Merrell Associates Ltd v HL (Qld) Nominees Pty Ltd - [2010] SASC 155

SUPREME COURT OF SOUTH AUSTRALIA
(Full Court)
MERRELL ASSOCIATES LTD v HL (QLD) NOMINEES PTY LTD
[2010] SASC 155
Judgment of The Full Court
(The Honourable Justice Nyland, The Honourable Justice Gray and The Honourable Justice Vanstone)
28 May 2010
REAL PROPERTY - TORRENS TITLE - INDEFEASIBILITY OF TITLE
REAL PROPERTY - GENERAL PRINCIPLES - REGISTRATION - WHAT IS CAPABLE OF REGISTRATION
SUPERANNUATION - INDUSTRY REGULATION
CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - CONSIDERATION - FAILURE OF CONSIDERATION
CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - ILLEGAL AND VOID CONTRACTS
EQUITY - GENERAL PRINCIPLES - MISTAKE - EFFECT ON CONTRACTS
EQUITY - GENERAL PRINCIPLES - REMEDIES AND PROCEDURE - FRAUD OR MISREPRESENTATION AS A DEFENCE OR ANSWER
Appeal from decision of Judge of Supreme Court against decision that a second mortgage over two certificates of title was valid and binding and that a priority agreement relating to those titles was enforceable - whether second mortgagee's title indefeasible - whether second mortgage validly vested - whether contended irregularity in registering mortgage invalidated registration - whether the conferral of legal title pursuant to section 69 of the Real Property Act 1886 (SA) inconsistent with provisions of the Superannuation (Industry) Supervision Act 1993 (Cth) and invalid pursuant to operation of section 109 of the Constitution - whether overall contractual arrangement frustrated - whether there had been a common mistake of such a nature that the transaction was not enforceable - whether priority agreement valid and enforceable - whether legally sufficient consideration passed in relation to the grant of priority - whether respondent, a third party beneficiary to the transaction, had standing to sue on the priority agreement - whether respondent could enforce rights under the priority agreement pursuant to the provisions of the Property Law Act 1974 (Qld) - whether priority agreement unenforceable as a consequence of frustration and common mistake.
Held: appeal dismissed - second mortgage valid and binding and priority agreement enforceable - the matters complained of were appropriately considered by the Judge.
Real Property Act 1886 (SA) s 54, s 68, s 69 and s 115A; Superannuation Industry (Supervision) Act 1993 (Cth) s 133 and s 138; Trustee Act 1936 (SA); Commonwealth Constitution (Cth) s 109; Property Law Act 1974 (Qld) s 55, referred to.
Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1988) 165 CLR 107, applied.
Coulls v Bagots Executor & Trustee Co Ltd (1967) 119 CLR 460, discussed.
Mayer v Coe [1968] 2 NSWR 747; Bank of South Australia Ltd v Ferguson (1998) 192 CLR 248; Farah Constructions Pty Ltd & Ors v Say-Dee Pty Ltd (2007) 230 CLR 89; Attorney-General (Vic) v Commonwealth (1962) 107 CLR 529; Viskauskas v Niland (1983) 153 CLR 280; Ex parte McLean (1930) 43 CLR 472; R v Brisbane Licensing Court; ex parte Daniell (1920) 28 CLR 23; Colvin v Bradley Brothers Pty Ltd (1943) 68 CLR 151, considered.

MERRELL ASSOCIATES LTD v HL (QLD) NOMINEES PTY LTD
[2010] SASC 155
Full Court: Nyland, Gray and Vanstone JJ

NYLAND J: I agree that the appeal should be dismissed for the reasons expressed by Gray J.
GRAY J.
This appeal raises issues concerning the indefeasibility of title with respect to a second mortgage over two certificates of title under the Real Property Act 1886 (SA) and the enforceability of a priority agreement relating to those titles.
Introduction
At a time of financial difficulty for the Harts Group of companies, a subsidiary within the group, Jobera Pty Ltd, made an in specie contribution to Harts Staff Superannuation Pty Ltd, the corporate trustee of the superannuation fund for employees within the group. The in specie contribution was made by way of the transfer of a second mortgage over real property in rural South Australia. The second mortgage extended over two certificates of title.
At the same time, arrangements were made for the holder of the first mortgage, Merrell Associates Ltd, a defendant and the appellant herein, to grant priority to the second mortgage. There was no direct legal relationship between Merrell Associates and any member of the Harts Group. However it appears that the people behind the corporate structures were known to each other.
Following the collapse of the Harts Group, Harts Staff Superannuation was replaced as trustee by HL (QLD) Nominees Pty Ltd, the plaintiff in the within proceedings and the respondent to this appeal. A vesting order was made under the Superannuation Industry (Supervision) Act 1993 (Cth).
On 5 June 2009 following a trial, a Judge of this Court made a declaration that the second mortgage, registered under the Real Property Act 1886 (SA), was valid and binding. Consequential declarations and orders were made. This appeal is from those declarations and orders.
On 17 April 2003, HL (QLD) made application to the Registrar-General of South Australia to note vesting and in particular to register HL (QLD) as the proprietor of the second mortgage with respect to both certificates of title. The application was in the following terms:
APPLICATION TO NOTE VESTING
(Pursuant to s115a of the Real Property Act 1886)
TO:    The Registrar-General
WHEREAS
1.HARTS STAFF SUPERANNUATION PTY LTD ACN 073 447 079 (“Harts”) a body corporate registered under the Corporations Law is at the date of this application registered under the provisions of the Real Property Act 1886 (“the RPA”) as the proprietor of the estate or interest in land which is described in the Schedule hereto (“the estate or interest”).
2.HL (QLD) NOMINEES PTY LTD ACN 098 522 037 (“HL”) is a body corporate registered under the Corporations Law.
3.By virtue of an Appointment of Acting Trustee order made by William Maston Gole, a delegate of the Australian Prudential Regulation Authority, under section 134(2) of the Superannuation Industry (Supervision) Act 1993 HL was appointed as Acting Trustee of the Harts Australia Staff Superannuation Fund (“Fund”). The appointment is evidenced by the Appointment of Acting Trustee order, a copy of which is attached hereto.
4.By virtue of a Property Vesting Order made by William Maston Gole, a delegate of the Australian Prudential Regulation Authority, under section 138(1) of the Superannuation Industry (Supervision) Act 1993 the property of the Fund was vested in HL. The property vesting is evidenced by the Property Vesting Order, a copy of which is attached hereto.
5.The assets of the Fund referred to above include the estate or interest.
6.As a consequence of the provisions of the Superannuation Industry (Supervision) Act 1993 HL is entitled to be registered as the proprietor of the estate or interest.
7.Section 115a of the RPA provides, inter alia, that where the Registrar-General is satisfied that by operation of law any land has become vested, either for an estate in fee simple or for a lesser estate, in a body corporate, the Registrar-General may register that body corporate as the proprietor of the estate or interest so vested.
NOW THEREFORE HL (QLD) Nominees Pty Ltd ACN 098 522 037 of Level 26, 345 Queen Street, Brisbane Qld 4000 APPLIES pursuant to s115a of the RPA to be registered as proprietor of the said estate or interest.
DATED this        17[1] day of April[2] 2003.
[Execution clause]
SCHEDULE
An estate or interest as mortgagee under and by virtue of Memorandum of Mortgage No. 9189316 registered over the whole of the land comprised and described in Certificates of Title Register Books Volume 5316 Folio 674 and 5291 Folio 876.
[1]    Handwritten in original.
[2]    Handwritten in original.
The Registrar-General acceded to the application and HL (QLD) was registered as proprietor of the second mortgage on the two certificates of title. The endorsements to both titles are relevantly identical.
The following appears on the Register with respect to Certificate of Title Volume 5316 Folio 674:
REGISTER SEARCH OF CERTIFICATE OF TITLE * VOLUME 5316 FOLIO 674 *

COST        : $16.80 (GST exempt )

REGION       : EMAIL

AGENT     : AUGS     BOX NO : 684

SEARCHED ON : 19/03/2008 AT : 16:18:05

CLIENT REF 03091688

PARENT TITLE

AUTHORITY

DATE OF ISSUE

EDITION

: CT 3145/96

: CONVERTED TITLE

: 04/01/1996

: 3

REGISTERED PROPRIETOR IN FEE SIMPLE
JOBERA PTY. LTD. OF LEVEL 8/171 GEORGE STREET BRISBANE QLD 4000
DESCRIPTION OF LAND
ALLOTMENT 93 FILED PLAN 168218
IN THE AREA NAMED KADINA
HUNDRED OF WALLAROO
EASEMENTS
NIL
SCHEDULE OF ENDORSEMENTS

8021269

9189314

9189315

9189316

9597989

MORTGAGE TO PERPETUAL TRUSTEES AUSTRALIA LTD.

