McMillan Investments Holdings Pty Ltd v North Coast Beach Property Pty Limited [2011] NSWSC 1363

Supreme Court New South Wales

Medium Neutral Citation: McMillan Investments Holdings Pty Ltd v North Coast Beach Property Pty Limited [2011] NSWSC 1363 Hearing dates: 29/09/11, 11/10/11, 20/10/11 Decision date: 17 November 2011 Jurisdiction: Common Law Before: James J Decision: Applicant's application is dismissed. Applicant to pay the costs of the application of the plaintiff and of the defendant. Legislation Cited: Real Property Act Cases Cited: Bahr v Nicolay (No 2) (1987-1988) 164 CLR 604 General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 National Commercial Banking Corporation of Australia Limited v Hedley (Hodgson J 3 May 1984) Perpetual Trustees Victoria Limited v English [2010] NSWCA 32 Re Skeat's Settlement (1889) 42 Ch D 522 Sargent v ASL Development Limited (1974) 174 CLR 634 Scaffidi v Montevento Holdings Pty Limited [2011] WASCA 146 Category: Principal judgment Parties: McMillan Investments Holdings Pty Ltd - Plaintiff North Coast Beach Property Pty Limited - Defendant Beach Coast Property Pty Ltd - First Applicant Brian McMillan - Second Applicant Karin McMillan - Third Applicant Representation: BAM Connell - Plaintiff R Higgins - Defendant GA Moore - First Applicant File Number(s): 2011/122285

Judgment 1This is an application pursuant to r 6.24 of the Uniform Civil Procedure Rules that a company Beach Coast Property Pty Limited ("Beach Coast") be joined as a defendant in the proceedings. The present parties to the proceedings are the plaintiff McMillan Investment Holdings Pty Ltd (which I will sometimes refer to as "McMillan Investment") and the defendant North Coast Beach Property Pty Limited (which I will sometimes refer to as "North Coast Beach"). Both the plaintiff and the defendant opposed the application by Beach Coast to be joined as a defendant. 2In the proceedings the plaintiff claimed judgment for possession of the land in Folio Identifier 2/301117 known as 161 Mitchell Street Stockton ("the property") and judgment for a monetary sum. The proceedings were brought pursuant to a loan agreement and a mortgage both dated 7 August 2007, the original parties to which were a company named Byville Pty Limited ("Byville") as lender or mortgagee and the defendant North Coast Beach as the borrower or the mortgagor. The plaintiff alleged that on or about 18 May 2010 Byville assigned all its right, title and interest in the loan agreement and the mortgage to a company Santai Corporation Limited ("Santai") and that on or about 20 October 2010 Santai assigned all its right, title and interest in the loan agreement and the mortgage to the plaintiff. 3The defendant did not defend the principal proceedings and on 13 May 2011 a consent judgment was entered. 4It is convenient to identify a number of natural persons, firms and companies having some connection with the principal proceedings or the application. 5Mr Dennis McCamley was originally and for some time the sole director of North Coast Beach. Mr McCamley was associated with the companies Byville and Santai. His solicitors were Messrs Mahoney and Dominic (Mr Caldwell) and his accountants were Messrs Moore Stephens (Mr Morton). 6Mr Brian McMillan is associated with the applicant Beach Coast. His solicitors were Messrs Clark McNamara (Mr Elias Yamine an employed solicitor and Mr Clark a partner). Mr McMillan's accountants were Messrs Einfeld Symonds and Vince (Mr Geoffrey Vince). 7Mr Brian McMillan's wife is Mrs Karin McMillan ("Mrs McMillan"), who was once the owner of the property. Elizabeth McMillan and Barbara McMillan are sisters of Brian McMillan. 8Mr Robert McMillan is associated with the plaintiff. He is not related to Mr Brian McMillan, although the two men have known each other for some years. 9Beach Coast's application was instituted by a notice of motion dated 13 May 2011. Directions were made for the filing of affidavits on the application and a large number of affidavits were filed. These affidavits included:- 1.For the applicant, two affidavits by Mr Brian McMillan, two affidavits by Mrs McMillan and an affidavit by Barbara McMillan. 2.For the respondents, an affidavit by Mr McCamley, an affidavit by Mr Caldwell, an affidavit by Mr Adams who is the liquidator of Byville, affidavits by the solicitors for the plaintiff in these proceedings and three affidavits by Mr Robert McMillan. 10The exhibits to these affidavits were voluminous, occupying many lever arch folders. As well as the exhibits to the affidavits, a number of documents were admitted into evidence as independent exhibits. 11Consistently with the nature of Beach Coast's application, there was no cross-examination of any deponent. 12Extensive written submissions were lodged by all of the applicant, the plaintiff and the defendant and oral argument on the application lasted almost three days. 13Rule 6.24 of the Uniform Civil Procedure Rules provides as follows:- " (1) If the court considers that a person ought to have been joined as a party, or is a person whose joinder as a party is necessary to the determination of all matters in dispute in any proceedings, the court may order that the person be joined as a party. (2) Without limiting subrule (1), in proceedings for the possession of land, the court may order that a person (not being a party to the proceedings) who is in possession of the whole or any part of the land (whether in person or by a tenant) be added as a defendant." 14The principal proceedings in the present case are proceedings for the possession of land. However, it was not suggested that Beach Coast was in possession of the land or any part of it and, accordingly, sub-r (2) of r 6.24 has no application. 15As to sub-r (1) of r 6.24, counsel for the applicant submitted, and counsel for the plaintiff and counsel for the defendant contested, that Beach Coast ought to have been joined as a party or was a person whose joinder as a party was necessary to the determination of matters in dispute in the proceedings. 16Counsel for the plaintiff, supported by counsel for the defendant, submitted (leaving aside any question of onus) that there was no matter genuinely in dispute requiring the joinder of Beach Coast. It was submitted by counsel for the plaintiff that I should be prepared to entertain extensive argument, directed to establishing that there was no matter genuinely in dispute. An analogy was drawn by counsel with an application for summary judgment in relation to which Barwick CJ in his judgment in General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 said at 130:- "Arguments, perhaps even of an extensive kind, may be necessary to demonstrate that the case of the plaintiff is so clearly untenable that it cannot possibly succeed". 17I considered that I should proceed in accordance with these submissions by counsel for the plaintiff. Undisputed or clearly established facts 18At the hearing the following facts were either undisputed or established beyond any argument. 19For a number of years down to 2007, Mr Brian McMillan operated through companies controlled by him an Audi authorised motor vehicle body repair business ("the bodyworks business") in premises at Five Dock. By 2006 the bodyworks business was struggling financially. In February 2007 a receiver was appointed to a number of companies in Mr Brian McMillan's group of companies, including the company operating the bodyworks business. 20From October 2001 to September 2007 Mrs McMillan was the registered proprietor of the property. The property had been mortgaged to the Commonwealth Bank of Australia to secure loans made to the McMillan group of companies and in early 2007 the Commonwealth Bank was pressing for payment of the amount due to it. 21In 2006 discussions commenced between Mr Brian McMillan and Mr McCamley with a view to Mr McCamley acquiring an interest in the bodyworks business. There were a number of conversations between Mr McMillan and Mr McCamley and, in particular, a conversation on 5 March 2007, to which I will return later in this judgment. 