Pollock v Piggott - [2017] WASCA 220

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

TITLE OF COURT : THE COURT OF APPEAL (WA)

CITATION: POLLOCK -v- PIGGOTT [2017] WASCA 220

CORAM: MURPHY JA
MITCHELL JA
CHANEY J

HEARD: 7 NOVEMBER 2017

DELIVERED : 28 NOVEMBER 2017

FILE NO/S: CACV 126 of 2016

BETWEEN: JAMIE KEVIN POLLOCK
First Appellant
STYLE SHOW PTY LTD
Second Appellant
AND
LEILA CLAIRE PIGGOTT
Respondent

ON APPEAL FROM:
Jurisdiction              :  SUPREME COURT OF WESTERN AUSTRALIA
Coram  :MASTER SANDERSON
Citation  :POLLOCK -v- PIGGOTT [2016] WASC 398
File No  :COR 165 of 2016

Catchwords:

Practice and procedure - Interlocutory decision of master to dismiss application for preaction discovery - Whether master erred in the exercise of his discretion - Whether substantial injustice would be suffered if the primary decision were left unreversed - Turns on its own facts

Legislation:

Rules of the Supreme Court 1971 (WA), O 26A r 4

Result:

Application for leave to appeal refused
Appeal dismissed

Category: B

Representation:

Counsel:

First Appellant               :     Mr S Vandongen SC
Second Appellant          :     Mr S Vandongen SC
Respondent:     Mr J Slack-Smith

Solicitors:

First Appellant               :     Edwards Mac Scovell Legal
Second Appellant          :     Edwards Mac Scovell Legal
Respondent:     Dentons Australia

Case(s) referred to in judgment(s):

Pollock v Piggott [2016] WASC 398
Alexander v Perpetual Trustees WA Ltd [2004] HCA 7; (2004) 216 CLR 109
Dodds v Kennedy [2011] WASCA 32
Herdegen v Federal Commissioner of Taxation (1988) 84 ALR 271
Kelbush Pty Ltd v Australia and New Zealand Banking Group Ltd [2016] WASCA 14; (2016) 49 WAR 374
Latec Investments Ltd v Hotel Terrigal Pty Ltd (in liq) [1965] HCA 17; (1965) 113 CLR 265
Pendlebury v The Colonial Mutual Life Assurance Society Ltd [1912] HCA 9; (1912) 13 CLR 676
Permanent Mortgages Pty Ltd v Vandenbergh [2010] WASC 10; (2010) 41 WAR 353
The English Scottish and Australian Bank Ltd v Phillips [1937] HCA 6; (1937) 57 CLR 302

JUDGMENT OF THE COURT: This is an appeal against Master Sanderson's decision in Pollock v Piggott[1] (primary decision). That decision concerned an application by the appellants for pre-action discovery against the respondent (Ms Piggott). Master Sanderson dismissed the application. Leave to appeal is required, as the primary decision is interlocutory. For the reasons which follow, the application for leave should be refused and the appeal should be dismissed.

Background[2]

February 2013

[1] Pollock v Piggott [2016] WASC 398.

[2] The following matters are taken from the primary decision, unless otherwise indicated.

In or about February 2013, the first appellant (Mr Pollock) became aware that a property in Wattle Grove (the property) was for sale by a mortgagee in possession.
Mr Pollock was familiar with the property. He held a position with a company (Stonetraders) which held a lease over part of the property.[3] He knew that the land adjoining it had been rezoned to allow urban residential development. He thought that the mortgagee in possession might sell the property for around $2.5 million, and suspected that the property could attract similar rezoning which could result in a significant increase in its value. The property also had good rental return prospects, which Mr Pollock thought could wholly cover repayments on borrowings used to purchase the property.[4]
[3] Mr Pollock's affidavit sworn 15 March 2016, par 8; GB 20.
[4] Primary decision [3] - [4].
Mr Pollock wanted to purchase the property, but had insufficient funds to do so. He approached Mr Lewis Piggott to be a co‑investor. Mr Pollock and Lewis Piggott met at the property on 20 February 2013. Also present at the meeting were Ms Piggott and Mr Ben Piggott. Lewis Piggott, Ben Piggott and Ms Piggott are siblings.[5]
[5] Primary decision [5] - [6].
At the meeting on 20 February 2013, Mr Pollock explained to Lewis, Ben and Ms Piggott why he thought the property was a good investment. A speaker telephone call was made to the seller, and the seller told Mr Pollock the terms on which he would be prepared to sell the property. Mr Pollock and Lewis Piggott agreed to the seller's terms at the meeting, and resolved to purchase the property jointly in equal shares.[6] The price was to be $2.65 million and the deposit was to be $1.2 million.[7] They agreed on the material terms on which the purchase would be made, including that:[8]
(a)Mr Pollock and Lewis Piggott would each pay half the deposit (ie, $600,000 each);
(b)a shelf company held by Lewis Piggott, namely ACN 159 520 000 Pty Ltd (the Company), would be used as the notional purchasing entity, in which Mr Pollock (or his nominee) would take both a shareholding and position as a director; and
(c)a formal unit trust would be drawn to reflect the respective interests.
[6] Primary decision [7].
[7] Mr Pollock's affidavit sworn 15 March 2016, pars 11, 12; GB 21.
[8] Primary decision [7].
Lewis Piggott was the sole director of the Company.[9]
[9] Mr Pollock's affidavit sworn 15 March 2016, par 6; GB 20.
Also, according to Mr Pollock, at the meeting on 20 February 2013:[10]
(a)Lewis Piggott said that he was confident that he could obtain finance for the balance of the purchase price on commercial terms;
(b)Mr Pollock told Lewis Piggott that if Lewis Piggott was unable to obtain commercial third party finance for the purchase, then Mr Pollock was agreeable for him (Lewis Piggott) to finance the purchase; and
(c)in that event, Mr Pollock would pay interest at the rate of 15% on his share.
[10] Mr Pollock's affidavit sworn 15 March 2016, pars 12(a) and (b)(ii); GB 21.
On 21 February 2013, the seller met with the purchasers (ie, Mr Pollock and Lewis Piggott), and the material terms of the sale of the property were agreed. Later that day, Mr Pollock attended a meeting at Ben Piggott's office, and Ms Piggott prepared an Offer and Acceptance, in which the buyer is described as 'ACN 159 520 000 Pty Ltd as trustee for the ACN 159 520 000 Unit Trust'.[11]
[11] Primary decision [8].
In relation to his $600,000 share in the deposit, Mr Pollock paid $300,000 to the Company and arranged for $300,000 to be paid to the vendor.[12]
[12] Mr Pollock's affidavit sworn 15 March 2016, par 16; GB 23.
For reasons not presently material, the 21 February 2013 Offer and Acceptance was terminated or otherwise failed, and the seller of the property accepted an offer from a third party. The vendor retained the $300,000 paid by Mr Pollock. The Company returned the other $300,000 to Mr Pollock.[13]

March 2013 and the Sale and Purchase Agreement

[13] Mr Pollock's affidavit sworn 15 March 2016, pars 17 - 18; GB 23.