TRANSFER OF MORTGAGE 8021269 TO CARDINAL FINANCIAL

SECURITIES LTD.

TRANSFER OF MORTGAGE 8021269 TO MERRELL ASSOCIATES LTD.

MORTGAGE TO HARTS STAFF SUPERANNUATION PTY. LTD.

VESTING OF MORTGAGE 9189316 IN HL (QLD) NOMINEES PTY. LTD.

NOTATIONS
DOCUMENTS AFFECTING THIS TITLE
NIL
REGISTRAR-GENERAL'S NOTES
PLAN FOR LEASE PURPOSES GP 307/01

The Judge concluded that HL (QLD) had obtained an indefeasible title to the second mortgage over the two certificates of title: [3]
[3]    HL(Qld) Nominees Pty Ltd v Jobera Pty Ltd & Anor [2009] SASC 165 at [134]-[137].
It is apparent from these cases that indefeasibility of title overrides technical requirements of the documentation leading to the registration, including failure to properly execute, or even in some cases the forgery of a signature.[4] Therefore, Qld Nominees’ primary argument that indefeasibility applies on the face of the Certificate of Title absent of fraud, dishonesty, moral turpitude or personal equity, is a very strong one.
[4]    Mayer v Coe [1968] 2 NSWR 747.
Qld Nominees further submits that there has been no allegation by either of the defendants in this case of dishonesty or moral turpitude which would amount to fraud in the way that the cases on indefeasibility have discussed.
There is no pleading as to fraud made by either defendant. There is no pleading nor any argument put by Jobera as to any dishonesty or moral turpitude by HSS, nor indeed by any party to the overall transaction, including the parties to the Second Mortgage. Similarly, there is no such claim or submission made by Merrell, save for the allegation of alleged misrepresentation pursuant to the TPA. I will discuss this claim of misrepresentation later in these reasons. However, I indicate at this point my conclusion that the allegations made by Merrell as to misrepresentations, which include innocent misrepresentations, are not of a character such that it would defeat the registered interests noted on the Certificate of Title. Further, as discussed later, the arguments relating to common mistake and frustration are alleged to have occurred without any fault by the parties. As a consequence, no issues of fraud, dishonesty or moral turpitude arise.
Therefore, prima facie, the registered interests noted on the Certificate of Title attract indefeasibility.
The Judge further concluded that HL (QLD) had priority over the first mortgage held by Merrell Associates. As a consequence, the Judge made the following declarations and orders:[5]
A declaration that Mortgage No 9189316 registered on Certificates of Title Volume 5316 Folio 674 and Volume 5291 Folio 876 is a valid and binding Mortgage and enforceable according to its terms.
A declaration that Mortgage No 9189316 on Certificates of Title Volume 5316 Folio 674 and Volume 5291 Folio 876 became vested in HL (Qld) Nominees Pty Ltd, which vesting is validly registered on the said Certificates of Title by instrument No 9597989.
A declaration that the Priority Agreement dated 27 July 2001 is valid and binding on the parties in accordance with its terms. Further that HL (Qld) Nominees Pty Ltd is entitled to have Mortgage No 9189316 registered on Certificates of Title Volume 5316 Folio 674 and Volume 5291 Folio 876, and given priority over Mortgage No 8021269 which was transferred to Merrell Associates and registered by instrument No 9189315.
A declaration that Qld Nominees is entitled pursuant to s 137 of the Real Property Act 1886, to enter into possession of the land contained in Certificates of Title Volume 5316 Folio 674 and Volume 5291 Folio 876.
An injunction restraining Jobera Pty Ltd and/or Merrell Associates Ltd from dealing with the land comprised in Certificates of Title Volume 5316 Folio 674 and Volume 5291 Folio 876.
The Appeal – The Second Mortgage
[5]    HL(Qld) Nominees Pty Ltd v Jobera Pty Ltd & Anor [2009] SASC 165 at [385].
Indefeasibility of Title
In resisting the appeal HL (QLD) contended before this Court, as it had at trial, that its title, as second mortgagee, over both certificates of title referred to above, was indefeasible. Attention was drawn to the relevant provisions of the Real Property Act:
Section 68:
The person named in or appearing by any certificate or other registered instrument as seized of or taking any estate or interest in land shall be the registered proprietor thereof.
Section 69:
The title of every registered proprietor of land shall, subject to such encumbrances, liens, estates, or interests as may be notified on the original certificate of such land, be absolute and indefeasible, subject only to the following qualifications:
Fraud
in the case of fraud, in which case any person defrauded shall have all rights and remedies that he would have had if the land were not under the provisions of this Act: Provided that nothing included in this subsection shall affect the title of a registered proprietor who has taken bona fide for valuable consideration, or any person bona fide claiming through or under him;
…
HL (QLD) submitted, as it had at trial, that the registered second mortgage could only be challenged through an allegation of fraud and that no such allegation had been advanced at trial or at any other time. In these circumstances, it was contended that the declarations and orders made by the Judge were unassailable.
For the purposes of section 69, fraud means actual fraud, personal dishonesty or moral turpitude on the part of the person whose title is sought to be impugned. As observed by the High Court in Bank of South Australia Ltd v Ferguson:[6]
[6] Bank of South Australia Ltd v Ferguson (1998) 192 CLR 248 at 255-256.
As we have indicated, within the meaning of the Act, the bank was the registered proprietor of the mortgage. In its terms, s 69I required identification of the rights and remedies which, as a person “defrauded”, Mr Ferguson would have had if the land were not under the provisions of the Act. The legislation thus recognises the principle, propounded in an established line of cases dealing with Torrens system legislation, that an equity arising from the conduct of a registered proprietor before or after registration may be enforced against that registered proprietor notwithstanding the indefeasibility of registered titles.
Section 69I operates to qualify the general principle of indefeasibility only if the case answers the statutory description of “fraud”. Not all species of fraud which attract equitable remedies will amount to fraud in the statutory sense. The distinction may be illustrated as follows. In some circumstances, equity subjects the interest of a purchaser of unregistered land to an antecedent interest of which the purchaser has notice. However, in respect of land to which the Act applies, registration of a transfer is not fraudulent in the statutory sense required to qualify the operation of the doctrine of indefeasibility, merely because the transferee knows that registration will defeat an antecedent unregistered interest of which the transferee has notice.
The points of significance for the present litigation are that (i) statutory fraud embraces less, not more, than the species of fraud which, at general law, founds the rescission of a conveyance; and (ii) statutory fraud is not itself directly generative of legal rights and obligations, its role being to qualify the operation of the doctrine of indefeasibility upon what would have been the rights and remedies of the complainant if the land in question were held under unregistered title.
[Footnotes omitted]
These observations were applied by the High Court in Farah Constructions Pty Ltd & Ors v Say-Dee Pty Ltd:[7]
Fraud. “Fraud” in s 42(1) means “actual fraud, moral turpitude”. The findings above negate actual fraud or moral turpitude not only on the part of Mrs Elias and her daughters, but also on the part of Mr Elias; and Lesmint is in the same position as Mr Elias. Even if the Court of Appeal’s factual findings about disclosure were not reversed, Mr Elias’ non-disclosures cannot be described as amounting to “actual fraud”, and the other parties are in no worse position.
In personam exception. An exception operating outside the language of s 42(1) can exist in relation to certain legal or equitable causes of action against the registered proprietor. So far as Say-Dee was relying on Barnes v Addy, it was certainly alleging a recognised equitable cause of action. In Macquarie Bank Ltd v Sixty-Fourth Throne Pty Ltd, Tadgell JA (Winneke P concurring, Ashley AJA dissenting) held that a claim under Barnes v Addy was not a personal equity which defeated the equivalent of s 42(1) in Victoria, namely the the Transfer of Land Act 1958, s 42(1). Tadgell JA said (279):
“[H]ere it is not possible to escape the circumstance that, if there was a “knowing receipt” by the appellant, it was a receipt by virtue of registration under the Transfer of Land Act.”
He continued:
“The argument for the respondent appears to assume that the acquisition by a mortgagee, in that capacity, of a proprietary interest following registration of a forged instrument of mortgage in respect of property that is subject to a trust amounts to a receipt by the mortgagee of trust property. If it were so, it might be possible to treat the holder of the registered proprietary interest as a constructive trustee arising from “knowing receipt” of trust property. As it seems to me, however, there is neither room nor the need, in the Torrens system of title, to do so. If registration of the mortgagee’s interest is achieved dishonestly then the registration, and with it the interest, are liable to be set aside not because, on registration, the registered holder became a constructive trustee but because s 42(1) recognises that fraud renders the interest defeasible. If, on the other hand, the registration is not achieved by fraud the Act provides, subject to its terms, for an indefeasible interest. Those terms allow, it is true, a claim in personam founded in equity against the holder of a registered interest to be invoked to defeat the interest; and a claim in personam founded in equity may no doubt include a claim to enforce what is called a constructive trust … [T]o recognise a claim in personam against the holder of a mortgage registered under the Transfer of Land Act, dubbing the holder a constructive trustee by application of a doctrine akin to “knowing receipt” when registration of the mortgage was honestly achieved, would introduce by the back door a means of undermining the doctrine of indefeasibility which the Torrens system establishes. It is to be distinctly understood that, until a forged instrument of mortgage is registered, the mortgagee receives nothing: before registration the instrument is a nullity. As Street J pointed out in Mayer v Coe … the proprietary rights of a registered mortgagee of Torrens title land derive “from the fact of registration and not from an event antecedent thereto”. In truth, I think it is not possible, consistently with the received principle of indefeasibility as it has been understood since Frazer v Walker and Breskvar v Wall, to treat the holder of a registered mortgage over property that is subject to a trust, registration having been honestly obtained, as having received trust property. The argument that the appellant is liable as a constructive trustee because it had “knowingly received” trust property should in my opinion fail.
[7] Farah Constructions Pty Ltd & Ors v Say-Dee Pty Ltd (2007) 230 CLR 89 at 169-170.