22By a letter dated 27 April 2007 Audi Australia Pty Limited confirmed that it was prepared to allow Byville to operate the bodyworks business. 23On 4 May 2007 Byville purchased the bodyworks business from the receiver for the sum of $218,000. 24On 16 May 2007 a company controlled by Mr Brian McMillan which was the owner of the premises at Five Dock, granted a lease of the premises to Byville. 25On 7 June 2007 the Commonwealth Bank advised that it was prepared to discharge its mortgage over the property in consideration of payment to it of not less than 1.5 million dollars. 1.5 million dollars was the amount of a recent valuation of the property. 26On 25 June 2007 North Coast Beach was incorporated. By agreement between Mr Brian McMillan and Mr McCamley, Mr McCamley became its sole director. 27On 13 July 2007 a trust deed for the North Coast Beach Property Trust ("the Trust") was executed. The settlor was Mr Vince. The trustee was North Coast Beach. Mr McCamley executed the trust deed on behalf of North Coast Beach. The appointor under the trust deed was Elizabeth McMillan. The principal beneficiary named in the trust deed was the Australian Red Cross New South Wales. 28In late July Byville provided 1.568 million dollars to its solicitors. 29On 7 August 2007 a settlement took place of a purported loan from Byville to North Coast Beach, the discharge of the mortgage to the Commonwealth Bank in consideration of payment to the Bank of the sum of 1.5 million dollars, a transfer of the property from Mrs McMillan to North Coast Beach and a purported mortgage from North Coast Beach to Byville. Mr McCamley had executed the loan agreement and the mortgage as a director of Byville and the sole director of North Coast Beach. 30On 18 September 2007 North Coast Beach was registered as the proprietor of the property. 31In 2008 and even more in 2009 relations between Mr Brian McMillan and Mr McCamley became seriously strained. 32On 13 August 2008 Elizabeth McMillan appointed her sister Barbara McMillan as the new appointor of the Trust. 33On 3 September 2009 Barbara McMillan purported as appointor to give North Coast Beach notice of its removal as the trustee of the Trust. On the same day Barbara McMillan purported to appoint Beach Coast as the trustee of the Trust. Mr Brian McMillan is the sole director and shareholder of Beach Coast. 34On 18 May 2010 Byville as assignor and Santai as assignee entered into a deed of assignment. In October 2010 Santai as assignor and McMillan Investment as assignee entered into a further deed of assignment. McMillan Investment was registered as the proprietor of the mortgage originally granted to Byville. 35On 8 June 2011 Beach Coast purportedly declared that Mrs McMillan had been a beneficiary of the Trust since 2007 and that two of her children were to be beneficiaries of the Trust as from 7 June 2011. The draft defence 36A draft defence has been prepared which the applicant would file, if it were joined as a defendant. The draft defence is a lengthy document, which I will not attempt to summarise in full. 37In the draft defence Beach Coast denies that Byville made a loan to North Coast Beach and asserts that North Coast Beach paid 1.5 million dollars to Mrs McMillan out of its own resources; Beach Coast challenges the validity of the purported assignment from Santai to the plaintiff; Beach Coast alleges that North Coast Beach acted in breach of trust and that Mr McCamley acted improperly in relation to the loan agreement and the mortgage; Beach Coast alleges that Mr Robert McMillan had knowledge of the breach of trust and the improper conduct, before the assignment from Santai to the plaintiff; and Beach Coast denies that any defaults occurred under the mortgage. 38A very large number of issues were raised in the written or oral submissions. It seems to me that the principal issues raised were as follows:- 1.Did Mr Brian McMillan and Mr Dennis McCamley make an agreement in March 2007 that certain transactions should occur 2.Whether the payment which Byville made was a loan by Byville to North Coast Beach 3.Whether there was any breach of trust by North Coast Beach or any improper conduct by Mr McCamley 4.If there was a breach of trust by North Coast Beach or improper conduct by Mr McCamley, did Mr Robert McMillan on behalf of the plaintiff have notice of the breach of trust or improper conduct, before the plaintiff took the assignment from Santai 5.Whether there was an effective assignment by Santai to the plaintiff of its right, title and interest in the loan agreement and the mortgage 6.If there was a breach of trust by North Coast Beach or improper conduct by Mr McCamley and if Mr Robert McMillan had notice of the breach of trust or improper conduct before the assignment from Santai to the plaintiff, would that constitute an exception to the indefeasibility of title the plaintiff would otherwise have as the registered proprietor of a mortgage 7.Was Beach Coast validly appointed as trustee of the Trust 39On an application of this sort it is my function to determine whether an issue is genuinely arguable but, if I conclude that it is genuinely arguable, I should not proceed to attempt to determine the issue. 40A number of the issues are interdependent, so that if I determine that a particular issue is not genuinely arguable, some other issues will simply not arise. 41I will now commence to consider these issues. 1. Did Mr Brian McMillan and Mr McCamley make an agreement in March 2007 that certain transactions should occur 42The principal evidence in the applicant's case was an affidavit of Mr Brian McMillan of 23 May 2011. In this affidavit Mr McMillan said that in 2006 and early 2007 he and Mr McCamley had a number of conversations in which they discussed the business affairs of Mr McMillan and his group of companies. 43In par 14 of his affidavit Mr McMillan said that in a conversation in October 2006, in response to a question from Mr McCamley, he had said that the most profitable business in his group was the Audi bodyworks business. Mr McMillan said that the Bentley business was good but not as good as the Audi business. 44In par 23 of his affidavit Mr McMillan said that in a conversation in the week of 26 February 2007, after he had referred to the property at Stockton, Mr McCamley had said "you don't want to lose that. You want to keep hold of that". In the same conversation Mr McCamley inquired, "what's the chances of me getting the Bentley franchise or the Audi body shop". Mr McMillan replied that he did not know, because Volkswagen had a charge over his businesses and he did not know what the position was with his bank. 45In par 25 of his affidavit Mr McMillan deposed to a conversation he had had with Mr McCamley on or about 5 March 2007. The terms of the conversation were set out at length in par 25 of the affidavit and much of that account of the conversation was repeated in par 33 of the appellant's written submissions. Because of the importance of this conversation in the determination of the issue I am now considering I will quote par 25 of the affidavit in full. "On or about 5 March 2007,1 had a lunch meeting with Dennis at Trattoraro. We had a conversation using words to the following effect: He said: How are you bearing up under the strain? I said: I think I have a way to get through this that will be good for all parties. Remember our conversation of last year, where you told me that you were interested in purchasing the Bentley business and/or the Audi business? He said: Yes. Which one again is the most profitable? I said: They both are profitable, but the