In or about March 2013, Mr Pollock was told by the seller that the property was again available for sale.[14]
[14] Primary decision [9].
On or about 11 March 2013, Mr Pollock telephoned Lewis Piggott and they agreed to attempt to purchase the property on terms that differed slightly, but not materially, from the 21 February 2013 Offer and Acceptance.[15] An apparent difference in the terms was that the deposit was reduced from $1.2 million to $900,000. Mr Pollock's evidence concerning the meeting was as follows:[16]
On or about 11 March 2013 I telephoned Lewis [Piggott] and told him what [the vendor] had told me … We said words to the effect of:
a)I asked Lewis [Piggott] whether he would still be interested in acquiring the [property] on the terms we had previously agreed prior to entry into the First Offer, which he replied that he was;
b)I suggested that we make another offer to buy the [property] on similar terms as the First Offer, except with a deposit of $900,000;
c)Because I had forfeited $300,000 to [the vendor] by [the Company's] failure to perform the First Offer, I could only immediately contribute $200,000 toward a further deposit, but I would be able to find my share of the balance of the deposit (ie, $250,000) by settlement;
d)Lewis [Piggott] said that he would be able to lend me the $250,000 until settlement, with which I agreed; and
e)Lewis [Piggott] said that he would get Daniel Romano [of the law firm Wilson and Atkinson] to look over the new offer and acceptance and prepare the unit trust deed [on the basis, in effect, that Mr Pollock or his nominee would be a 50% shareholder and director in the purchasing entity, and hold 50% of the units in the unit trust].
[15] Primary decision [10].
[16] Mr Pollock's affidavit sworn 15 March 2016, par 20; GB 23 - 24.
Between 11 and 12 March 2013, Ms Piggott sent to Mr Pollock an Offer and Acceptance, again noting the buyer as 'ACN 159 520 000 Pty Ltd as trustee for the ACN 159 520 000 Unit Trust' (the Sale and Purchase Agreement). It could be inferred that Ms Piggott prepared the document. She also proceeded to participate in the negotiation of the Sale and Purchase Agreement.
The Sale and Purchase Agreement was entered into on or about 19 March 2013.[17]
[17] Primary decision [11].
The Sale and Purchase Agreement provided for a purchase price of $2.65 million, with settlement in 120 days. It was not subject to finance and required a deposit of $900,000 to be paid within three days.[18]
[18] GB 37.
After 11 March 2013, Mr Pollock went about securing leases to maximise the property's rental value.[19]
[19] Primary decision [13].
On or about 22 March 2013, Mr Pollock paid a sum of $200,000 to the Company towards the purchase price of the property in accordance with the agreement of 11 March 2013.[20]

April - July 2013

[20] Primary decision [12].

In or about April 2013, Mr Pollock registered the second appellant (Style Show), which was to be the nominee entity in which his interest in the property was to be held.[21]
[21] Primary decision [13].
In readiness for settlement, Mr Pollock made several representations to Lewis Piggott and Ms Piggott seeking that they formalise the unit trust and other arrangements relating to the purchase of the property.[22] Mr Pollock, in effect, requested that Style Show be issued 50% of the shares in the Company and 50% of the units in the unit trust.[23]
[22] Primary decision [14].
[23] Mr Pollock's affidavit sworn 15 March 2016, pars 32 - 33; GB 25 - 26.
At a meeting on or about 2 July 2013, Lewis Piggott and Ms Piggott confirmed to Mr Pollock that they would arrange the share transfer and appointment of Mr Pollock as a director of the Company, and for the drawing of the unit trust deed by their lawyer.[24]

September 2013 - Style Show's caveat over the property

[24] Primary decision [14].

After persistent failure by Lewis Piggott and/or the Company to give effect to the above representations, on 26 September 2013, Style Show's solicitors lodged a caveat over the property and sent a copy of it to the Company.[25]

2 - 9 October 2013

[25] Primary decision [15].

According to Mr Pollock, on or about 2 October 2013:[26]
[26] Mr Pollock's affidavit sworn 15 March 2016, par 40; GB 27.
I received a telephone call from Lewis [Piggott] in which:
a)He complained that I had engaged lawyers and said in this regard 'you know how to piss me off';
b)I responded that I had engaged lawyers because the outstanding legal documents had not been prepared and I was concerned about his intentions to do so;
c)He said words to the effect that he would instruct Mr Romano to prepare the outstanding legal documents;
d)I said that if ultimately [the Company's] contribution to the costs of the [property] were greater than mine, then I would pay interest at 15% on the difference, as well as penalty interest at 25% for any late payments on these amounts and that any such amounts paid by him could be treated as loans to me, which could be secured against my interest in the [property] if need be; and
e)Lewis [Piggott] said that he agreed to my proposal at sub‑paragraph (d).
(emphasis added)
On 3 October 2013, Mr Pollock sent Lewis Piggott an email in the following terms:[27]
[27] GB 90.
Hi Lewis
Further to our conversation yesterday please see below points to be incorporated into the agreement to proceed and have the agreement finalised:
[Lewis Piggott] to provide funding from his side (one option discussed was without the use of the title) to effect settlement
Price $2,650,000 (less approx GST of 241k) plus stamp duty of 128k = $2,537,000 to pay
50% each of $2,537,000 = $1,268,500 for each JV partner to contribute
[Mr Pollock] contribution is $1,268,500 less $200k already paid to [the Company] leaves $1,068,500 - this amount [Mr Pollock] is to pay higher rate to [Lewis Piggott] on a monthly basis.
To secure [Lewis Piggott] if interest payment is not made on time then [Lewis Piggott] can charge [Mr Pollock] 25% interest on amount outstanding until outstanding interest is brought up to date
Happy for [Lewis Piggott] or company associated with [Lewis Piggott] to have 1st mortgage over the property to secure [Lewis Piggott's] contribution.
If the title is used for the purpose of funding then the amount used for finance from the lender is to come off the amount [Mr Pollock] is to pay [Lewis Piggott] the higher rate at.
For example if ANZ lent $1.2 million to help facilitate the settlement, the amount [Lewis Piggott] would charge [Mr Pollock] the higher rate at is $1068,500 less 600k = $468,500
… to settlement:
Style Show … is to have 1 share issued in [the Company] - therefore being a 50% shareholder of the company
Style Show … is to hold half the units in the … Unit Trust
[Mr Pollock] to be appointed co-director with [Lewis Piggott], however if [Lewis Piggott] was required to be sole director at time of settlement, then agreement can stipulate that [Mr Pollock] or nominee of [Mr Pollock's] can be appointed director at any time after settlement.
All rent received from the property is to go to debt reduction, that is
100k from Thiess
60k from Stonetraders
99k from Sollpak
[Mr Pollock] to cover the cost of the documents to be drawn up by Wilson Atkinson (Daniel) to effect the agreement
Can you give me a call when you have read this
(emphasis added)
On 3 October 2013, later that day, Mr Pollock emailed Isabell Allsopp (of Wilson and Atkinson), and said:
Hope you are well!
I understand Daniel is away and is back from leave on Tuesday next week.
Can you please provide an approximate cost for your firm to draft up the agreement/relevant paperwork between [the Company] and Style Show … to effect the settlement of [the property] - given your understanding of the matter as it sits at the moment.
I understand that it is only an approximate[.]
Can you please also advise the timeframe to have these drafted[.]
(emphasis added)
By 9 October 2013, it appeared that the parties had resolved the matter on certain terms.[28] Mr Pollock's evidence was:[29]
On 9 October 2013 I telephoned Lewis [Piggott] and we said words to the effect that:
a)I said that I presently had only $150,000 to contribute toward acquisition of the [property];
b)He said that he would fund the shortfall by loaning me that amount with interest at the rate of 15%;
c)He said that he didn't want to pay the legal fees for having the outstanding legal documents prepared, so I agreed that Style Show would pay those costs.
[28] Primary decision [15].
[29] Mr Pollock's affidavit sworn 15 March 2016, par 42; GB 27 - 28.
On 9 October 2013, Mr Pollock sent an email to Lewis Piggott in the following terms:[30]
[30] GB 93 - 94.
Hi Lewis
Further to our conversation today please see below points to be incorporated into the agreement to proceed and have the agreement finalised:
Purchase Price  $2,650,000
Plus Stamp Durty [sic]  $128,440
less GST($241,000)
Total$2,537,440
50% of this is  $1,268,720
less 200k [Mr Pollock] has in           $1,068,720
[Mr Pollock] to add a further $164,220 - this is $100k plus 50% of stamp duty - half of $128,440 - these funds to be held in trust account of Wilson Atkinson
leaves $904,500
[Lewis Piggott] to provide funding for the $904,500 at 15%
Prior to settlement:
Style Show … is to have 1 share issued in [the Company] - therefore being a 50% shareholder of the company
Style Show … is to hold half the units in the … Unit Trust - how many units are there[?]
[Mr Pollock] to be appointed co‑director with [Lewis Piggott], [Mr Pollock] can resign and appoint another director if required, same as Lewis [Piggott], so both sides always have a representative.
50% of All rent received from the property is to go to debt reduction for Style Show, these figures are net of GST
105 from Thiess
50k from Stonetraders
90k from Sollpak
How is this rental to be handled in an accounting sense?
Style Show to have the ability to make lump sum contributions to its debt and interest charges accordingly upon pmt of lump sum
[Mr Pollock] to cover the cost of the documents to be drawn up by Wilson Atkinson (Daniel) to effect the agreement
Regards