The earlier referred to application of HL (QLD) for the registration of the second mortgage on the two certificates of title, was a document in respect of which an entry in the register book was permitted. Both titles record the vesting of the second mortgage pursuant to the application by HL (QLD) to be registered as the proprietor of the second mortgage. HL (QLD) became the registered proprietor of the second mortgage.
By that registration, HL (QLD) obtained an indefeasible title to the second mortgage. This was as a consequence of the operation of sections 68 and 69 of the Real Property Act. This was subject only to rights and remedies, including in personam rights, in equity arising from fraud. There has not been at any relevant time an allegation of fraud. The registered second mortgage is indefeasible as against Merrell Associates.
Both at trial and on appeal, Merrell Associates submitted that there were a number of grounds on which the assertion of HL (QLD) that it was the holder of an indefeasible title to the second mortgage, could be challenged. In this respect the Judge observed:[8]
It follows generally then that the primary argument of Qld Nominees would be sufficient to defeat many of the defendants’ arguments. However, there are some further issues to consider, relating to whether there has been a valid vesting of the Second Mortgage in Qld Nominees as was registered on the Certificate of Title, as well as the meaning and effect of s 69 of the RPA in the circumstances of this case. There are also issues as to the status of the Priority Agreement which has not been registered on the Certificate of Title.
The Judge then proceeded to reject each of these challenges. I now turn to consider each of these challenges as advanced on appeal.
[8] HL(Qld) Nominees Pty Ltd v Jobera Pty Ltd & Anor [2009] SASC 165 at [138].
No Valid Vesting
Merrell Associates submitted that there had been no valid vesting of the second mortgage as a consequence of the operation of the Superannuation Industry (Supervision) Act.
Counsel for Merrell Associates submitted that the provisions of the Superannuation Industry (Supervision) Act had not been complied with because there was not a proper registration of the vesting of the second mortgage. Section 138 of the Superannuation Industry (Supervision) Act provides:
(1)     If a person is appointed as acting trustee, the Regulator must make a written order vesting the property of the entity concerned in the acting trustee.
(2)     If the appointment of the acting trustee comes to an end, the Regulator must make a written order vesting the property of the entity concerned in:
(a)     if there is to be a fresh acting trustee—the fresh acting trustee; or
(b)if the acting trustee acted during a period of suspension of the actual trustee and the suspension has come to an end—the actual trustee; or
(c)if the acting trustee acted because of a vacancy in the position of actual trustee and the acting trustee’s appointment has come to an end because the vacancy in the position of actual trustee has been filled by a new actual trustee—the actual trustee.
(3)     If an order is made by the Regulator under this section vesting property of a superannuation entity in a person:
(a)if the property was vested in law in the trustee—subject to subsections (4) and (5), the property immediately vests in law in the person named in the order by force of this Act; and
(b)if the property was vested in equity in the trustee—the property immediately vests in equity in the person named in the order by force of this Act.
(4)     If:
(a)the property is of a kind whose transfer or transmission may be registered under a law of the Commonwealth, of a State or of a Territory; and
(b)     that law enables the registration of such an order;
the property does not vest in that person at law until the requirements of the law referred to in paragraph (a) have been complied with.
(5)     If:
(a)the property is of a kind whose transfer or transmission may be registered under a law of the Commonwealth, of a State or of a Territory; and
(b)that law enables the person named in the order to be registered as the owner of that property;
the property does not vest in that person at law until the requirements of the law referred to in paragraph (a) have been complied with.
The Judge rejected Merrell Associates’ submission that no proper registration of the second mortgage had occurred, and reasoned:[9]
Interpolating the circumstances of this case into the application of s 138(3), I note that HSS, prior to the Property Vesting Order, was the registered proprietor of the Second Mortgage and therefore the property of the Fund vested in it in law. Accordingly, the written order of the Regulator that the Second Mortgage be vested in Qld Nominees, had the effect of immediately vesting the Second Mortgage in Qld Nominees in law subject to sub-ss (4) and (5). The vesting having been one of legal property, I must then consider whether the vesting complies with s 138(4) and (5).
Sections 138(4) and (5) of the SIS Act both commence in the same way. Namely, the first requirement for the application of both subsections is that the property is of a kind whose “transfer or transmission may be registered under a law of the Commonwealth, of a State or of a Territory”. Subsection (4) then goes on to say that the second requirement for application is that “the law enables the registration of [a vesting order]” and sub-s (5) states that the second requirement is that “the law enables the [acting trustee] to be registered as the owner of [the] property”.
The requirements for the application of both of the subsections do not require that the registration processes be mandatory. This is demonstrated by the references in the sections to circumstances in which a transfer or transmission “may” be registered and where the law “enables” registration. The effect of this terminology is that if there is the potential for the subject matter referred to in each of s 138(4) and (5) to be registered, then the property does not vest in law until that registration has been achieved. It does not necessarily have to be a circumstance in which the law of the Commonwealth, State or Territory compels the registration of the subject matter.
[9] HL(Qld) Nominees Pty Ltd v Jobera Pty Ltd & Anor [2009] SASC 165 at [209]-[211].
It should be said immediately that HL (QLD) did not rely on there being a valid vesting under the Superannuation Industry (Supervision) Act. The argument advanced by HL (QLD) was that the relevant vesting occurred through the noting of vesting under the Real Property Act. However, in any event, HL (QLD) contended that, if relevant, the submission of Merrell Associates was misconceived.
The effect of section 138 is that property which vests in a trustee of a fund, whether in law or equity, will automatically vest in an acting trustee, in law or equity respectively, upon the Regulator making a written order to that effect. However, if the property is vested in the original trustee in law, then the vesting order is subject to subsections (4) and (5). The effect of these subsections is that if the property is of a kind, such that its transfer may be registered under another Act, and if it is possible to either register the vesting order or to register the acting trustee as owner of that property, then the property will not vest in law until that registration has occurred. That is, prior to registration, the property will only vest in the acting trustee in equity.
In the present case the vesting, in accordance with section 138(4), occurred pursuant to the provisions of the South Australian Real Property Act.
Merrell Associates’ submissions assume that the title may be attacked on grounds that are simply not open; the title is indefeasible save for an attack as to fraud or the other matters set out in section 69 of the Real Property Act. There is no substance to this submission.
Section 115A, Real Property Act
Merrell Associates contended that there had been an inappropriate use of section 115A of the Real Property Act by HL (QLD) when applying to note vesting.[10] The Judge concluded that section 115A did not apply to the vesting of a mortgage:[11]
In my view the Application should not have been described as an “application pursuant to s 115A” of the RPA. Rather, the Application was solely an instrument to note that a second mortgage had been vested in equity in Qld Nominees. Qld Nominees sought to have that right registered on the title.
[10] Section 115A of the Real Property Act 1886 (SA) relevantly provided at the time:
115A—Issue of certificate where land is vested in acquiring authority by operation of law or compulsorily acquired
(1) In this section—
acquiring authority means the Crown in right of the Commonwealth or the State, and includes a body corporate or other person in which or in whom land is vested by operation of law or which or who is empowered or authorised by or under any law of South Australia or of the Commonwealth to acquire or take land compulsorily.
(2) Notwithstanding anything in this Act or any other law, where—
(a)the Registrar-General is satisfied that by operation of law or without the execution of any transfer, conveyance or other instrument or document, any land has become vested, either for an estate in fee simple or for a lesser estate, in any acquiring authority; and
(b)an appropriate application has been made in writing by the acquiring authority to the Registrar-General,
then,
(c)if the land is under the provisions of this Act, the acquiring authority shall, without the execution of any transfer, conveyance, or other instrument or document, or the production of any duplicate certificate or other instrument or document, be registered as the proprietor of such estate in the land by the registration and issue of a new certificate of title in the name of the acquiring authority as the registered proprietor of that estate in the land; and
(d)if the land is not under the provisions of this Act, the land shall, without any further or other application being made or the execution of any conveyance, transfer or other instrument or document or the publication of any notice or the production or examination of any documents of title whatsoever, be brought under the provisions of this Act, and a certificate of title for such estate in the land shall be registered and issued in the name of the acquiring authority as the registered proprietor.