Audi prestige repair business has consistent profit all year round, whereas the Bentley business has huge profits when a new model comes out so you have to keep the funds on hold through a period awaiting the next model. He said: So really, the Audi business is always profitable and the Bentley business is good to have. I said: Yes, that's about the summary of it. Remember that you mentioned that you didn't want me to lose Stockton? He said: Yes. I said: Well, I'm not sure how I'm going to organise Stockton. CBA says its valued at $2.2 million, but the debt is for considerably less. $1.6 million I think. He said: Yes, you don't want to lose that. I said: This is the deal I think I can organise for you if you're agreeable. If I can secure the Audi franchise for you, and maybe the Bentley franchise - but I'm not sure about the Bentley franchise, but probably the Audi franchise - then in return for that I want for Karin (my wife) to end up with the Stockton property unencumbered subject to any structure that my accountant, Geoff Vince, advises. He said: How do I know how much I will have to pay for the Audi business? I hear what you're saying about Stockton, but I also recall you saying that there is an enormous amount of interest in the Audi bodyshop. I said: Yes, there is, because it has a great reputation in repairing Rolls-Royce, Bentley and other marques for such a long period of time, which is over 20 years. Look, we own the buildings, I've had a long relationship with Audi and if I can secure the business for you, and Karin gets Stockton unencumbered, that is my motivation for getting the Audi bodyshop deal for a bargain price. He said: I understand. I said: The arrangement would be, I will set it all up. I don't need to be paid any wages, ill just do all the work and all the management and we will split the profits 50/50 after expenses. He said: Ok, I'm fine with that. That's good. I said: So we're clear about this, you will pay for the Audio Bodyshop and to the CBA to unencumber Stockton and pay working capital we need to run the business. You can either put the funds in as a lump sum or when it's needed. He said: I would rather put the money in as we go, instead of a lump sum as I have many investments and property developments going ail the time. I said: Let's see what we can put together with these franchises. I understand what you're saying with Bentley and the main key for you is the Audi bodyshop because of the profit. He said: Yes. Bentley would be good, but let's make sure we get Audi. I've done a good deal recently and I would love to get into the automotive business. Just thinking - how much stock do you think is needed for the Bentley business, if we got it? I said: Stock alone would be $4 million to $6 million. Then you would need working capital and all the other expenses to meet the Bentley franchise requirements. But, it's still a good brand to have because of the business it attracts. He said: Well then, I'd only be happy to go for the Bentley business as long as I get it for next to nothing, but the Audi business is what makes sense, provided that the cost of securing Stockton unencumbered for Karin, plus the cost of acquiring the Audi franchise business, is around $2 million, then I'll do the deal. I said: There's no stock in the Audi business and if we set it up right, which I'll do for you, it'll make considerable money for us. He said: How do you think you'll go dealing with the receivers? I said: I'm not sure. He said: Who will in effect be buying the Audi and Bentley businesses? I said: You will be seen to be buying the Audi and Bentley businesses, but I will be orchestrating everything from behind the scenes. At the end of the day, you will be seen to be the purchaser that has my support in the business. Audi will not go ahead with someone that they don't know, trust or respect. And that will be the same with anybody wishing to purchase the Bentley business. You will need to give me a name of the entity you will use for the purchase He said: Use the name Byville Pty Ltd. How long do you think this will all take? I said: I'm going to have to do this very quickly, because I don't know how long the CBA will wait. I need to probably organise Stockton first, out of all the properties with the CBA, and then factories second. He said: Do you think it will be done in a couple of weeks, because the longer the receiver's in there, the more damage he will do to the business. I said: The receiver is probably going to be difficult to deal with and it will depend on what offers the receiver already has for the Audi bodyshop. In saying that, the people who have applied for the franchise, will still need approval from Audi Australia. Anyway, leave it with me. I really appreciate your support and friendship. Let's see if I can get a deal done that's good for both of us." 46In the immediately following paragraph of the applicant's written submissions, paragraph 34, which has the heading "The agreement Dennis McCamley and Brian McMillan" it is stated:- "From this meeting with Dennis McCamley on or about 5 March 2007, Brian McMillan believed that he had an agreement with Mr McCamley to the effect that an interest associated with Dennis McCamley was prepared to spend up to $2 million to: (a) Acquire the business known as the Audi Authorised Bodyworks Shop from the receiver of McMillan Prestige, Mr Michael Jones; and (b) Make available to a trust to be formed, for the benefit of Karin McMillan, a sufficient sum to enable Karin McMillan to pay out the CBA mortgage and obtain a discharge of mortgage, with the intent that Karin McMillan would hold the Stockton property unencumbered by any mortgage other than a mortgage in favour of the trust to be formed for the benefit of Karin McMillan; provided that Brian McMillan was able to facilitate: (a) The acquisition of the business known as the Audi Authorised Bodyworks Shop from the receiver of McMillan Prestige, Mr Michael Jones; plus (b) Obtain an Audi franchise from Audi Australia to operate the Audi Authorised Bodyworks Shop at Five Dock in the names of Dennis McCamley and Brian McMillan; plus (c) Obtain a lease to operate the Audi Authorised Bodyworks Shop from the premises at Five Dock owned by Classic Auto Search." 47It is noteworthy that in the first sentence of par 34 it is said that Mr McMillan "believed" that he had an agreement and not that an agreement had actually been made. 48In paras 35 to 37 of the applicant's written submissions it was submitted in effect that Mr McMillan had performed his part of the agreement with Mr McCamley by facilitating all of the making of an agreement on 4 May 2007 whereby the receiver agreed to sell the Audi bodyworks business to Byville for $218,000; the giving of consent by Audi Australia on 27 April 2007 to Byville operating the bodyworks business as an Audi authorised business; and the giving of consent by the landlord of the premises at Five Dock to Byville operating the bodyworks business at those premises. 49In his affidavit Mr McCamley agreed that he had had a conversation with Mr McMillan broadly to the effect of the conversation alleged in para 25 of Mr McMillan's affidavit, while disputing a number of the details of Mr McMillan's account of the conversation. In particular, Mr McCamley denied that there had been any mention in the conversation of Mr McCamley re-financing the property at Stockton or of the property being acquired unencumbered for Mrs McMillan. 50On an application of the present sort I should proceed on the basis of accepting Mr McMillan's account of the conversation. 