[Mr Pollock]
(emphasis added)

15 October 2013 - settlement of the Sale and Purchase Agreement and the Mortgage

On 15 October 2013, the Company became the registered proprietor of the property.
Also on 15 October 2013, a mortgage in favour of Ms Piggott was registered over the property, purportedly securing monies loaned to it (approximately $2.56 million) for its purchase (the Mortgage).
The terms of the Mortgage provided that:[31]
(a)the principal was repayable upon demand by Ms Piggott, or upon expiry of a 10‑year term;
(b)interest was payable at the ordinary rate of 15% compounded daily and not including any default interest; and
(c)in the event of default, interest was payable at the additional rate of 25% compounded daily from the date of default.

November 2013

[31] Primary decision [16].

On 1 November 2013, two weeks after the purchase of the property, a notice of demand was issued by Ms Piggott to the Company, requiring payment of the entirety of the loan funds secured by the Mortgage by 11 December 2013. The demand was issued to the Company's address noted on the title to the property, which also happened to be Ms Piggott's postal address.[32]

2014 - Mr Pollock and Style Show commence proceedings against the Company

[32] Primary decision [17].

On 21 January 2014, following the refusal or failure of Lewis Piggott and/or the Company to give effect to Mr Pollock's claimed interest in the property in the agreed manner, Mr Pollock and Style Show commenced proceedings in the Supreme Court against the Company seeking declaratory relief in respect of the property.[33]

2015 - sale of the property to Ciderberry

[33] Primary decision [18].

On 25 March 2015, an auction for the property was held on Ms Piggott's behalf. Mr Pollock or Style Show took no action to prevent the sale because Ms Piggott had determined, and communicated to them through her lawyers, that there would be no surplus from the sale proceeds.[34]
[34] Primary decision [19].
A bid of $3,005,000 and an offer of $3 million were rejected.
About two months later, on 23 April 2015, the property was sold to Ciderberry PHA Pty Ltd (Ciderberry), an entity related to Ms Piggott, for $3 million.[35]

The proceedings by Mr Pollock and Style Show against the Company

[35] Primary decision [20]; GB 100 - 110.

As noted earlier, Mr Pollock and Style Show commenced proceedings against the Company in 2014: CIV 1075 of 2014. In their amended statement of claim filed 31 March 2015, they plead, amongst other things, that the agreement with Lewis Piggott and the Company included terms that if the vendor accepted the offer to purchase the property, the Company 'would borrow sufficient funds to meet the balance of the purchase price when it fell due',[36] and that:
13On 15 October 2013 [the Company]:
13.1borrowed $2,557,897.20 from [Ms] Piggott;
13.2became the registered proprietor of the Property.
14On 15 October 2013, [Ms] Piggott registered mortgage M43283 [the Mortgage] to secure the sum of $2,557,897.20 that had been advanced to [the Company].
[36] Amended statement of claim, par 4.4.

In those proceedings, Mr Pollock and Style Show seek a declaration that the Company holds an undivided half‑share of the property on trust for Mr Pollock, or alternatively Style Show; a declaration that the Company is liable to account to Mr Pollock and Style Show; alternatively, a declaration that the Company 'holds $200,000 on trust for and is liable to pay the same to [Mr Pollock] along with interest thereon'.

The application for pre‑action discovery

Against that background, on 29 July 2016, Mr Pollock and Style Show filed an application for pre-action discovery against Ms Piggott seeking the following documents:[37]
[37] Primary decision [21]; see originating process, BB 11 - 14.
1.Any and all notices issued by [Ms Piggott] to [the Company] pursuant to [the Mortgage], including but not limited to that notice of demand dated 1 November 2013.
2.Any loan agreement underlying the Mortgage and any variations thereto.
3.Evidence of any and all payments made by [the Company] (or by any person on its behalf) to [Ms Piggott] pursuant to any underlying loan agreement or the Mortgage.
4.Copies of any loan account created and/or maintained by [Ms Piggott] or on her behalf with respect to the loan monies secured by the Mortgage.
5.Any and all documents (including contemporaneous records of verbal communications) recording or relating to the negotiation and execution of the Mortgage and/or any underlying loan agreement.
6.Any and all valuation/s (irrespective of who it was obtained by) in support of the sale of the [property] pursuant to the Mortgage and any letter/s of instruction relevant to the same.
7.Copy of the stamped Offer and Acceptance between [Ms Piggott] and Ciderberry … dated 23 April 2015 (O&A).
8.Any valuation of the O&A by the Valuer General.
9.Any and all advertising material, and any marketing plan, relating to [Ms Piggott's] sale of [the property].
10.Copies of any and all correspondence between [Ms Piggott] (or her agent or representative) and Ciderberry (or any related entity) relating to, and/or in contemplation of, the purchase of the [property] by Ciderberry or any related entity thereof.
11.Copies of any and all offers (i.e. other than the O&A) received by [Ms Piggott] (or her agent or representative) with respect to the [property].
…
13.Any and all notices received by [Ms Piggott] pursuant to the (undated) commercial lease agreement between [the Company] and Stonetraders … with respect to the [property].
Access to category 12 in the application was not pressed.[38]

Possible causes of action alleged by Mr Pollock and Style Show in the proceedings before the master

[38] Primary decision [21]; ts 5.