[11] HL(Qld) Nominees Pty Ltd v Jobera Pty Ltd & Anor [2009] SASC 165 at [237].
It was said that the Judge was correct in concluding that section 115A was not “the correct vehicle” for registering the vesting of property. The Judge nevertheless went on to conclude that the mortgage was validly registered under the Real Property Act: [12]
[12] HL(Qld) Nominees Pty Ltd v Jobera Pty Ltd & Anor [2009] SASC 165 at [237]-[244].
Having found that the Application is no more than an instrument to note an interest in land, I turn my consideration to whether the Application, having been registered, nonetheless created a legal interest in land. The term “instrument” is defined in s 3(1) of the RPA as:
instrument shall mean and include every document capable of registration under the provisions of any of the Real Property Acts, or in respect of which any entry is by any of the Real Property Acts directed, required, or permitted to be made in the Register Book;
The definition of “instrument” makes specific reference to documents which may be “permitted” to be registered. It must be a document which would fulfil the objects of the RPA indicated in broad terms in s 10 of the RPA. Namely, to “facilitate dealing” with title to land and to “secure indefeasibility of title to all registered proprietors”.
A mortgage is an interest in land and the word “land” is broadly defined in s 3(1) as follows:
land shall extend to and include all tenements and hereditaments corporeal and incorporeal of every kind and description and every estate and interest in land.
Also, the words “registered proprietor” by virtue of s 68 of the RPA, refers to a registered proprietor of “any estate or interest in land”. A “mortgagee” is defined in s 3(1) of the RPA as “the registered proprietor of a mortgage”.
The fact that the Application was misdescribed as being an Application under s 115A of the RPA, does not invalidate or affect its registration. This can be seen from s 54 of the RPA, …
The Application was one which sought to have the vesting of the Second Mortgage in Qld Nominees noted on the register. This was an important transaction which affected the interest in land and it was important to register it in order to have the interest of Qld Nominees duly noted and to secure indefeasibility. Therefore the registration of the vesting of the Second Mortgage is a valid registration.
In summary, the Application was an appropriate application which could be made under the RPA and was encompassed by s 138(4) of the SIS Act being a law which enabled registration of that order. As a consequence, the property in the Second Mortgage did not vest in law in Qld Nominees until the registration of the Application had been noted on the title. It then vested in law and s 69 of the RPA rendered it to be absolute and indefeasible subject to any matters contained in s 69(a) to (e) or other dishonest dealings to which I have referred earlier in these reasons.
HL (QLD) did not directly address this issue on the appeal. Although issue has not been joined on the question of the suitability of section 115A as a vehicle for registration, the question should be reserved for further consideration on an occasion of full argument. As earlier observed, HL (QLD) did not place reliance on the provisions of the Superannuation (Industry) Supervision Act.
It is to be noted that section 54 of the Real Property Act provides:
(1) Subject to this Act, the Registrar-General shall not register any instrument purporting to transfer or otherwise deal with or affect any estate or interest in land under the provisions of this Act unless the instrument complies with this Act and is in a form approved by the Registrar-General.
(2) Notwithstanding anything in subsection (1) of this section, the Registrar-General may, in his discretion, register any instrument notwithstanding any error in or omission from its memorandum or endorsement of prior encumbrances and, in such case, the error or omission shall not invalidate or otherwise affect the registration of the instrument.
(3)Notwithstanding anything in subsection (1) of this section, where an instrument contains a patent error, the Registrar-General may of his own motion correct the error by marginal notation on the instrument, and the instrument so corrected shall have the like validity and effect as if the error had not been made.
In any event, even if this issue could give rise to an attack on indefeasibility, I agree with the Judge’s conclusion that the misdescription of the application being under section 115A would not operate to invalidate or affect the registration that followed.
The submission appears to do no more than suggest that because of a misdescription of a form, that the consequent registration of the second mortgage on the respective titles was void and of no effect. Such a submission seeks to elevate form over substance. In my view, if there was an error in the application it did not invalidate the subsequent registrations.
Section 109 – Inconsistency
Merrell Associates submitted that the provisions of the Superannuation (Industry) Supervision Act and in particular section 138(5), are inconsistent with section 69 of the Real Property Act and that in these circumstances there is an inconsistency between Commonwealth and State legislation such that to the extent that section 69 of the Real Property Act confers legal title, it does so in defiance of the Commonwealth statute, and is pro tanto, invalid.[13] It was claimed that this was an example of direct inconsistency of the kind adverted to by Dixon J in Attorney-General (Vic) v Commonwealth[14] and in particular, it was said that the operation of section 69 of the Real Property Act would alter, impair and detract from the operation of section 138(5) of the Superannuation (Industry) Supervision Act by conferring effectiveness on a document – the vesting order – without the prerequisites which the latter Act contemplates as necessary to achieve such effectiveness. It was contended that the Real Property Act would thus confer rights – in this case immediate legal title – which the Superannuation (Industry) Supervision Act in its terms withholds. It was then said that it is impossible to obey both laws in the sense that the Real Property Act confers legal title on HL (QLD) to the property in question by merely registering the vesting order without more, whilst the Superannuation (Industry) Supervision Act provides that HL (QLD) shall not obtain legal title merely by registering the vesting order, but rather must first comply with the requirements of the Trustee Act 1936 (SA) for the transmission of title to newly appointed trustees. It was claimed that when expressed in this way, the direct nature of the collision between the provisions was apparent. In effect Merrell Associates submitted that the inconsistency arises as consequence of the finding that the second mortgage is registered under the Real Property Act and thereby vested in law in HL (QLD) notwithstanding that the registration process under the Trustee Act had not been complied with.
[13] Section 109 Commonwealth Constitution.
[14] Attorney-General (Vic) v Commonwealth (1962) 107 CLR 529.
The Judge rejected this submission:[15]
The critical error in [the submission] is that it assumes that s 138 of the SIS Act requires compliance with Part 5 of the Trustee Act. I have already found that Part 5 of the Trustee Act does not apply in relation to s 138(4) of the SIS Act. In my view the result is also applicable to s 138(5) of the SIS Act, albeit that that sub‑section is differently worded from s 138(4).
As I have said, ss 75 to 77 of the Trustee Act create a system of registration of the appointment of new trustees, not a method of registration of the transfer or transmission of property.
Further, the sections of the Trustee Act are not provisions which enable a person named in a property vesting order to be registered as the owner of that property. Instead, it is a facultative provision which enables new trustees upon registration of the memorandum of their appointment, to be vested in the estate and interest of the old trustees. The Trustee Act itself does not vest real estate property in the new trustees and enable them by virtue of ss 69 and 77 of the RPA to have indefeasibility of title.
Therefore, there is no need to comply with the Trustee Act in order for property to vest under s 138(4) or (5).
It is apparent that, having reached this conclusion, the inconsistency complained of by Merrell is defeated. It is not inconsistent for property to attract indefeasibility under s 69 of the RPA and at the same time not to have been associated with a registration of trustee appointment under the Trustee Act. Sections 138(4) and (5) of the SIS Act and the provisions of the Trustee Act have different spheres of operation and it cannot be submitted that there can be no vesting of property under the SIS Act until such time as Qld Nominees has already been vested with the real property pursuant to the Trustee Act.
It would therefore seem, as indeed counsel for Qld Nominees submitted, that the submission of Merrell is not so much an inconsistency between the provisions of a Commonwealth Act and a State Act, but rather an inconsistency between the provisions of two State Acts, namely the Trustee Act and s 115A of the RPA. That is not a matter which enlivens the operation of s 109 of the Constitution. There is, in my view, no inconsistency between the provisions in s 138(4) or (5) of the SIS Act and s 115A of the RPA.
I therefore reject that there is any inconsistency as alleged. Qld Nominees is the registered proprietor of the Second Mortgage. There is no argument that there has been fraud or any matter which would defeat the title to that interest. The registration of Qld Nominees as being the registered proprietor of the Second Mortgage is not inconsistent with any provision of the SIS Act.
[15] HL(Qld) Nominees Pty Ltd v Jobera Pty Ltd & Anor [2009] SASC 165 at [268]-[274].