51I have already drawn attention to the fact that in para 34 of the applicant's written submissions it was asserted that, after the conversation of 5 March 2007, Mr McMillan "believed" that he had an agreement with Mr McCamley and not that an agreement had actually been made between them. In oral argument on the hearing of the application counsel for the applicant, at least at times, disavowed submitting that the conversation of 5 March 2007 had given rise to a binding agreement (see transcript of oral argument at pp 50 and 83 to 85). However, it was contended that the conversation of 5 March 2007 had activated an equitable principle, the application of which would produce the consequences that the Trust should not have become subject to any debt and that, by procuring North Coast Beach to enter into the transactions which it did, Mr McCamley should be regarded as having caused North Coast Beach to act in breach of trust, as well as acting improperly himself. 52Counsel for the plaintiff and counsel for the defendant submitted that the conversation of 5 March 2007 had not given rise to any binding agreement. Alternatively, it was submitted that, if the conversation had given rise to a binding agreement, it was an agreement only as between Mr McMillan and Mr McCamley, the agreement did not extend to some of the transactions that were subsequently entered into and any agreement was superseded in the subsequent discussions and communications between the parties. 53In my opinion, even accepting in full Mr McMillan's account of the conversation of 5 March 2007, it is clear beyond reasonable argument, as was virtually conceded by counsel for the applicant in parts of his oral submissions, that the conversation did not give rise to a binding agreement. 54As was submitted by counsel for the plaintiff and counsel for the defendant, much of the language used in the conversation was the language of negotiation and was inconsistent with any binding agreement being then and there concluded. The conversation left many things unresolved, including whether the Bentley franchise would be included in any deal, what structure Mr Vince would devise, precisely how much Mr McCamley would have to pay, whether the Commonwealth Bank of Australia would be cooperative, whether any deal could be implemented promptly ("in a couple of weeks"), whether the receiver would be cooperative and whether Audi Australia would give its approval. 55In the conversation Mr McMillan does not commit himself. He says "this is the deal I think I can organise for you if you're agreeable". Mr McMillan's last remark is "let's see if I can get a deal done that's good for both of us". 56I would also, if it were necessary, uphold each of the alternative submissions made by counsel for the plaintiff and counsel for the defendant. 2. Whether the payment which Byville made was a loan by Byville to North Coast Beach 57It was undisputed that in July 2007 Byville provided $1.568 million dollars to its solicitors and that in August 2007 that sum, subject to deductions on settlement, was paid by Byville to North Coast Beach. It is convenient to focus on the amount of 1.5 million dollars. 58It was submitted by counsel for the applicant that there was an understanding, if not an agreement, that the payment to North Coast Beach would be, not the making of a loan to North Coast Beach, but the providing of funds to North Coast Beach which would become the property of the Trust and in respect of which North Coast Beach would not incur any obligation to Byville. 59It was submitted that after the payment by Byville to North Coast Beach, North Coast Beach as trustee of the Trust would then lend 1.5 million dollars, being its own funds, to Mrs McMillan. Mrs McMillan would use the 1.5 million dollars to pay out the Commonwealth Bank and obtain a discharge of the Bank's mortgage. Mrs McMillan would give a mortgage over the property to North Coast Beach to secure the loan made to her by North Coast Beach. 60Mrs McMillan would enter into a contract to sell the property to North Coast Beach as trustee of the Trust and then transfer the property to North Coast Beach. Accordingly, North Coast Beach would become both the owner of the property and the mortgagee of the property and the mortgage would effectively be extinguished. Mrs McMillan would have the benefit of the property, because she was to be a beneficiary of the Trust. 61Some of the transactions in this putative sequence did happen. A payment of 1.5 million dollars by Byville to the Trust was made and the payment was used to discharge the indebtedness to the Commonwealth Bank and to obtain a discharge of the Bank's mortgage. Mrs McMillan did transfer the property to the Trust, although she did not give any mortgage to the Trust. However, it was submitted by counsel for the applicant, Mr McCamley as the controller of Byville and as the sole director of North Coast Beach caused North Coast Beach and Byville to enter into a loan agreement and a mortgage, notwithstanding that, according to the agreement or understanding which had been reached, the payment by Byville to North Coast Beach was not to be a loan but a providing of funds in respect of which North Coast Beach would not incur any obligation to Byville. 62It was submitted by counsel for the applicant that what had in fact happened involved improper and dishonest conduct by Mr McCamley and a breach of trust by North Coast Beach as trustee of the Trust. 63It was submitted that the loan agreement between Byville and North Coast Beach and the mortgage from North Coast Beach to Byville had been entered into without the knowledge of Mr Brian McMillan or Mrs McMillan. Mr McCamley as the sole director of North Coast Beach had executed the loan agreement and the mortgage on behalf of North Coast Beach (as well as on behalf of Byville) and the signatures of Mr McMillan and Mrs McMillan had not been required. 64Mr McMillan and Mrs McMillan swore in their affidavits that they remained unaware of the loan agreement and the mortgage until December 2008. Mr McMillan said in his affidavit that, after he had been informed by Mr McCamley in November 2008 that he was no longer required to work in the bodyworks business, he caused a title search to be made and this title search disclosed the existence of the mortgage. 65In support of the submission that there had been an agreement or understanding that the sequence of transactions contended for should take place, counsel for the applicant referred to records of Messrs Clark McNamara, the solicitors for Mr Brian McMillan and Mrs McMillan, which showed that in early July 2007 these solicitors had prepared a draft loan agreement and mortgage between North Coast Beach and Mrs Karin McMillan but had discontinued work on these documents, after being informed on 16 July 2007 by Mr McCamley's solicitors that those solicitors would be preparing loan documents. Messrs Clark McNamara did proceed to prepare a contract for sale and a transfer between Mrs McMillan and North Coast Beach. 66Counsel referred to other pieces of evidence as supporting his general submission, including that Byville had not been noted on the insurance policy for the property as having an interest as mortgagee and that Mrs McMillan, who has at times been in occupation of the property, was requested by Mr McCamley's personal assistant on a number of occasions in 2008 and 2009 to pay outgoings on the property, including council rates, water rates and land tax. 67Counsel for the applicant also submitted that a proposal in 2008 to raise money to pay out two brothers named Boyd who held a second mortgage on the Five Dock property, by a sale of the property (at Stockton) to Mr McCamley for its then value, with an option to Mr McMillan to re-purchase the property, was inconsistent with Mr McCamley having, or believing that he had, a valid mortgage over the property, or with Mr McMillan or Mrs McMillan being aware of the mortgage of the property to Byville. 