Mr Pollock and Style Show alleged, in effect, in written submissions before the master,[39] that immediately 'upon the conveyance of the [property]', and prior to the registration of the Mortgage, Mr Pollock and/or Style Show had, or may have had, pursuant to a constructive trust, a 50% equitable interest in the property arising from a specifically enforceable contract with the Company. Alternatively, they alleged that they had, or may have had, a 0.075% equitable interest in the property pursuant to a resulting trust, arising immediately upon the 'conveyance' of the property and prior to the registration of the Mortgage. The trust was said to arise from the payment of $200,000 towards the purchase price.[40] They alleged that the registered Mortgage given by the Company to Ms Piggott to secure the payment of $2.56 million did not, as a result of s 68 of the Transfer of Land Act 1893 (WA) (TLA), extinguish their equitable interest in the property, but if it did, the 'conveyance of the [Mortgage] was defeasible' and they had in personam claims against Ms Piggott.
[39] Written submissions, pars 19 - 21; BB 19 - 20.
[40] In the appeal, Mr Pollock and Style Show put the relevant figure as 8%, and not 0.075%.
Mr Pollock and Style Show appeared to contend in their written submissions before the master[41] that they may have claims against Ms Piggott as follows:
[41] Written submissions, pars 22 - 23; BB 20 - 22.
1.Ms Piggott took the Mortgage:
(a)'purporting to avail herself of the assumption afforded by s 127 Corporations Act 2001' knowing that it was 'rebutted' or 'being recklessly indifferent to the likelihood that it was';
(b)knowing or having ought to have known that the Company as trustee had no power to mortgage the entirety of the property; and
(c)without having, or taking steps to seek, the express consent of each of the beneficial owners.
2.Whether 'by reason of her capacity as agent' of the Company, or alternatively 'her intimate involvement in the dealings that led to the creation of the interest', Ms Piggott had knowledge of their claim to equitable ownership in the property when she took the Mortgage, or was at least aware of facts that would have aroused the suspicion of a reasonable person so as to put her on a path of inquiry, and therefore she:
(a)took the Mortgage 'subject to [their] interest and thereupon held the [property] upon constructive trust for [them]';
(b)knowingly assisted the Company to commit a breach of trust; and
(c)knowingly received trust property.
3.Ms Piggott 'dealt with the [property] in breach of trust' or 'inconsistently with [their] interests … pursuant to the constructive trust':
(a)by taking security over the entirety of the property in the circumstances outlined at par 1 above; and
(b)by:
(i)the application of interest and/or costs that were objectively exorbitant;
(ii)sitting on her rights for a period of approximately 18 months before exercising a power of sale, by which time there was no sale surplus; and
(iii)transferring the property to a related party for less than the sum which had been offered by another purchaser just weeks prior to the sale.
4.In her 'capacity as the agent' for the Company, Ms Piggott breached her fiduciary duty to the Company by using information obtained in that capacity, and/or otherwise using her position, to gain a commercial advantage for herself, by loaning secured money to her principal the Company without the fully informed consent of the beneficial owners (of the property), and in doing so obtained the Company's agreement to loan terms that were not commercial and at arm's length, that were unconscionable and/or that constituted a penalty, such causes of action being actionable by Mr Pollock and Style Show 'via section 236(1)(a) of the Corporations Act 2001'.[42]
5.If the court were to find that the Mortgage did extinguish the equitable interest of Mr Pollock and Style Show, then they may have claims against Ms Piggott that 'the conveyance of the [Mortgage] was defeasible', in that Ms Piggott did not acquire her interest in good faith, and that she obtained her interest by equitable fraud. Also, the other causes of action 'continue to subsist in personam'.
[42] Section 236(1) of the Corporations Act provides, relevantly, in effect, that a person who is a member, former member or a person entitled to be registered as a member of a company, or who is an officer or former officer of a company may, if leave is granted under s 237, bring proceedings on behalf of the company.
In oral submissions, counsel for Mr Pollock and Style Show also submitted that they had, or may have, a cause of action against Ms Piggott for failing to act in good faith in the exercise of the power of sale under the Mortgage.[43] This submission appears to relate to the matters referred to in pars 3(b)(ii) and (iii) above. Also, they had submitted in their written submissions,[44] by reference to Latec Investments Ltd v Hotel Terrigal Pty Ltd (in liq),[45] that 'a collusive and colourable sale by a mortgagee in possession to a related entity was a plain case of fraud'.
[43] ts 10.
[44] Footnote 52.
[45] Latec Investments Ltd v Hotel Terrigal Pty Ltd (in liq) [1965] HCA 17; (1965) 113 CLR 265, 274.
In oral submissions in reply, counsel for Mr Pollock and Style Show also contended,[46] in effect, that as beneficiaries of a trust, they may commence proceedings in their own names to recover trust property in accordance with the principles outlined in Alexander v Perpetual Trustees WA Ltd.[47]

The submissions by Mr Pollock and Style Show as to the relevance of the categories of documents

[46] ts 16.

[47] Alexander v Perpetual Trustees WA Ltd [2004] HCA 7; (2004) 216 CLR 109 [55] ‑ [56].

In oral submissions to the master, counsel for Mr Pollock and Style Show submitted, in effect, with respect to the various categories of documents (see [37] above) that:[48]
1.Categories 1 and 6 - 11 related to the exercise of the power of sale.
2.Categories 2 and 5 related to 'the knowledge of [Ms Piggott] and the extent to which she took her interest with notice'.
3.Categories 3, 4 and 13 related to 'how the property was dealt with during the … period while … the property was held on trust'.
[48] ts 10 - 11.

Primary decision

Master Sanderson dismissed the application for pre-action discovery. He said that there were two insurmountable difficulties with the application.
The first was the issue of whether or not Mr Pollock and Style Show had a cause of action. In this regard, Counsel had submitted that Mr Pollock and Style Show had some form of equitable right which subsisted even in the face of s 68 of the TLA. Master Sanderson, however, said that there was real doubt as to whether such a claim could be maintained. Further, even if it could be maintained, the cause of action would be limited to damages recoverable from Ms Piggott on the basis that the property was sacrificed. In that regard, there was nothing in the evidence to suggest that the property was not properly marketed or that the marketing campaign was inadequate. Ms Piggott as a mortgagee in possession was under no duty of care with respect to Mr Pollock and Style Show, and there was nothing to suggest that they could have any complaint about the sale proceeds.[49]
[49] Primary decision [24] - [25].
The second insurmountable difficulty identified by the master concerned the value of the claim. On the evidence before him, the best offer for the property was $3,005,000 and the property was eventually sold for $3 million. There was no evidence that the property was sold at an undervalue, and the value of Mr Pollock's and Style Show's claim therefore stood to be for around $5,000. The master said that, as it stood, it looked like any claim would be modest, and he was not satisfied that it would be in the interests of justice to order the discovery sought by Mr Pollock and Style Show.[50]
[50] Primary decision [26].

Appeal

The appellants' case contains two grounds of appeal to the following effect.
Ground 1 alleges that the master erred in law, or in law and fact, in dismissing Mr Pollock's and Style Show's application for pre-action discovery on the basis that they had failed to establish that they may have a cause of action against Ms Piggott. In this regard, it is said, in effect, that:[51]
1.the master only considered whether Mr Pollock and Style Show had established that they may have a cause of action against Ms Piggott on the basis that she had sacrificed their interests in the property, and that this basis for a cause of action was never part of Mr Pollock's and Style Show's case; and
2.the master 'failed to properly consider, or to consider at all … that they may have a cause of action against [Ms Piggott]'.
[51] Appellants' grounds of appeal; WB 6.
Ground 2 alleges that the master erred in law, or in law and fact, in the exercise of his discretion when dismissing the application for pre‑action discovery by:[52]
1.erroneously finding that the 'claim would be for around $5,000' and that 'it looks very much as though any claim would be modest indeed'; or
2.failing to take into account the fact that Mr Pollock and Style Show may have other causes of action against Ms Piggott.
[52] Appellants' grounds of appeal; WB 6.
There is also a notice of contention by Ms Piggott, referred to later in these reasons.