Section 109 of the Constitution provides that:
When a law of a State is inconsistent with a law of the Commonwealth, the latter shall prevail, and the former shall, to the extent of the inconsistency, be invalid.
Generally, a State law will be held to be inconsistent with a Commonwealth law for the purposes of section 109 of the Constitution on one of three bases: that the Commonwealth law evinces an intention to “cover the field” on a particular topic to the exclusion of any State legislation;[16] that there is some direct inconsistency between the relevant provisions in the sense that it is impossible to obey both laws;[17] or, that a State law prohibits something which is expressly or impliedly permitted by a Commonwealth law.[18]
[16]Viskauskas v Niland (1983) 153 CLR 280; Ex parte McLean (1930) 43 CLR 472.
[17]R v Brisbane Licensing Court; ex parte Daniell (1920) 28 CLR 23.
[18] Colvin v Bradley Brothers Pty Ltd (1943) 68 CLR 151.
Properly construed, section 138(5) of the Superannuation (Industry) Supervision Act works in harmony with section 69 of the Real Property Act, not in conflict with it. It is the fact of registration which constitutes compliance with the Superannuation (Industry) Supervision Act, not the means by which that registration is obtained. This follows for several reasons. The language of subsections (a) and (b) of section 138(4) and (5) of the Superannuation (Industry) Supervision Act is directed to the obtaining of registration in respect of property where local legislation enables that to occur. Next, section 138(4) and (5) are compendious provisions. They are not directed to the particular requirements of specific other legislation, such as the Trustee Act. They are, rather, directed to legislation which has the particular effect of enabling registration. Finally, the object of Part 17 of the Superannuation (Industry) Supervision Act[19] would be defeated if it were to be construed as requiring registration to be obtained in a particular form. The evident object of that Part is to ensure the protection of trust property and notification of change of ownership on the appointment of an alternative trustee.
[19] See, in particular, section 133(1)(b)of Superannuation (Industry) Supervision Act1993 (Cth).
I consider that the Judge was correct to conclude that HL (QLD) was not required to comply with the provisions of Part 5 of the Trustee Act in order for the second mortgage to vest in law in HL (QLD) pursuant to section 138(3) of the Superannuation (Industry) Supervision Act. The Judge correctly construed the Trustee Act as being legislation directed to the registration of the appointment of new trustees and the statutory vesting in them of trust property. This is to be contrasted with sections 138(4) and (5) of the Superannuation (Industry) Supervision Act, which are concerned with registration of a transfer or transmission of property.
In this respect, the Judge observed:[20]
…The subject matter of what is capable of registration under the Trustee Act and what is required to be registered by virtue of s 138 of the SIS Act is different. The effect of the registration of a new trustee under the Trustee Act is certainly that property will vest in that trustee, but it is not a transfer of property nor a vesting order that is being registered.
The Judge further correctly concluded that the Superannuation (Industry) Supervision Act was complied with by registration of the application in accordance with the Registrar-General’s power to do so under the Real Property Act.
[20] HL(Qld) Nominees Pty Ltd v Jobera Pty Ltd & Anor [2009] SASC 165 at [216].
As the Judge observed, the submissions of Merrell Associates did not identify any relevant inconsistency between the Superannuation (Industry) Supervision Act and the Real Property Act, but rather alleged an inconsistency between the provisions of two State Acts. That is not a matter which enlivens the operation of section 109 of the Constitution. There is no inconsistency within the meaning of section 109 of the Constitution.
Frustration – Common Mistake
Merrell Associates submitted that the entire contractual arrangement was frustrated as the Commissioner of Taxation and the Prudential Regulator were not prepared to accept the in specie contribution as a valid contribution to a superannuation fund. It was contended that this was the very purpose of the arrangement and that the non-acceptance led to the inevitable conclusion that the whole transaction was unenforceable. Even if correct, this would not, in my opinion, form a basis for contending that the title was not indefeasible.
The Judge in rejecting this submission observed that frustration, in the absence of fraud or dishonesty, could not defeat the indefeasibility of title. However, the Judge went further. The Judge was not prepared to make a finding that the object and purpose of the transactions was to make an acceptable and effective contribution to Harts Staff Superannuation in accordance with the legislative requirements. The Judge was not satisfied that such an outcome was a fundamental concern, and in particular, noted that the arrangement was to ensure the best outcome for members by the placement of an asset into the superannuation fund.
When addressing the same submission with respect to the priority agreement, the Judge rejected the contention that the first mortgagee, Merrell Associates, was concerned with compliance with the particular statutory regime. It was pointed out, that there were five linked agreements and that the argument advanced was that frustration would only affect two of the five agreements. The Judge doubted whether the doctrine of frustration could operate in such a way. Finally, the Judge emphasised that there were different parties to each of the five agreements and doubted whether in these circumstances the doctrine of frustration could apply.
Similar submissions were made asserting that there had been a common mistake of such a nature that the transaction was not enforceable. It was said that the common assumption made by the parties was a mistake, as the in specie contribution was not ultimately effective. The Judge noted the close correlation of the concepts of common mistake and frustration and adopted similar reasoning to that referred to above in rejecting the contention. Importantly, the Judge was not prepared in any event to make a finding that there had in fact been a common mistake.
A review of the evidence confirms that the Judge’s findings were open on the evidence. Further, my review confirms that they were the appropriate findings. In any event, frustration or common mistake could not be raised to defeat indefeasibility.
The Appeal - The Priority Agreement
The priority agreement entered into by Merrell Associates giving priority to the second mortgage, was not registered. The Judge concluded that the Real Property Act allowed for registration of a priority agreement and observed that had there been registration, the priority agreement would have had the protection of section 69 of the Real Property Act.
The Judge following a careful analysis of the evidence made the finding, not challenged on appeal, that the priority agreement was executed by Merrell Associates prior to the transfer of the first mortgage to Harts Staff Superannuation. In these circumstances, the Judge concluded that it would amount to a fraud for Merrell Associates to deny that HL (QLD) had a right to have its second mortgage rank above the first mortgage:[21]
…I have already found that the Priority Agreement is valid. In addition, Merrell’s denial of the existence of the Priority Agreement is a recent development that has occurred subsequent to registration of the Second Mortgage. Clearly at the point of signing the priority agreement Merrell considered the document to have some effect. Similarly the ultimate purchaser’s denial of the enforceability of the right in Bahr was a development that occurred subsequent to registration. It is not the case that a party who has undertaken to recognise an unregistered right can circumvent the rule in Bahr simply by subsequently denying both the enforceability of, and the existence of, that unregistered right, rather than merely denying the former.
I consider that there is a valid and indefeasible Second Mortgage vested in Qld Nominees, which mortgage had previously been registered in the name of HSS, as endorsed on the Certificate of Title. The Second Mortgage was subject to a valid though unregistered Priority Agreement prioritising the Second Mortgage above the First Mortgage. Merrell, in registering the First Mortgage, knew of the existence of this Priority Agreement and had assented to its terms. Therefore a denial of the Priority Agreement would be a fraud within the meaning of s 69 of the RPA.
[21] HL(Qld) Nominees Pty Ltd v Jobera Pty Ltd & Anor [2009] SASC 165 at [309]-[310].
On appeal, counsel for Merrell Associates accepted that, if the priority agreement was a valid and enforceable agreement, this conclusion of the Judge was correct.
The priority agreement relevantly provided:
THIS AGREEMENT made the 27[22] day of JULY 2001[23]
[22] Handwritten in original.
[23] Handwritten in original.
BETWEEN:        MERRELL ASSOCIATES LIMITED (called “Mortgagee”)
ANDHARTS STAFF SUPERANNUATION PTY LTD ACN 073 447 079 (called “Harts”)
RECITES:
1.JOBERA PTY LTD ACN 067 129 248 (called “Mortgagor”) a mortgage registered no. 8021269 in South Australia, (called “the Mortgagee Security”) over real property described in it to secure repayment of loans, advances, credits or financial accommodation referred to in it together with interest and other moneys mentioned in it and the Mortgagee is the present holder of the benefit of such Mortgage.
2.The Mortgagor also executed another security (being a Mortgage) dated the 27^th day of July 2001 (called “the Subsequent Security”) over that property in favour of Harts to secure repayment to of [sic] a loan together with interest and other moneys as mentioned in the Subsequent Security.
3.Harts and the Mortgagee enter into this Agreement to maintain an agreed order of priority as between the Mortgagee Security and the Subsequent Security.
IN CONSIDERATION of their Agreement Harts and the Mortgagee mutually agree and declare between them:
1.In order of priority as between the Mortgagee Security and the Subsequent Security for the moneys secured respectively by them shall be:
FIRSTLYThe Subsequent Security and all moneys from time to time secured by it to the extent of a maximum principal sum of NINE HUNDRED THOUSAND DOLLARS ($900,000.00) and all interest on it (whether capitalised or not) and all customary and other charges, costs, expenses or outlays which Harts may from time to time be entitled to debit and charge under the provisions of the Subsequent Security.
SECONDLY(after satisfaction of the first priority). The Mortgagee Security and all moneys from time to time secured by it remaining unpaid.
2.(No Marshalling) Neither Harts nor the Mortgagee may require the other of them to resort to any other security or right that the other may hold from any person before it has recourse to its security.
3.(Obligations Secured) Each security may secure (among other things) running accounts, continuing and varying obligations from time to time undertaken by Harts and the Mortgagee under their respective securities, and other continuing and varying obligations including contingent obligations of the Mortgagor to each of them under those securities.
4.(Matters Not Affecting Liability) The priorities now established apply despite:
·    the dates of execution and registration of the securities;
·    Harts or the Mortgagee having notice of the other’s security or the date of that notice;
·    the dates on which money is advanced or deemed to be advanced, or becomes owing or payable under a security;
·    the repayment from time to time of any money secured by the securities;
·    the amount secured by a security fluctuating and in particular being reduced and subsequently increased;
·    the re-lending or re-advancing of money, the lending or advancing of additional money or the furnishing of further financial accommodation, secured by a security;
·    the partial discharge or release of a security or the receipt of money by Harts or the Mortgagee in consideration of that partial discharge or release;
consideration of that partial discharge or release; [sic]
·    any amount secured by a security being a contingent liability;
·    a security being or becoming at any time and for any reason wholly or partly invalid or unenforceable;
or
·    anything contained in the securities or any rule of law or equity to the contrary.
[Execution clauses follow]
…
In my view the priority agreement was valid and enforceable. It was an agreement reached between the parties reduced to writing and appropriately executed. In these reasons I dismiss each of the complaints with respect to the Judge’s conclusions as to its enforceability.
As earlier mentioned, the priority agreement was not registered and as a consequence does not directly attract the protection of section 69 of the Real Property Act. However, as ultimately found by the Judge, section 69 of the Real Property Act still operates against Merrell Associates as its denial that the second mortgage ranks in priority above the first mortgage constitutes a fraud for the purposes of section 69.
No Consideration
Merrell Associates contended that no consideration passed with respect to the granting of priority. The same contention was advanced at trial. The Judge rejected this submission and found that there was a legally sufficient consideration.
The consideration for the priority agreement as expressed in the instrument is stated to be “In consideration of their Agreement Harts and the Mortgagee [Merrell] mutually agree…” In finding that there was good consideration, the Judge first relied on her earlier findings to the effect that “the Agreement” was a reference to the wider agreement reached by the entities involved, and the priority agreement formed part of an overall transaction as to the restructure of the securities which included the loan agreement: [24]
Of course, a promise by one party to enter into an agreement cannot be legal consideration for the agreement itself or else the definition of consideration would be circular. Thus if the words “their Agreement” were to mean merely agreement as to the Priority Agreement, this would not be good consideration. However, for reasons which I have previously expressed … the expression “their Agreement” is a reference to the wider agreement reached … which encompasses the Second Mortgage and the prioritisation of that mortgage. In addition, for reasons which I have also expressed …, the Priority Agreement forms part of an overall transaction as to the restructure of the securities. In particular it includes the Loan Agreement.
[24] HL(Qld) Nominees Pty Ltd v Jobera Pty Ltd & Anor [2009] SASC 165 at [280].
The Judge continued with the following analysis:[25]
As to whether the Priority Agreement fails for want of consideration received by Merrell, the answer does not rely solely upon the terms of the Priority Agreement, but with that agreement in combination with the terms of the Loan Agreement with which it is expressly connected.
Paragraph 5(iii) of the “Special Provisions” of the Loan Agreement specifically refers to the condition that there be a prioritisation of the Second Mortgage over the First Mortgage. The Loan Agreement is the instrument which articulates the consideration given to Merrell. The overall transaction was a commercial arrangement entered into whereby Merrell agreed to extend the time for the repayment of $900,000 of the First Mortgage for a period of two years and to do so at an interest rate of 9 per cent with a penalty interest of 11 per cent. The balance of the First Mortgage, namely $300,000, was still subject to the terms of the First Mortgage. The consideration received by Merrell was that Harts Australasia assumed the responsibility of Jobera to pay $900,000 and interest. This was not a contractual responsibility which applied to the First Mortgage repayments, but was an additional benefit obtained by Merrell as a result of the overall transaction.
Further, the repayment was backed by the security of an HMC guarantee and charge. The fact that this was unable to be achieved in the final practical result due to the liquidation of the relevant companies does not mean that it does not amount to valuable consideration at the time of the transaction. The practical futility of the security, which one can observe only in retrospect, is a matter concerning the adequacy or effectiveness of the consideration, it is not relevant in the circumstances of this case to whether or not consideration was given at all. In relation to the contractual requirement of consideration, it is not necessary that such consideration be adequate, but only that it be legally sufficient, in that it must comprise of a matter that the courts regard as capable of being the subject of an enforceable exchange. If consideration is legally sufficient, a court will not enquire into the prudence of the transaction and thereby determine the adequacy of consideration provided. The consideration received by Merrell was legally sufficient. I therefore reject the first strand of the argument posited by Jobera.
[25] HL(Qld) Nominees Pty Ltd v Jobera Pty Ltd & Anor [2009] SASC 165 at [281]-[283].
I consider that this analysis is entirely correct. The loan agreement articulates the consideration given to Merrell Associates. Furthermore, although the security of the “HMC guarantee and charge” was ultimately ineffective, it was valuable consideration at the time of the transaction. In these circumstances there was a legally sufficient consideration.
Standing to Sue
Merrell Associates challenged the conclusion of the trial Judge that HL (QLD), the successor to Harts Staff Superannuation, a third party beneficiary to the transaction, had standing to sue on the priority agreement. HL (QLD) supported the Judge’s conclusion that it was entitled to assert its rights as a mortgagee with a priority over the first mortgage.
On the hearing of the appeal, HL (QLD) drew attention to the decision of the High Court in Coulls v Bagots Executor & Trustee Co Ltd to further support this entitlement.[26] In that case, the members of the High Court expressed the view that a joint promisee, if a party to a contract, could sue to enforce it notwithstanding that they had not themselves furnished any part of the consideration. The case involved a contract whereby royalties were to be paid to the husband and wife jointly while they both lived, and thereafter to the survivor of them. In that arrangement, no consideration flowed from the wife as her only part in the proceedings was to append her signature to the contract document. The members of the High Court ultimately held that the wife could sue on the promise if she was a joint promisee and party to the contract.
[26] Coulls v Bagots Executor & Trustee Co Ltd (1967) 119 CLR 460.
Barwick CJ and Windeyer J held that the plaintiff was a party to the contract and, as a joint promisee, could enforce it notwithstanding that her husband alone had provided the consideration.[27] In that respect, Windeyer J observed:[28]
Still, it was said, no consideration moved from her. But that, I consider, mistakes the nature of a contract made with two or more persons jointly. The promise is made to them collectively. It must, of course, be supported by consideration, but that does not mean by considerations furnished by them separately. It means a consideration given on behalf of them all, and therefore moving from all of them. In such a case the promise of the promisor is not gratuitous; and, as between him and the joint promisees, it matters not how they were able to provide the price of his promise to them. That is the position as I see it. It accords with the very old decision in Rookwood's Case (1589) Cro Eliz 164; 78 ER 421 and with general principle.
On this view, that Coulls and Mrs Coulls were joint promisees, an action against the construction company would, during their joint lives, have had to be brought in the names of both. If one had refused to be joined as a plaintiff, he or she could, after an offer of indemnity against costs, have been made a defendant: Whitehead v Hughes (1834) 2 Cr & M 318; 149 ER 782; Cullen v Knowles (1898) 2 QB 380; Rodriguez v Speyer Brothers (1919) AC 59, at pp 103, 104. After the death of either of two joint promisees an action on a contract can be brought by the survivor alone: see Halsbury's Laws of England, 3rd ed, Vol 8, p 67. Therefore Mrs Coulls, on the basis that she is a surviving joint promisee, could now bring an action on the contract; and in respect of moneys becoming due and payable under it since the death of her husband recover them for herself alone.
[27] Coulls v Bagots Executor & Trustee Co Ltd (1967) 119 CLR 460 at 478-480, 492-493.
[28] Coulls v Bagots Executor & Trustee Co Ltd (1967) 119 CLR 460 at 493.