68Counsel for the plaintiff and counsel for the defendant submitted that the loan agreement between Byville and North Coast Beach and the mortgage from North Coast Beach to Byville were in accordance with an agreement reached between Mr McCamley and Mr Brian McMillan in June 2007, of which Mr Brian McMillan and his solicitors were well aware. Counsel relied particularly on three emails, an email of 19 June 2007 and two emails of 25 June 2007. 69The first email was as follows:- "From: Geoff Vince [ mailto:GeoffV@einfelds-com.au ] Sent: Tuesday, 19 June 2007 7:07 PM To: wmorton@rnoorestephens.com.au Cc: Brian McMillan; Dennis McCamley Subject: McMillan Hi Wayne Brian has asked me to forward the following details concerning the "financing/acquisition" of the property currently owned by Karin McMillan at 161 Mitchell Street Stockton. The current proposal is as follows:- 1.A NewCo be formed, North Coast Beach Property Pty Ltd. (I have undertaken a search & the name is currently available.) 2.It has been suggested that Dennis should be the sole director & shareholder of this company, however, this would be up to your advice. 3.A NewTrust will also be formed, North Coast Beach Property Trust. This Trust being a blind trust with the Power of Appointment resting with Brian's sister, Elizabeth McMillan. 4.The Company would be the Trustee of the Trust. 5.We currently have a valuation for the property at $1.5m (copy attached) 6.An entity associated with Dennis would provide $1.5m via a first mortgage to discharge the mortgage currently provided by the CBA. 7.Immediately subsequent to the discharge of the CBA mortgage, the property would be transferred from Karin McMillan to North Coast Beach Property Pty Ltd atf the North Coast Beach Property Trust, together with the mortgage from Dennis's entity. 8.I understand that the mortgage from Dennis would be for a period of five years, interest only, with the interest rate to be agreed. Could you please review the above & advise whether you agree with the proposal, so that the documents can be prepared asap. Regards Geoff" 70This email was from Mr McMillan's accountant, Mr Vince, to Mr McCamley's accountant, Mr Morton, with copies to both Mr McMillan and Mr McCamley. The email said that "Brian", which must be Mr Brian McMillan, had asked his accountant to forward the details in the email. The email spoke of the "current" proposal, indicating that there had been changes from time to time in what was proposed. 71It is clear that where Mr Vince used the word "mortgage" in the email he often meant "loan secured by a mortgage". For example, in the point numbered 6 where Mr Vince referred to "the mortgage currently provided by the CBA" he clearly meant, not a mortgage given by the Commonwealth Bank of Australia, but the loan from the Commonwealth Bank of Australia secured by the mortgage. 72Similarly, in point 8 "the mortgage from Dennis" was clearly, not a mortgage to be given by Mr McCamley (or an entity associated with Mr McCamley), but a loan from Mr McCamley to be secured by a mortgage. 73Conflicting submissions were made about the interpretation which should be given to the expressions in the email "an entity associated with Dennis" in point 6 and "Dennis' entity" in point 7. Counsel for the applicant submitted that the expressions referred to North Coast Beach of which Mr McCamley was to be the sole director and shareholder. Counsel for the plaintiff and for the defendant submitted that the expressions referred to an entity associated with Mr McCamley, which would be distinct from North Coast Beach. 74In my opinion, it is not correct, and not even reasonably arguable, that the expressions referred to North Coast Beach. In the earlier points of the proposal North Coast Beach was referred to by its name, as "the Company" and as the trustee of the Trust. In point 6 "an entity associated with Dennis" was mentioned for the first time and was clearly different from North Coast Beach. The correct interpretation of the expressions is put beyond argument by point 7, where in the same point both North Coast Beach and "Dennis' entity" are referred to. 75In point 6 it was proposed by Mr McMillan's accountant that an entity associated with Mr McCamley, clearly not being North Coast Beach, was to "provide $1.5 million via a first mortgage", that is to lend $1.5 million dollars on the security of a first mortgage. 76The concluding words of point 7 "together with a mortgage from Dennis' entity" were not happily chosen. However, I consider that point 7 clearly meant that, after the mortgage to the Commonwealth Bank of Australia had been discharged, the property would be transferred to North Coast Beach, which would also give a mortgage to secure the loan from Mr McCamley's entity. 77On 20 June 2007 Mr McCamley forwarded a copy of the email of 19 June to his solicitor Mr Caldwell. 78On 25 June 2007 at 8:16 am Mr McCamley sent an email to Mr McMillan, with copies to their accountants. The email was as follows:- "From: Dennis McCaley [dennis@shoesin.com.au] Sent: Monday, 25 June 2007 8:16 AM To: brianmcmillan01@gmail.com Cc: Wayne MORTON; GeoffV@einfelds.com.au Subject: Re Stockton Property I understand Geoff is setting up the trust etc. I have agreed to this formula. The deal is for 5 years and can be played (sic) out at any time. The mortgage will be for $1,500,000-00 plus stamp duty. All Legal will be to your account. Interest will be at 1.5% above the BBR. It is at 6.9% at present. This rate can go up or down and the calculations will be on a monthly basis. Interest will be compounded on a per annum basis. Please confirm all points so we can proceed. Please call me if you have any questions. Regards Dennis" 79There was no evidence of any communication between Mr McMillan and Mr McCamley or between their professional advisers between 19 June 2007 and 25 June 2007 in which there was any reference to any different proposal from that put in the email of 19 June. In these circumstances, the expression "this formula" used in the email of 25 June 2007 must be a reference to the proposal in Mr Vince's email of 19 June. In the email of 25 June Mr McCamley said that he had agreed to "this formula", without proposing any further or different terms, other than with respect to the terms of the mortgage. 80The stipulations in the email of 25 June 2007 about the terms of the mortgage, including its duration, variations in the rate of interest and the compounding of interest on an annual basis, are consistent with a mortgage to protect Mr McCamley's interests in securing a loan being made by Mr McCamley's entity but hardly consistent with a mortgage to be given by Mrs McMillan, which would soon be extinguished. 81Counsel for the applicant referred to an email sent on 23 May 2007 which became exhibit C in the proceedings. In this email sent by Mr McMillan to Mr McCamley Mr McMillan asked Mr McCamley to have his accountant draft a letter which Mr McMillan's accountant could present to the Commonwealth Bank to show that "a private investor is taking over the debt of this property". Mr McMillan attached an email from Mr Vince, in which Mr Vince suggested that Mr Morton should write a letter saying that he was acting for a private investor who was prepared to lend $1.5 million dollars to Mrs McMillan by way of re-financing. In the email from Mr Vince some particulars of the proposed loan are given, some of which are similar to the terms stipulated for by Mr McCamley in his email of 25 June. 82However, little weight can be given to this email of 23 May 2007. The email was sent almost a month before the email of 19 June 2007. The evident specific purpose of the email was to convey the impression to the Bank, which would have been a false impression, that there was to be a genuine re-financing of the debt to the Bank. In his email Mr Vince said "I've just made this up on the basis of what I think the CBA would accept". 