Submissions

Appellants' submissions

In relation to ground 1, it is submitted, in essence, that the master wrongly confined his consideration to whether Ms Piggott had failed to act in good faith in the exercise of her power of sale under the Mortgage. It is submitted that the master erroneously limited his consideration to that issue, and did not give any consideration to the other potential causes of action identified in the written submissions before the master.[53]
[53] Appellants' submissions, pars 8 - 11; WB 7 - 8.
Further, it is submitted[54] that the master should have found that Mr Pollock and Style Show may have one or more of the following causes of action against Ms Piggott:
1.knowing assistance in breach of a trust;
2.knowing receipt of trust property; and
3.breach of fiduciary duty owed by Ms Piggott to the Company.
[54] Appellants' submissions, par 25 - 26; WB 10 - 11.
In their written submissions in this appeal they contended:[55]
[55] Appellants' submissions, pars 31 - 34; WB 12 - 13.
31.[T]hat, in light of all of the evidence, the Master should have found that a trust may have been created in favour of the appellants upon the transfer by the first appellant of the sum of $200,000 to [the Company], and/or upon the transfer of the Property to [the Company]. The nature of that trust may have been:
(a)A resulting[56] or constructive trust (or imputed trust),[57] at least as to the $200,000 that was paid by the first appellant to [the Company]; and/or
[56] In accordance with the principles referred to by Gibbs CJ in Calverley v Green (1984) 155 CLR 242 at [3].
[57] As to which, see the helpful summary of the relevant principles in Carter v Brine [2015] SASC 204 at [286] to [362].
(b)A constructive or bare trust as to a one half interest in the Property arising by reason of a common intention.
32.Further, the Master should have found that [the Company] may have breached that trust when it allowed the mortgage to be registered over the Property in favour of the respondent because, at least:
(a)It did not have the power to mortgage the Property without the consent of one or both of the appellants, having regard to the fact that the first appellant and Lewis Piggott (the sole director and shareholder of [the Company]) had agreed that they (or their nominees) would become '50% shareholders and directors, and 50% unit holders respectively'.[58]
(b)[The Company] improperly used its position to use the trust property to benefit the respondent (and acted to the detriment of the appellants) and/or failed to act impartially and fairly as between all of the beneficiaries of the trust, having particular regard to the fact that it allowed a mortgage to be registered over the Property in favour of the respondent, who is related to Lewis Piggott and who was [the Company's] agent, on terms that were uncommercial.[59]
33.It may also be inferred from all of the evidence that the execution of the mortgage, and its subsequent registration, was in fact part of a scheme designed to defeat the appellants' interest, to which [the Company] was a party, contrary to its duties as trustee.
34.Based on the evidence … it is submitted that the Master should have found that the appellants may have causes of action against the respondent for her knowingly assisting in the breach of trust by [the Company] and/or her knowingly receiving trust property.
[58] First appellant's affidavit at [12(b)(iii)] and [37].
[59] Which included a term pursuant to which the principal was repayable on demand.
In relation to the possible claim concerning Ms Piggott's alleged breach of fiduciary duty to the Company, Mr Pollock and Style Show submit:[60]
37.As identified …, quite apart from a cause of action arising out of a potential breach of trust by [the Company], the Master should have found that the appellants may also have a cause of action against the respondent based upon a breach by her of a fiduciary obligation she owed to [the Company] as its agent.
…
39.It is submitted that the evidence, particularly the evidence referred to at [45] ‑ [49] of the first appellant's affidavit, is capable of supporting a conclusion that the appellants may have a cause of action arising out of the respondent's breach of her fiduciary obligations in her capacity as agent for [the Company]. Potential breaches include using information obtained in that capacity, or otherwise using her position, to gain a commercial advantage for herself.
[60] Appellants' submissions, pars 37, 39; WB 13.
With respect to ground 2, it is submitted that there are two reasons why the master erred in finding that on the evidence, Mr Pollock's and Style Show's claim 'would be for around $5,000' and that 'it looks very much as though any claim would be modest indeed'.[61]
[61] Appellants' submissions, pars 44 - 45; WB 14.
First, it is submitted that the conclusion that their claim would be for around $5,000 was based on the premise that the only relevant cause of action was the claim concerning the failure to exercise the power of sale under the Mortgage in good faith and, as alleged in ground 1, it is said that the master failed to consider their other alleged possible causes of action. In relation to their other alleged causes of action, Mr Pollock and Style Show submit that their potential remedies include a declaration that Ms Piggott held, 'up until the time she sold the [property] as mortgagee in possession, her legal interest in one half of the [property] on constructive trust' for Mr Pollock and Style Show (or either of them) (emphasis added).[62]
[62] Appellants' submissions, pars 46 - 48; WB 14 - 15.
The second reason given in relation to ground 2 is as follows:[63]
49.Secondly, the conclusion that the appellants' claim would be for around $5,000 was in any event based on an assumption that when the respondent exercised her power of sale she was properly entitled to be paid $3 million from the proceeds of the sale. However, there was no evidence to support that assumption.
50.In fact, one of the evident purposes of the appellants' application for pre‑action discovery was to obtain documents in the respondent's possession that may throw light on the question of whether she was properly entitled to be paid $3 million from the proceeds of the sale, which may in turn assist the appellants in making a decision whether to commence proceedings against the respondent.
[63] Appellants' submissions, pars 49 - 50; WB 15.
By their written submissions, Mr Pollock and Style Show also submit that there is a real prospect that the refusal of pre‑action discovery will preclude them from ever asserting any rights which they may have against Ms Piggott.[64]
[64] Reference is made to Kelbush Pty Ltd v Australia and New Zealand Banking Group Ltd [2016] WASCA 14; (2016) 49 WAR 374 [85].
In oral submissions in the appeal, senior counsel for the appellants, in effect emphasised that:
1.The property was held on 'bare trust' for the appellants at the point in time when the Company became the registered proprietor of the property, and there was no statutory or express power to mortgage the property.[65]
2.Pursuant to a specifically enforceable agreement, Mr Pollock had an existing entitlement to be a director and 50% shareholder of the Company and an entitlement (directly or through Style Show) to 50% of the units of the unit trust under a deed of trust containing a power of mortgage. On that basis, it could be inferred that the Company, through the intervention of Mr Pollock,[66] would never have granted the Mortgage with its terms as to repayment on demand and high interest rates, and that, as a consequence, Mr Pollock would never have suffered loss.[67]
3.The master had overlooked the point that Mr Pollock and Style Show may be entitled to bring proceedings in respect of the breaches of trust as beneficiaries of the trusts upon which the Company held the property, in accordance with the principles in Alexander.[68]
4.The events were consistent with an overall scheme by the Company to divest itself of the property held by it on trust to the detriment of the beneficiaries of the trust and for the benefit of Ms Piggott.[69]
[65] Appeal ts 6.
[66] Presumably as shareholder, director or beneficiary of a trust.
[67] Appeal ts 24.
[68] Appeal ts 22.
[69] Appeal ts 11.

It was also accepted at the hearing of the appeal that if the master was correct in finding that the only potential cause of action was the alleged improper exercise of the power of sale, then the claim, on the evidence before the master, would be a modest one.[70]

The respondent's submissions and the notice of contention

[70] Appeal ts 14.