Although McTiernan, Taylor and Owen JJ held that the wife was not a party to the contract, Taylor and Owen JJ agreed that if she had been a party, the fact that it was her husband who provided the consideration would not have prevented her suing on the contract.[29]
[29] Coulls v Bagots Executor & Trustee Co Ltd (1967) 119 CLR 460 at 483, 486.
In the circumstances of the present proceeding, Harts Staff Superannuation was not a signatory to the loan agreement and consideration was paid by Harts Australasia Limited rather than the Harts Staff Superannuation. However, it is apparent that Harts Staff Superannuation was an active participant in the overall transaction, having executed the priority agreement and being a party to the second mortgage. It is appropriate in these circumstances to characterise Harts Staff Superannuation as a party to the overall transaction. Furthermore, Harts Staff Superannuation and Harts Australasia Limited may be characterised as joint promisees, whereby for consideration flowing from Harts Australasia, Merrell Associates promised both Harts Australasia and Harts Staff Superannuation that the benefit of the second mortgage and its priority over the first mortgage would flow to Harts Staff Superannuation.
In these circumstances, the fact that consideration did not flow from Harts Staff Superannuation is not an impediment for HL (QLD) as the successor to Harts Staff Superannuation, to assert an entitlement to sue.
The Judge did not make reference to the authority of Coulls, but instead based her finding that HL (QLD) had standing to sue on an analysis of the later authority of Trident General Insurance Co Ltd v McNiece Bros Pty Ltd.[30] It is to be observed that the Court in Trident referred with approval to the principles espoused in Coulls and did not relevantly limit those principles.[31]
[30] Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1988) 165 CLR 107.
[31] It is to be observed that only Toohey J restricted the application of the principles to insurance cases.
In discussing Trident, the Judge observed:[32]
Contract law recognises that a third party beneficiary who is not a party to a contract may have a remedy against the party who conferred the benefit under the contract. Recognition of the rights of a third party beneficiary is sometimes treated as being an exception to the privity rule, being the rule that only the parties to a contract are legally bound by the contract and are the only ones who may enforce it. However, the reference to it being a potential exception to the privity rule is the subject of differing views expressed by the judges in Trident.
Privity of contract must be distinguished from the principle, discussed above, that consideration must move from the promisor to the promisee.
There has been much discussion about the effect which Trident has had in relation to the law of contract and privity in particular.
Trident related to the ability of a third party to obtain the benefit of a contract of insurance to which the third party was not privy. Toohey J held that the third party, who was intended to be benefited by the contract, could recover under the policy, although his Honour restricted it to situations of insurance. Mason CJ and Wilson J in their joint judgment upheld the right of the third party in his action to recover under the policy of insurance. Their Honours also appeared to accept that an action may be taken by a third party in a situation other than under a policy of insurance. Deane J did not approach the situation from a right of action by a third party on a contract, but rather thought that the principles of estoppel or unjust enrichment could apply. This was similar to Gaudron J, who relied on a principle of unjust enrichment rather than a right to sue on the contract.
The dissenting judgments considered that there should be no exception to the privity of contract doctrine either under insurance contracts or otherwise. However, they indicated that remedies which may alleviate the injustice of the privity doctrine may be found in the law of trusts and estoppel.
HSS was not a signatory to the Loan Agreement. According to the reasoning in Trident, the fact that the consideration was not paid by HSS but instead paid by Harts Australasia Limited may not prevent HSS taking action. Or, to put this argument differently, Trident suggests that the privity rule may be qualified to give effect to the intention of the parties. The intention of the parties was clearly to benefit HSS. HSS was, at all times, an active participant in the overall transaction and executed the Priority Agreement and was a party to the Second Mortgage. Merrell was a party to, and executed, the Loan Agreement and the Priority Agreement.
I therefore consider that HSS would have been entitled to a declaration that the Loan Agreement is valid as against it and that Qld Nominees, as the successor to HSS, is entitled to assert its rights as a mortgagee with a priority over the First Mortgage.
[32] HL(Qld) Nominees Pty Ltd v Jobera Pty Ltd & Anor [2009] SASC 165 at [285]-[291].
I agree with the above analysis and reasoning. The decision of Trident provides that the privity of contract rule may be qualified in circumstances such as those of the within proceeding where the intention of the parties was clearly to benefit a third party. As found by the Judge, Harts Staff Superannuation was at all times an active participant in the transaction and the intention of the parties was to benefit Harts Staff Superannuation. In these circumstances, contrary to the contentions of Merrell Associates, Harts Staff Superannuation had legal standing to sue on the priority agreement. HL (QLD), as the successor to Harts Staff Superannuation is entitled to assert its rights as mortgagee with a priority over the first mortgage. This conclusion is supported by the reasoning of the High Court in both Coulls and Trident.
Section 55 Property Law Act (Qld)
Merrell Associates challenged the conclusion that HL (QLD) could enforce rights under the priority agreement as a consequence of the provisions of the Property Law Act 1974 (Qld). That Act applied as a consequence of a “choice of law” provision. Section 55 of that Act, headed “contracts for the benefit of third parties”, provides:
(1)A promisor who, for a valuable consideration moving from the promisee, promises to do or to refrain from doing an act or acts for the benefit of a beneficiary shall, upon acceptance by the beneficiary, be subject to a duty enforceable by the beneficiary to perform that promise.
(2)Prior to acceptance the promisor and promisee may, without the consent of the beneficiary, vary or discharge the terms of the promise and any duty arising from it.
(3)     Upon acceptance—
(a) the beneficiary shall be entitled in the beneficiary’s own name to such remedies and relief as may be just and convenient for the enforcement of the duty of the promisor, and relief by way of specific performance, injunction or otherwise shall not be refused solely on the s 55 46 s 55 Property Law Act 1974 ground that, as against the promisor, the beneficiary may be a volunteer; and