83Mr McMillan did not reply to Mr McCamley's email of 25 June 2007. However, the following day 26 June 2007 Mr Vince sent an email to Mr McCamley, which became exhibit D in the proceedings. This email incorporated an email from Mr McMillan to Mr Vince sent at 9:30 am on 25 June 2007, that is little more than an hour after Mr McCamley's email to Mr McMillan. The email from Mr McMillan to Mr Vince attached the email of 25 June from Mr McCamley to Mr McMillan and in the body of the email Mr McMillan said "all what Dennis has written sounds correct". In his email to Mr McCamley Mr Vince said "I think Brian meant to send this email to you as well as to me. I've forwarded these details to the solicitors to draft the documents". 84It is true, as was submitted by counsel for the applicant, that in early July 2007 Messrs Clark McNamara drafted a loan agreement and a mortgage in respect of a loan which was to be from North Coast Beach to Mrs McMillan. In the light of other evidence in the case, I consider that the undertaking of the drafting of these documents must be attributed to a misunderstanding or a breakdown in communication between Mr and Mrs McMillan and their solicitors. In any event, Messrs Clark McNamara desisted from preparing these documents, after a conversation on 16 July 2007 with Mr McCamley's solicitors, although they continued to prepare a contract for the sale of the property from Mrs McMillan to North Coast Beach and a transfer from Mrs McMillan to North Coast Beach. 85Mr McCamley's solicitors proceeded with the preparation of documents which would give effect to the proposal which had been agreed to in the emails, including a mortgage incorporating the terms required by Mr McCamley. 86On 19 July 2007 Mr McCamley's solicitors forwarded draft documents to Byville for approval including a draft loan agreement between North Coast Beach and Byville and a draft mortgage from North Coast Beach to Byville. In the covering letter which was headed "Proposed loan to North Coast Property Trust" the solicitors said that, if the draft documents were approved, the signed documents should be returned, together with other documents including an insurance policy noting Byville's interest as mortgagee. 87On 23 July 2007 Mr Caldwell of Messrs Mahoney Dominic sent an email to Mr Yamine of Messrs Clark McNamara, attaching copies of the documents which had been sent to Mr McCamley "for your information". These documents included copies of the draft loan agreement and the draft mortgage. Another document a copy of which was attached was a set of draft minutes of a meeting of the directors of North Coast Beach (to be attended only by Mr McCamley), including a resolution that the company as trustee borrow the sum of 1.568 million dollars and execute a loan agreement and mortgage. The email informed Mr Yamine that Mr McCamley would be signing the documents that afternoon. 88Having received the email, Mr Yamine immediately sent an email to Mr Clark, his principal within the firm of Messrs Clark McNamara, attaching the email from Mr Caldwell and attaching copies of the documents which had been received. 89On 24 July 2007 Mr Caldwell sent an email to Mr Yamine informing him that the loan and security documents had been signed. 90On 25 July 2007 Mr Yamine sent an email to Mr Clark about the execution of the contract for sale by Mr McCamley. The subject of the email was stated in the email to be "Byville loan to North Coast Property Trust". 91Documents from the files of the solicitors for Mr McCamley and the solicitors for Mr McMillan and Mrs McMillan, to some of which I have referred, establish, beyond any argument, that, at least from 16 July 2007, the solicitors for Mr and Mrs McMillan were aware that the payment to be made by Byville to North Coast Beach was to be a loan from Byville to North Coast Beach and not simply a providing of funds by Byville to North Coast Beach, that there would be a loan agreement between Byville as lender and North Coast Beach as borrower and a mortgage of the property from North Coast Beach as mortgagor to Byville as mortgagee and that there would not be any loan agreement or any mortgage between Mrs McMillan and North Coast Beach. I accept a submission made by counsel for the plaintiff that the knowledge of these matters by the solicitors Messrs Clark McNamara should be attributed to their clients Mr and Mrs McMillan, even if Mr and Mrs McMillan were not personally aware of these matters. See Sargent v ASL Development Limited (1974) 174 CLR 634, especially at 658-659 per Mason J. 92In any event, it is not credible that Mr Brian McMillan and Mrs McMillan were not personally aware of these matters. That Mr McMillan was aware of these matters is established by the emails of 19 June 2007 and 25 June 2007. Even if Mr McMillan and Mrs McMillan had not been independently aware of these matters, they would surely have been informed of them by their solicitors. Messrs Clark McNamara continued to act for Mrs McMillan on the sale and transfer of the property to North Coast Beach and all the transactions were simultaneously settled on 7 August 2007. The time billing report forwarded to Mrs McMillan by Messrs Clark McNamara, supporting a bill of costs rendered 31 July 2007, indicates that during July 2007 there were communications by telephone and email between the solicitors and either Mr McMillan or Mrs McMillan. 93Mrs McMillan executed the contract for the sale of the property and the transfer of the property at the office of her solicitors on 26 July 2007, that is after the solicitors had received copies of the documents which were to be executed and had been informed that the documents had been executed. On the same day Mr Brian McMillan telephoned the solicitors "regarding progress of settlement". 94Mrs McMillan and Mr Brian McMillan would have been aware that Mrs McMillan had not executed any loan agreement with North Coast Beach or any mortgage to North Coast Beach. 95I conclude that it is clear beyond argument that the payment of $1.5 million dollars to be made by Byville to North Coast Beach was understood by all persons including Mr Brian McMillan and Mrs McMillan to be a loan by Byville to North Coast Beach which was to be secured by a mortgage over the property and was not a providing of funds to North Coast Beach which North Coast Beach would take, free of any obligation to Byville. 3. Whether there was any breach of trust by North Coast Beach or any improper conduct by Mr McCamley 4. If there was a breach of trust by North Coast Beach or improper conduct by Mr McCamley, did Mr Robert McMillan on behalf of the plaintiff have notice of the breach of trust or improper conduct, before the plaintiff took the assignment from Santai 6. If there was a breach of trust by North Coast Beach or improper conduct by Mr McCamley and if Mr Robert McMillan had notice of the breach of trust or improper conduct before the assignment from Santai to the plaintiff, would that constitute an exception to the indefeasibility of title the plaintiff would otherwise have as the registered proprietor of a mortgage. 96In the light of the conclusions I have reached on the first two issues, that no agreement was made by Mr Brian McMillan and Mr McCamley in March 2007 that certain transactions should occur and that it was understood by all persons including Mr Brian McMillan and Mrs McMillan that the payment by Byville to North Coast Beach was to be a loan by Byville to North Coast Beach to be secured by a mortgage by North Coast Beach to Byville over the property, there was no breach of trust by North Coast Beach as trustee of the Trust and no improper conduct by Mr McCamley or any entity associated with Mr McCamley. North Coast Beach did not incur any loss from the transactions it entered into. It borrowed the sum of $1.5 million dollars and applied that sum in acquiring as trust property the property at Stockton, which had recently been valued at $1.5 million dollars. 