Ms Piggott contends that the master's decision has not been shown to be in error.
Ms Piggott submits, in effect, that the master did not fail to consider the other causes of action raised by Mr Pollock and Style Show. She says that the transcript records that the master reviewed the papers, and Mr Pollock and Style Show referred to the other causes of action in their oral submissions to the master.[71]
[71] Respondent's submissions, pars 40 - 42; WB 33.
Ms Piggott also submits that the master did not finally determine that $5,000 was the maximum amount that Mr Pollock and Style Show could be awarded. Rather, it is submitted that this was a preliminary view and that the view of the master as to the 'modest' amount that could be claimed influenced his discretion to refuse the application for pre-action discovery.[72]
[72] Respondent's submissions, pars 34 - 39; WB 32 - 33.
In these circumstances, Ms Piggott submits that it is not certain that a substantial injustice would be suffered if leave to appeal were refused, and the primary decision is not attended with sufficient doubt to justify the grant of leave.[73] Further, even if leave to appeal were granted, it is submitted that the court should not make the orders sought in the originating process for the following reasons:[74]
[73] Respondent's submissions, par 44; WB 34.
[74] Respondent's submissions, pars 45 - 55; WB 34 - 35.
1.For the above reasons, it is doubtful whether Mr Pollock and Style Show may have a cause of action and, if they do, it seems that they only have a relatively small claim.
2.Half of the categories of documents (categories 6 ‑ 11) sought in the application relate to the sale process, which Mr Pollock and Style Show accept is irrelevant to many of their potential causes of action.
3.For some categories of documents sought (categories 2, 5, 6 and 8), there is inadequate evidence of reasonable grounds for believing that Ms Piggott has any such documents in her possession.
4.For the last category of documents sought (category 13):
(a)there is evidence that Mr Pollock is associated with Stonetraders, but no evidence of any attempt to obtain the documents from Stonetraders; and
(b)discovery of documents in category 13 was not pressed at first instance.
5.There was no evidence that, at the time of making the application, Mr Pollock and Style Show had not decided whether they wanted to commence proceedings, which is a jurisdictional prerequisite to an order for pre-action discovery.
6.No memorandum of conferral was filed with the application for pre‑action discovery, as required by O 59 r 9(1) of the Rules of the Supreme Court 1971 (WA) and Practice Direction 4.3.2.
7.The costs order sought in the originating process was extraordinary, and no grounds have been provided for departure from the general rule that 'a party ordered to give pre-action discovery is entitled to costs of taking legal advice, the application and giving discovery'.
By her notice of contention, Ms Piggott also contends, in effect, that the master's decision should be upheld having regard to the matters referred to in 3, 4(a), 5 and 6 above.

The appellants' response to the notice of contention

Mr Pollock and Style Show concede that, in relation to categories 2, 5 and 8, they have not established that there were reasonable grounds for believing that Ms Piggott has, or is likely to have had or to have, possession of such documents as required by O 26 r 4(2) of the Rules of the Supreme Court. Otherwise they deny the matters raised in the notice of contention.

Order 26A r 4 of the Rules of the Supreme Court 1971 (WA)

Order 26A r 4 of the Rules of the Supreme Court 1971 provides:
4.Discovery from potential party
(1)This rule applies if a person who may have a cause of action against a person whose description has been ascertained (the potential party) wants -
(a)to commence proceedings against the potential party; or
(b)to take proceedings against the potential party in the course of an action to which the person is a party,
but the person, after reasonable enquiries, has not been able to obtain sufficient information to enable a decision to be made as to whether to commence or take the proceedings.
(2)If there are reasonable grounds for believing that the potential party had, has, or is likely to have had or to have, possession of documents that may assist in making the decision, the person may apply for an order under this rule.
(3)The application shall be supported by an affidavit and a copy of both shall be served on the potential party.
(4)On the application the Court may order the potential party to give discovery of all documents that are or have been in the potential party’s possession and that may assist the applicant in making the decision.
The relevant principles were discussed by Mitchell J in Kelbush (Martin CJ & Buss JA relevantly agreeing). By O 26A r 4(1), the applicant for pre‑action discovery must be a person 'who may have a cause of action against' the potential party. The applicant does not need to establish positively the existence of a cause of action, but there must be evidence indicating, beyond mere assertion, conjecture or suspicion, that all facts necessary to give rise to a right to curial relief may be able to be established.[75]
[75] Kelbush [1], [7] ‑ [8], [70] ‑ [71] (emphasis added).
Further, as noted by Mitchell J:[76]
In Central Exchange Steytler J, with whom other members of the court agreed, observed:
'While it is true that the rule, in this State, uses the word "may", that does not mean that, in any case in which the applicant asserts a possible cause of action against some other person, no matter how speculative or remote, discovery will be ordered [82].'
(footnotes omitted)
[76] Kelbush [124].

Leave to appeal - principles

In Kelbush, Mitchell J (Martin CJ & Buss JA relevantly agreeing) said:[77]
An order dismissing an application for pre-action discovery is interlocutory in character.As such, the appellant requires leave to appeal under s 60(1)(f) of the Supreme Court Act 1935 (WA). Generally, leave should not be granted unless the decision below is plainly wrong or is attended by sufficient doubt to justify the grant of leave and a substantial injustice would be done if it remains undisturbed.
As Martin CJ noted in Waller, the requirement for leave to appeal against an interlocutory decision is no mere technicality or procedural nicety. Rather it is a substantive restriction which advances the administration of justice by preventing procedural disputes distracting the court and the parties from the determination of contested substantive rights. (footnotes omitted)
[77] Kelbush [80] ‑ [81].
Moreover, special restraint must be exercised when the interlocutory order under appeal is one concerning practice and procedure.[78]
[78] Dodds v Kennedy [2011] WASCA 32 [5].