(b)     the beneficiary shall be bound by the promise and subject to a duty enforceable against the beneficiary in the beneficiary’s own name to do or refrain from doing such act or acts (if any) as may by the terms of the promise be required of the beneficiary; and
(c)     the promisor shall be entitled to such remedies and relief as may be just and convenient for the enforcement of the duty of the beneficiary; and
(d)     the terms of the promise and the duty of the promisor or the beneficiary may be varied or discharged with the consent of the promisor and the beneficiary.
(4)Subject to subsection (1), any matter which would in proceedings not brought in reliance on this section render a promise void, voidable or unenforceable, whether wholly or in part, or which in proceedings (not brought in reliance on this section) to enforce a promissory duty arising from a promise is available by way of defence shall, in like manner and to the like extent, render void, voidable or unenforceable or be available by way of defence in proceedings for the enforcement of a duty to which this section gives effect.
(5)In so far as a duty to which this section gives effect may be capable of creating and creates an interest in land, such interest shall, subject to section 12, be capable of being created and of subsisting in land under any Act but subject to that Act.
(6)     In this section—
acceptance means an assent by words or conduct communicated by or on behalf of the beneficiary to the promisor, or to some person authorised on the promisor’s behalf, in the manner (if any), and within the time, specified in the promise or, if no time is specified, within a reasonable time of the promise coming to the notice of the beneficiary.
beneficiary means a person other than the promisor or promisee, and includes a person who, at the time of acceptance is identified and in existence, although that person s 56 47 s 57 Property Law Act 1974 may not have been identified or in existence at the time when the promise was given.
promise means a promise—
(a)     which is or appears to be intended to be legally binding; and
(b)     which creates or appears to be intended to create a duty enforceable by a beneficiary;
and includes a promise whether made by deed, or in writing, or, subject to this Act, orally, or partly in writing and partly orally.
promisee means a person to whom a promise is made or given.
promisor means a person by whom a promise is made or given.
(7)Nothing in this section affects any right or remedy which exists or is available apart from this section.
(8)     This section applies only to promises made after the commencement of this Act.
The Judge ultimately held that for the reasons discussed above, sufficient consideration passed to Merrell Associates. As a consequence, section 55 of the Property Law Act applied to protect Harts Staff Superannuation’s rights as a beneficiary. The Judge further held that having regard to the terms of section 55, Merrell Associates could be characterised as the promisor, who for consideration passing from the Harts Australasia, the promisee, promised to benefit Harts Staff Superannuation. That benefit was the promise by Merrell Associates to arrange for Jobera to grant a second mortgage to Harts Staff Superannuation and to give priority to that second mortgage over the first mortgage.
For the purposes of section 55, and in particular section 55(6), Merrell Associates, by the loan agreement made on 27 July 2001, promised Harts Australasia Limited that the second mortgage would take priority over Merrell Associates’ first mortgage to the extent of $900,000.00 together with interest and costs. This promise was or appears to have been intended to be legally binding and to create a duty enforceable by a beneficiary. As expressed by the Judge:[33]
The overall outcome overtly indicated [by the series of documents which comprised the overall transaction] …, was that [Harts Staff Superannuation], as trustee of the Fund, would be the recipient of the benefit of a second mortgage over the Kadina property owned by Jobera, in the sum of $900,000, which second mortgage was to be given priority over the registered First Mortgage. …
Harts Staff Superannuation was an entity other than the promisor, Merrell Associates, and the promisee, Harts Australasia Limited, and accordingly, a beneficiary within the meaning of that term in section 55(6) of the Queensland Act. The reasoning of the Judge is correct.
[33] HL(Qld) Nominees Pty Ltd v Jobera Pty Ltd & Anor [2009] SASC 165 at [119].
It is relevant to observe that even if the principles in Trident’s case could not be applied, section 55 of the Property Law Act would provide an appropriate remedy. The Judge’s conclusion in this respect was correct.
Frustration and Common Mistake
The concluding submission of Merrell Associates again involved the doctrines of frustration and common mistake, but with particular reference to the priority agreement. It was said that the priority agreement was unenforceable as a consequence of the doctrines of frustration and common mistake in the same manner as articulated earlier in these reasons. In respect of the priority agreement, the Judge rejected these submissions. Earlier in these reasons I have set out the basis of the Judge’s conclusions and the reasons why these findings were appropriate on the evidence.
In the present case, the substance of the transaction was the provision to the Harts Staff Superannuation of an in specie contribution by way of first mortgage security over the land in question in circumstances where cash was not available. Merrell Associates asserted on appeal that the understanding was that an in specie contribution such as that described above, would discharge the relevant contribution obligations of and avoid ruinous consequences for the Hart Group of a default in those obligations; and would make an effective superannuation guarantee contribution, and thereby forestall the ruinous consequences for the Harts Group of penalty tax and official investigation.
The transaction did not require for its foundation any such assumptions. Critically, and as the Judge correctly found, there is no evidence of any such assumptions. Further, as the Judge pointed out, the transaction comprised five agreements to which there were different parties. This fact presents a difficulty for Merrell Associates, who asserted on appeal that the doctrine of frustration applied to render one of the agreements unenforceable.
Ultimately, Merrell Associates simply failed to establish the facts sufficient to establish that the transaction was not ineffective to constitute a valid superannuation guarantee contribution.
Conclusion
For the above reasons I would dismiss this appeal.
VANSTONE J: I would dismiss the appeal. I agree with the reasons of Gray J.