97As there was no breach of trust by North Coast Beach and no improper conduct by Mr McCamley, issues 3, 4 and 6 do no arise. Consequently, there is no need to examine the evidence about conversations Mr Brian McMillan asserted he had had with Mr Robert McMillan before the assignment from Santai to the plaintiff took place, which were sought to be relied on as putting Mr Robert McMillan on notice that a breach of trust or improper conduct had occurred and there is no need to examine the cases on exceptions to the indefeasibility of the title of a registered proprietor of an estate or interest under the Real Property Act , which were referred to in the course of submissions, including Bahr v Nicolay (No 2) (1987-1988) 164 CLR 604; Perpetual Trustees Victoria Limited v English [2010] NSWCA 32; National Commercial Banking Corporation of Australia Limited v Hedley (Hodgson J 3 May 1984). 5. Whether there was an effective assignment by Santai to the plaintiff of its right, title and interest in the loan agreement and the mortgage 98In October 2010 a document described as Deed of Assignment of Mortgage, the parties to which were Santai ("assignor"), McMillan Investment ("assignee"), North Coast Beach ("NCBPT") and Mr McCamley ("joint debtor") was executed. 99In clause 1 of the Deed the expression "First Loan Agreement" was defined as the loan agreement of 7 August 2007 between Byville and North Coast Beach, the expression "Second Loan Agreement" was defined as the loan agreement of 15 June 2010 between the assignee as lender and the assignor and joint debtor as borrower, as subsequently varied, "Security" was defined as the registered mortgage of 7 August 2007 over the property at Stockton. 100In the recitals in the deed it was recited that on 18 May 2010 Byville had assigned to the assignor all its right, title and interest in the first loan agreement and the security (recital B); that the assignor and Mr McCamley as borrowers had entered into the second loan agreement with the assignee as lender (recital C); that the assignor had provided security for the moneys advanced under the second loan agreement by way of a mortgage over a property at Five Dock (recital D); and that the second loan agreement contemplated that additional or collateral security might be provided to further secure the loan by the assignee to the assignor (recital E). Recital F was in the following terms:- "The Assignor has now agreed with the Assignee that the Assignor will by way of providing further security, (referred to in the Second Loan Agreement as "collateral security") transfer to the Assignee all of its right, title and interest in and to the First Loan Agreement and the Security, and the NCBPT Trustee has agreed to enter into this deed to provide further assurance to the Assignee." 101Some of the operative clauses of the deed were as follows. 2. ASSIGNMENT - In consideration of the continued provision of the loan advanced to Joint Debtor and the Assignor by the Assignee pursuant to the Second Loan Agreement, the Assignor HEREBY TRANSFERS AND ASSIGNS to the Assignee effective on the date hereof, all of its right, title and interest in and to the First Loan Agreement and the Security together with all Associated Rights, subject to and upon the terms of this Deed. COLLATERAL SECURITY 3:1. The Assignee hereby expressly agrees and undertakes to take and accept the aforesaid assignment of the First Loan Agreement and the Security as "collateral security" (as that term is defined in the Second Loan Agreement). ...... REAL PROPERTY ACT TRANSFER 4.1. The Assignor shall upon the execution of this Deed hand to the Assignee: a. Real Property Act form of transfer of the Security signed by the Assignor in favour of the Assignee, in registrable form; and b. Certificate of Title for Folio Identifier 2/301117 5. BENEFIT OF INDEMNITY OF NCBPT TRUSTEE 5.1 The NCBPT Trustee hereby acknowledges and agrees to allow the Assignee to have full recourse to its indemnity under the NCBP Trust in whatever way the Assignee, in its absolute discretion determines. 5.2 Without limiting the generality of the foregoing the NCBPT Trustee irrevocably consents to the Assignee bringing proceedings in its name. 6.2 Assistance in Recovering the Debt Owed under the Security The Joint Debtor, the Assignor and the NCBPT Trustee agree to do all things, at their own expense, that the Assignee shall require to enable the Assignee to realise the Security or recover moneys advanced pursuant to the First Loan Agreement ... 102A number of submissions were made by counsel for the applicant in support of the general contention that there had not been an effective assignment by Santai to the plaintiff of its right, title and interest in the loan agreement and the mortgage. I will consider each of these submissions (not necessarily in the order in which they were advanced by counsel for the applicant). 103It was submitted that by the time the Deed was entered into North Coast Beach was no longer the trustee of the North Coast Beach Property Trust and that the current trustee had not consented to the Deed. However, even if North Coast Beach was on or about 3 September 2009 validly removed as the trustee of the Trust, this would not affect the validity of the assignment by Santai to McMillan Investment. North Coast Beach was joined as a party to the Deed of Assignment merely for the purposes of its agreeing to allow McMillan Investment full recourse to its right of indemnity as trustee, of its agreeing to assist McMillan Investment in realising the Security or recovering moneys advanced and of its joining in the covenant for further assurance. 104It was submitted by counsel for the applicant that the validity of the purported assignment depended on McMillan Investment having actually lent moneys to Santai under the loan agreement of 15 June 2010. 105In the appellant's written submissions filed on 21 September 2011 it was submitted that no evidence had been provided of what, if any, money had been lent by McMillan Investment to Santai under the loan agreement of 15 June 2010 (apart from copies of some bank cheques). 106After the appellant's written submissions had been filed and served, an affidavit by Mr Robert McMillan of 26 September 2011 was filed and served on behalf of McMillan Investment. Paragraphs 12 to 15 of this affidavit were in the following terms:- "12. I am the sole director and shareholder of McMillan Printing Unit Custodian Pty Ltd ACN 107 401 356. 13. On 15 June 2010 McMillan Printing Unit Custodian Pty Ltd loaned $1,412,351.08 to the plaintiff. At Tab 9 is a copy of McMillan Printing Unit Custodian Pty Ltd's general journal entry for 15 June 2010. 14. On or about 15 June 2010, I caused McMillan Printing Unit Custodian Pty Ltd to draw cheques as requested in Mahony Dominic Lawyer's letter referred to above (of 11 June 20010), to pay on behalf of the plaintiff the sum of $1,412,281.08 to Santai Corporation Pty Ltd pursuant to the Santai Loan Agreement and arranged for the cheques to be delivered to the plaintiff's solicitors, PMF Legal's office. At Tab 10 is a copy of those cheques. At Tab 11 is a copy of McMillan Printing Unit Custodian Pty Ltd's bank statements showing the drawdown of the funds used to purchase the cheques. 15. On or about 15 June 2010, PMF Legal attended the settlement of Santai Corporation Pty Ltd's purchase of the Five Dock Properties at the offices of Espreon and handed the cheques at Tab 9 over to the representative of Santai Corporation Pty Ltd at settlement." 