Disposition

Whether the master's reasons are plainly wrong or attended by sufficient doubt

The material before the master was, arguably, to the effect that Mr Pollock and Lewis Piggott negotiated a proposal to purchase the property along the following lines:[79]
[79] The following does not purport to represent a final or conclusive view of the relevant arrangements.
1.The Company would purchase the property for $2.65 million, with payment of a deposit of $900,000.
2.The Company would hold the property on trust jointly for Lewis Piggott and Mr Pollock (or their nominees) pursuant to a unit trust deed, the terms of which remained to be drawn up. Also, each of Mr Pollock and Lewis Piggott (or their nominees) would be directors of the Company and equal shareholders in the Company.
3.Mr Pollock and Lewis Piggott would contribute $450,000 each toward the deposit by way of a loan to the Company.
4.Mr Pollock's contribution to the deposit would involve him paying $200,000 from his own funds and borrowing $250,000 from Lewis Piggott for that purpose.
5.Lewis Piggott would lend or procure a third party lender to lend to the Company the balance of the purchase price, comprising:
(a)$450,000 (for Lewis Piggott's contribution of the deposit);
(b)$250,000 (on behalf of Mr Pollock's contribution of $250,000 for the deposit); and
(c)the remainder of the balance due.
6.In relation to any funding made to or procured by Lewis Piggott for the Company, Mr Pollock would pay interest on the sum of approximately $900,000 at the rate of 15%, with a default rate of 25%.[80]
7.The Company would grant a mortgage over the property to secure any loan made to the Company by Lewis Piggott or a third party to fund the purchase of the property.[81]
8.Other than the interest rates referred to above, it appears that the terms and conditions of any loan, including the repayment date, were not agreed. Nor were any of the terms of a mortgage agreed.
[80] See, eg, [22] above.
[81] See also par 21 of Mr Pollock's and Style Show's written submissions; BB 20.
As noted earlier, Mr Pollock and Style Show contended, in effect, that a line should be drawn between the 'conveyance of the [property]' to the Company on the one hand, and Ms Piggott's registration of the Mortgage on the other. They contended[82] for the existence of a specifically enforceable agreement, pursuant to which the Company held the legal estate in the property on constructive trust for Mr Pollock and Style Show as to 50%, or for a resulting trust under which they had a 0.075% beneficial interest in the property.[83] Each trust allegedly intercepted the registration of the Mortgage in that it was said to arise immediately '[u]pon the conveyance of the [property]' to the Company, and prior to the registration of the Mortgage. The Company's grant of the Mortgage then (allegedly) involved a breach of the trust upon which the Company held the property, and it was submitted, in effect, that the beneficiaries of the trust may have claims against Ms Piggott for knowing assistance, knowing receipt of trust property, and breach of fiduciary duty owed by her to the Company.[84]
[82] Written submissions, par 19; BB 19.
[83] As noted earlier, in this appeal the appellants put their percentage interest in this alternative case at 8% rather than 0.075%.
[84] Appeal ts 6; see [39] - [40] above.
As noted earlier, Mr Pollock and Style Show commenced proceedings, in January 2014, asserting an entitlement to an equitable interest in the property. Accordingly, they do not require pre‑action discovery to enable them to make a decision as to whether to commence proceedings in that regard.
Turning to the five points relied on by Mr Pollock and Style Show before the master[85] concerning possible claims against Ms Piggott, the following observations may be made. As to point 1, it is difficult to see what s 127 of the Corporations Act has to do with any of the alleged causes of action. As to the suggestion that the Company had no power to mortgage the property, that seems to be at odds with their reliance on a binding agreement under which, on the evidence, it was apparently contemplated or agreed that the Company would complete the purchase of the property by obtaining a mortgage to finance the bulk of the purchase price. In other words, on the agreement upon which Mr Pollock and Style Show appear to rely, it appears to have been agreed between the (assumed) trustee Company and the (assumed) beneficiaries that the trustee would have the power to mortgage the property. Further, the relevant grant of the Mortgage, in equity, prima facie occurred at the time of the settlement of the purchase, and not at the point of the registration of the Mortgage. Moreover, it is difficult to conceive that a court would enforce the agreement on the basis that the Company could acquire the legal estate, and the beneficiaries obtain their equitable interest in it, as a result of the funds secured by the Mortgage, but then restrain the registration of the Mortgage on the basis that the grant of the Mortgage was a breach of trust in the first place.
[85] Referred to in [40] above.
The same observations apply to point 2. Further, it does not, prima facie, make sense to say that by taking the Mortgage, Ms Piggott held the property on constructive trust for Mr Pollock and Style Show or that she received the property knowing that the property was trust property. The Mortgage is a statutory charge, not a conveyance of the fee simple. A Torrens title mortgage involves no ownership in the land the subject of the security.[86] Similarly, the contention in this appeal[87] that Mr Pollock and Style Show may be entitled to a declaration that Ms Piggott held 'her legal interest in one half of the [property] on constructive trust' is not easy to understand.
[86] The English Scottish and Australian Bank Ltd v Phillips [1937] HCA 6; (1937) 57 CLR 302, 321 ‑ 322.
[87] Appellants' written submissions, par 48(a); WB 15.
As to point 3(a), this seems to rely on the matters in point 1 which, for the reasons indicated above, do not reveal the possibility of causes of action against Ms Piggott. As to point 3(b)(i), it is not clear what is meant by the proposition that Ms Piggott 'dealt with the [property] in breach of trust' or inconsistently with a constructive trust by the application of interest and/or costs that were objectively exorbitant. Ms Piggott was not, under the Mortgage, a trustee of the property. In any event, it would appear that, on the evidence, the rates of interest complained of before the master were suggested by Mr Pollock. If those matters were put to one side, it might, as a matter of theory, be accepted that if Lewis Piggott had breached his fiduciary duty as a director of the Company in granting the Mortgage to Ms Piggott, and if Ms Piggott knowingly assisted in that breach of duty, the Company may have causes of action against each of Lewis Piggott and Ms Piggott. Further, it may be accepted for present purposes as arguable that if the Company had, as trustee of some trust, such causes of action available to it, and Mr Pollock and Style Show were beneficiaries of the relevant trust, and the Company, as trustee, failed to commence proceedings against Lewis Piggott and Ms Piggott, then Mr Pollock and Style Show could arguably do so.[88] However, even accepting all of the above as a matter of theory, it is not apparent that the master was informed that Mr Pollock and Style Show were alleging a possible cause of action to the effect that Lewis Piggott had breached his fiduciary duties as a director of the Company.
[88] Alexander [55] - [56]. There was no debate as to whether s 236(3) of the Corporations Act had any significance in this context.
As to points 3(b)(ii) and (iii), as indicated earlier, these evidently relate to an allegation that there was an improper exercise of the power of sale by Ms Piggott as mortgagee in possession.
Point 4 concerns the allegation that Ms Piggott was a fiduciary of the Company who gained an unauthorised benefit by obtaining from the Company a mortgage on terms favourable to herself and unfavourable to the Company. Those matters, assuming they are arguable, indicate that the Company may have a cause of action against Ms Piggott. Prima facie, they do not indicate (subject to the matter mentioned in [81] below) that Mr Pollock or Style Show 'may have a cause of action against'[89] Ms Piggott within the meaning of O 26A r 4(1). Section 236 of the Corporations Act, to which Mr Pollock and Style Show referred in their written submissions before the master, refers to proceedings brought on behalf of a company (s 236(1)) and in the name of a company (s 236(2)).
[89] Rules of the Supreme Court, O 26A r 4(1).
As to point 5, the point seemingly being made by Mr Pollock and Style Show is that if, by registration of the Mortgage, Ms Piggott extinguished their pre‑existing beneficial interest in the property arising at the time of the conveyance of the property to the Company and prior to registration of the Mortgage, then the Mortgage could be set aside for equitable fraud or (if there be any difference between the two) because the causes of action referred to earlier gave rise to in personam claims against Ms Piggott to set aside the Mortgage. However, any causes of action to set aside the Mortgage would prima facie be those of the Company, subject to the point referred to next.
In their written submissions before the master, Mr Pollock and Style Show did not suggest that insofar as the Company had arguable causes of action against Ms Piggott, they were nevertheless entitled to bring proceedings against her as beneficiaries of a trust in accordance with the principles in Alexander.[90] Nor did they make that submission in their oral submissions in chief. Mention of such an entitlement emerged (briefly) in oral submissions in reply.[91] The matter received little attention in the hearing before the master, and there was no debate as to whether such an (arguable) entitlement is a 'cause of action' that they may have 'against' Ms Piggott within the meaning of O 26A r 4(1).
[90] Alexander [55] ‑ [56].
[91] ts 16.
Further, although broad assertions were made as to potential causes of action, there was no attempt by Mr Pollock and Style Show to outline to the master each of the material facts necessary to establish the various postulated curial relief.
Finally, Mr Pollock and Style Show did not contend that the evidence before the master indicated that they may have causes of action along the following lines: there was a partnership or joint venture between Mr Pollock and Lewis Piggott for the purchase of the property, pursuant to which Lewis Piggott owed fiduciary duties to Mr Pollock, which he breached by procuring the grant of the Mortgage (with its alleged uncommercial terms) to his sister, and in which Ms Piggott had knowingly participated.
The application before the master is to be considered in the above context.