107The document at tab 9 to the affidavit shows entries in the general journal of McMillan Printing Unit Custodian Pty Ltd recording the lending to McMillan Investment on 15 June 2010 of a total amount of $1,412,351.08. The documents at tab 10 to the affidavit are copies of a number of bank cheques obtained on 15 June 2010 in compliance with cheque directions given by Messrs Mahony Dominic for the settlement to take place that day. 108At the hearing of the application counsel for the applicant conceded that evidence which had been adduced since his written submissions were prepared showed, more probably than not, that some moneys had been advanced but submitted that the evidence showed that the moneys had been advanced by "another McMillan entity", that is a company in Mr Robert McMillan's group of companies other than the plaintiff. 109I consider that, even accepting that the validity of the purported assignment depended on the plaintiff having actually lent moneys to Santai under the loan agreement of 15 June 2010, Mr Robert McMillan's affidavit shows that moneys were advanced to Santai on 15 June 2010 and that the moneys were advanced on behalf of the plaintiff out of moneys lent to the plaintiff by McMillan Printing Unit Custodian Pty Ltd. 110It was submitted by counsel for the applicant that the Deed of Assignment was to be characterised as a mortgage of the mortgage of 7 August 2007, as distinct from a transfer of the mortgage. In support of this submission counsel referred to recitals E and F to the Deed and operative clause 3, under which the assignment was to be "collateral security". 111I do not accept this submission. Operative clause 2 of the Deed is quite clear in its terms. By clause 2 Santai assigned to the plaintiff, and did not merely mortgage, all its right, title and interest in the loan agreement and the mortgage. 112Even if the assignment were to be regarded as a mortgage of the mortgage of 7 August 2007, s 52A of the Real Property Act provides in part:- " (1) All acts, powers, and rights which may be done or exercised by the mortgagee or chargee of an estate in land in relation to the estate of the mortgagor or charger of the estate may, when the mortgage of, or charge on, the estate is subject to a mortgage, be done or exercised by the mortgagee of the mortgage or charge, and shall not be done or exercised by the mortgagee or chargee of the estate." 113A submission was made by counsel for the applicant that the Deed of Assignment was a sham. However, this submission depended on the submissions that the purported assignment was really a mortgage of the mortgage and that there was no evidence that any moneys had been advanced by McMillan Investment to Santai and I have rejected both of these submissions. 114Mr Robert McMillan's affidavit to which I have referred convincingly refutes that the assignment was merely a sham. 115I hold that, beyond any reasonable argument, there was an effective assignment by Santai to the plaintiff of its right, title and interest in the loan agreement and the mortgage. 7. Was Beach Coast validly appointed as trustee of the Trust 116It was strongly argued by counsel for the plaintiff and counsel for the defendant that the purported removal on 3 September 2009 of North Coast Beach as the trustee of the Trust by Barbara McMillan acting as appointor and the purported appointment by her on 3 September 2009 of Beach Coast as the new trustee of the Trust were invalid. 117Under clause 14.1(b) of the Trust Deed the appointor for the time being was given power to appoint a new trustee in place of or in addition to any existing trustee. 118However, it was submitted that the power of an appointor to remove a trustee or appoint a new trustee is a fiduciary power to be exercised for the benefit of the beneficiaries of the Trust. It was submitted that the purported exercise by Barbara McMillan of the power to remove a trustee and to appoint a new trustee had been made for the improper purpose, not of benefiting the only beneficiary of the Trust (the Australian Red Cross NSW), but of benefiting persons who were not beneficiaries of the Trust, namely Mrs McMillan and her children. 119As to the proper exercise of the power of an appointor to appoint or remove the trustee of the trust, counsel referred to Re Skeat's Settlement (1889) 42 Ch D 522 and Scaffidi v Montevento Holdings Pty Limited [2011] WASCA 146. 120If the submission that Beach Coast was not validly appointed as a trustee of the Trust was accepted, then that would be a fatal objection to Beach Coast's application to be joined as a party in the present proceedings, because Beach Coast would not have standing to complain about an alleged breach of trust by a previous trustee of the Trust. 121However, I do not consider that this issue is suitable for determination in an application of the present kind and, having regard to my determination of other issues, it is unnecessary to determine it. 122Counsel for the plaintiff and counsel for the defendant also submitted that there had not been any valid determination that Mrs McMillan should be a beneficiary of the Trust. I consider that this issue also need not be decided in the present application. Default 123I did not include in my statement of the principal issues the issue of whether default had occurred under the mortgage so as to give rise to an entitlement in the plaintiff to possession of the property under clause 17 of the annexure to the mortgage. 124In paragraph 15 of the statement of claim it was alleged that a number of breaches of clause 4 of the annexure to the mortgage containing covenants by the mortgagor had occurred, thereby entitling the mortgagee to exercise the powers set out in clause 17 of the annexure to the mortgage, including the power of entering into possession of the property (clause 17(c)(iii)). 125It was also alleged in paragraph 15(e) of the statement of claim that, by reason of a number of events which were particularised in paragraph 15(e), in the mortgagee's opinion there had been a deterioration in the mortgagor's financial position whereby the mortgagor's ability to meet its obligations under the mortgage was materially adversely affected, which by clause 17(b)(ix) of the annexure to the mortgage was an instance of default under the mortgage. 126Paragraph 15 of the statement of claim was not disputed by the defendant. Paragraph 15 of the statement of claim was denied in the draft defence on behalf of the applicant. 127At the hearing little, if any, attempt was made by counsel for the applicant to challenge the plaintiff's case that breaches of the mortgage had occurred and that the instance of default in clause 17(b)(ix) of the annexure to the mortgage had occurred. 128I am satisfied on the evidence that breaches of clause 4 of the annexure to the mortgage occurred and that the instance of default in clause 17(b)(ix) of the annexure occurred. To mention only one particular of the instance of default within clause 17(b)(ix), it is clear that the financial position of the mortgagor had deteriorated by the time the statement of claim was filed, with the accumulation of interest on the loan, the absence of any reduction in the principal amount of the loan and the reduction in the value of the property, as shown by a valuation. Conclusion 129These are proceedings for possession of a property brought by a mortgagee against a mortgagor in default. The applicant was not joined as a party and joinder of the applicant as a party was opposed by both the existing parties. The applicant does not claim to have been at any time an occupier of the property or any part of it. I do not consider that the applicant is a person who ought to have been joined as a party. I have held that there is no matter genuinely in dispute such that the joinder of the applicant as a party would be necessary for the determination of a matter genuinely in dispute. 130Accordingly, I dismiss the applicant's application and make an order that the applicant pay the costs of the application of the plaintiff and of the defendant.