Ground 1

Although the master's language was compressed, it appears to be implicit that his process of reasoning was that:
1.Even if the Company, upon acquisition of the property, held the property on trust for Mr Pollock (or Style Show) as to 50% (or some lesser percentage), the Company held the legal interest in the fee simple as registered proprietor.
2.The Mortgage operated as a statutory charge on the property, and not as a conveyance of the legal fee simple.
3.The coming into existence of an underlying equitable interest in the fee simple upon completion of the purchase would not, in itself, mean that the grant by the Company of a mortgage to enable the property to be acquired in the first place was in breach of trust.
4.A registered proprietor (such as a registered mortgagee) who acquires title merely with notice of an existing unregistered interest, or takes a transfer with knowledge that its registration will defeat such an interest, is not guilty of fraud for the purposes of the provisions of the TLA concerning indefeasibility of title.
5.On the evidence, the only real complaint that Mr Pollock and Style Show may have is if the mortgagee, Ms Piggott, improperly exercised the power of sale as mortgagee.
The master's implicit reasoning in points 1 ‑ 4 above was, with respect, correct.[92] The reasoning implicitly involved, in substance, the conclusion that Mr Pollock and Style Show had not shown, beyond mere assertion, on the evidence and by their submissions, that all the facts necessary to give rise to their claims against Ms Piggott for knowing assistance in breach of trust, knowing receipt of trust property, and breach of fiduciary duty, may be able to be established. The fifth point in the master's implicit reasoning follows from points 1 ‑ 4. In other words, if, for example, the property had been sold by the mortgagee for (say) $10 million and the mortgage debt was (say) $3 million, on the primary claim advanced by Mr Pollock and Style Show in their other proceedings, the Company would hold 50% of the balance of $7 million on trust for Mr Pollock (or Style Show). But that would not involve any claim against Ms Piggott.
[92] In relation to indefeasibility of title under the TLA, see Permanent Mortgages Pty Ltd v Vandenbergh [2010] WASC 10; (2010) 41 WAR 353 [367] ‑ [379].

Further, and contrary to the contention of Mr Pollock and Style Show, the master was invited, in effect, in written and oral submissions, to find that Mr Pollock and Style Show may have a claim against Ms Piggott for an improper exercise of the power of sale under the Mortgage. In dealing with this topic, the master, with reference to whether the property was 'sacrificed',[93] evidently had in mind the language of Griffith CJ in Pendlebury v The Colonial Mutual Life Assurance Society Ltd.[94]
[93] Primary decision [24].
[94] Pendlebury v The Colonial Mutual Life Assurance Society Ltd [1912] HCA 9; (1912) 13 CLR 676, 680.
If the master did overlook the contention that Mr Pollock and/or Style Show as beneficiaries were entitled to bring proceedings in accordance with the principles in Alexander[95] in respect of claims available to the Company as trustee, the error is immaterial. That is because the master evidently rejected the contention that Mr Pollock and Style Show had established, beyond mere assertion, that they may be able to establish all the material facts necessary to obtain curial relief with respect to the alleged trusts and/or alternatively the alleged breaches of trust.
[95] Alexander [55] ‑ [56].
With respect to the particular matters emphasised by senior counsel at the hearing of the appeal (referred to in [59] above), the following observations may be made.
As to the first point, a trustee of a bare trust, in general terms, holds the legal estate without any further duty to perform other than to convey the legal estate to the beneficiary.[96] It is doubtful that the arrangements deposed to would enable Mr Pollock and Style Show to call for a transfer to them of the legal estate in the property.
[96] Herdegen v Federal Commissioner of Taxation (1988) 84 ALR 271, 281.
As to the second point, it may be assumed, for present purposes, that there was a specifically enforceable agreement pursuant to which Mr Pollock was entitled to orders to the effect that he be appointed a director of the Company, an equal shareholder in the Company with Lewis Piggott and a beneficiary under a unit trust deed, and that, in that event, the Company would not have granted the Mortgage to Ms Piggott. Nevertheless, it is difficult to see how those assumptions assist Mr Pollock and Style Show. Absent evidence of at least the possibility that another party (such as a bank) may have lent the Company money to complete the purchase, there is nothing to indicate, on the material before the master, that the purchase of the property would or may have been completed. Had the purchase of the property not been completed, the trustee of the unit trust on this hypothesis (the Company), would not have acquired the property for the trust, and Mr Pollock and Style Show would have no beneficial interest in the property. Also, prima facie, the deposit would have been forfeited to the vendor, including Mr Pollock's contribution to the deposit of $200,000.
As to the third and fourth points, for the reasons given earlier, it appears that the master was not satisfied that the appellants had established, beyond mere assertion, that they may be able to establish all the material facts necessary to obtain curial relief against Ms Piggott with respect to the alleged trusts. Moreover, as indicated earlier, it was not submitted before the master that there was a joint venture or partnership under which Lewis Piggott owed, and breached, fiduciary duties to Mr Pollock, in which Ms Piggott knowingly participated.
In light of the foregoing, ground 1 has not been established.

Ground 2

Ground 2 relies on two propositions. The first is to the effect that the master failed to consider, and find, that Mr Pollock and Style Show had, or may have, substantial claims against Ms Piggott for the other causes of action as alleged in ground 1.
The second proposition involves the allegation quoted in [57] above. It is to the effect that Mr Pollock and Style Show wish to see whether Ms Piggott was 'properly entitled to be paid $3 million from the proceeds of the sale'. That contention raises a question of accounting between the Company and Ms Piggott as mortgagee. Any entitlement to an account is, prima facie, a cause of action vested in the Company, not Mr Pollock or Style Show. Senior counsel nevertheless contended at the hearing of the appeal that the proceedings for an account could have been maintained by Mr Pollock and Style Show as beneficiaries of the trust.[97] However, that contention again relies on matters advanced with respect to ground 1.
[97] Appeal ts 22.
For the reasons given earlier, ground 1 has not been established. Accordingly, ground 2 has not been established.

Conclusion

For the foregoing reasons, it has not been shown that the primary decision is plainly wrong or attended by sufficient doubt to warrant appellate intervention.

Whether substantial injustice

Nor have Mr Pollock and Style Show shown that they would suffer substantial injustice if the primary decision were left unreversed.
That is because:
1.The documents in categories 1 and 6 - 11 were said[98] to relate to the alleged improper exercise of the power of sale. No error has been shown in relation to the master's finding that the quantum of any claim that Ms Piggott had improperly exercised the power of sale under the Mortgage was likely to be modest.
2.Mr Pollock and Style Show concede that they did not establish that they had reasonable grounds for believing that Ms Piggott had, has, or is likely to have had or to have,[99] possession of the documents in categories 2, 5 and 8. The notice of contention should be upheld in this regard.
3.The documents in category 13 would, prima facie, be available from Stonetraders, a company with which Mr Pollock has an association. The notice of contention should also be upheld in this regard. Point 4 below also relates to the documents in category 13.
4.The documents in categories 3, 4 and 13 were said[100] to relate to 'how the property was dealt with during the … period while … the property was held on trust'. It is not apparent how such documents would assist Mr Pollock and Style Show in making a decision as to whether to commence proceedings, in relation to the grant of the Mortgage, for knowing assistance in breach of trust, knowing receipt of trust property, or breach of fiduciary duty owed by Ms Piggott to the Company.
[98] See [43] above.
[99] As required by O 26A r 4(2).
[100] See [43] above.

Conclusion

The application for leave to appeal should be refused, and the appeal should be dismissed.
It is otherwise unnecessary to deal with the notice of contention.