Federal Court of Australia

Kayler-Thomson v Colonial First State Investments Limited (No 3) [2023] FCA 606

ORDERS

THE COURT ORDERS THAT:

1.    The answer to each of questions 1 to 5 in Annexure A to the orders dated 12 August 2022 is determined in the affirmative.

2.    The first respondent pay the third applicant’s costs of and incidental to the determination of those questions in any event, such costs to be assessed if not agreed.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

COLVIN J:

1    Ms Wendy Gibson is the third representative applicant in proceedings brought against Colonial First State Investments Limited (Colonial). Colonial is the trustee of the Colonial First State FirstChoice Superannuation Trust (Fund). Ms Gibson was a member of the Fund at material times.

2    The claims made against Colonial in the representative proceedings are in respect of the arrangements made by Colonial as trustee concerning the interest rates to be paid on some of the funds invested in the Fund that were held in term deposits with the Commonwealth Bank of Australia (CBA). Colonial is alleged to be a subsidiary and close associate of CBA. It is alleged that the interest rates that were arranged by Colonial were lower than those which would have applied if Colonial had been dealing with CBA at arms’ length in the same circumstances.

3    For present purposes, relevant allegations made against Colonial in the proceedings are to the effect that it breached its obligations to act in the best interests of the beneficiaries of the FirstChoice Fund, to act with care and skill, to avoid or manage conflicts of interest and to avoid obtaining a profit from the dealings.

4    Discovery has been given in the representative proceedings. Ms Gibson seeks orders requiring Colonial to produce for inspection a number of documents in respect of which Colonial claims legal professional privilege. It is common ground that legal professional privilege may not be invoked by a trustee against a beneficiary of a trust where the trustee and the beneficiary have a joint privilege. The issue between the parties is whether there is such a joint privilege in the relevant documents.

5    The parties have identified five documents from amongst the documents that Ms Gibson seeks to inspect on the basis that the resolution of the competing contentions as to those documents will resolve all relevant issues. On 12 August 2022, orders were made for determination of questions as to whether Ms Gibson shares a joint privilege with Colonial in each of the five documents.

6    I have previously considered a similar application by Mr Keith Kayler-Thomson who is another representative applicant in proceedings against Colonial concerning the interest paid on term deposits arranged by Colonial with CBA. One of the issues on that application was whether Mr Kayler-Thomson could rely upon his status as a representative applicant to claim joint privilege in circumstances where he could not establish that he personally held a joint privilege in the relevant documents. I determined that a representative applicant in a class action could not claim production of discoverable documents on the basis of a joint privilege that was held by members of the represented class but not held personally by the representative applicant: Kayler-Thomson v Colonial First State Investments Limited (No 2) [2021] FCA 854 at [72]-[87]. On the present application, the correctness of that proposition was not in issue because Ms Gibson relies upon her personal circumstances to support a claim to joint privilege in the relevant documents. For present purposes, they are materially different to those of Mr Kayler-Thomson.

7    Ms Gibson was added as a representative applicant after the determination of the previous application for production of privileged documents brought by Mr Kayler-Thomson. She was a member of the defined class of persons for the purposes of the representative proceedings at the time of that earlier application. However, the opt out procedure for the representative proceedings had not occurred at that time. The significance of that fact for present purposes is that a person who opts out will not be bound by the conduct of the common questions that are determined by the representative proceedings. Therefore, at the time of the previous application by Mr Kayler-Thomson it was not possible to say that Ms Gibson was a person who, by her own actions, had conferred authority upon Mr Kayler-Thomson as to the conduct of the common questions.

8    Only some of the documents that Ms Gibson claims to be the subject of joint privilege were the subject of the application by Mr Kayler-Thomson.

9    Before identifying the issues on the present application, I will first explain the relevant contextual circumstances.

The circumstances of the application by Ms Gibson

10    The Fund was established by a trust deed dated 29 April 1998 which has been amended from time to time (Deed).

11    Colonial is, and at all material times has been, the trustee of the Fund.

12    Ms Gibson became a member of the Fund on 24 May 2005. At all material times thereafter, she was a contributor to the Fund and therefore a beneficiary.

13    The Deed provides for the Fund to be administered by providing benefits in respect of beneficiaries in any one or more ‘Divisions’ (cl 2.3).

14    At all material times, one of the Divisions of the Fund was FirstChoice Wholesale Personal Super and Ms Gibson was a contributor to that Division. The way in which that occurred was that Colonial marketed the FirstChoice Fund as comprising five different products. Each of the products corresponded with a Division as provided for by the Deed. One of the products was FirstChoice Wholesale Personal Super and Ms Gibson was an investor in that superannuation product (Product).

15    Members of the Fund who were investors in the Product were invited by Colonial to choose between various investment options for the investment of the funds they contributed to the Fund. Some of the options available to investors in the Product were also available to investors in other products (or Divisions).

16    From 17 November 2008, an option known as FirstRate Saver was made available to members of the Fund who were investors in the Product (and all other Divisions). Ms Gibson selected the FirstRate Saver investment option for some of her funds from 24 September 2012 to 4 October 2012 and from 31 October 2012 to 18 September 2019.

17    From 13 July 2009, an option known as FirstRate Term Deposits was made available to members of the Fund who were investors in the Product (and all other Divisions except FirstChoice Employer Super). Ms Gibson selected the FirstRate Term Deposits investment option for some of her funds from 23 September 2011 to 9 September 2019 (save for between 27 September 2012 and 3 October 2012 and from 18 May 2017 to 23 May 2017).

18    Where members selected the FirstRate Saver or the FirstRate Term Deposits option, Colonial invested the funds with CBA at interest rates agreed between Colonial and CBA.

19    The documents that Ms Gibson seeks to inspect fall into three relevant periods:

(1)    Documents created after she became a member of the Fund but before the establishment of the relevant option to which the document relates;

(2)    Documents created after she became a member of the Fund and after the option was available but before she selected the option to which the document relates;

(3)    Documents created after she became a member of the Fund and after the option was available and after she last invested in the option to which the document relates.

20    No issue arises concerning documents that were created during the time when Ms Gibson had selected the relevant option.

The principal competing contentions

21    Colonial advances a number of contentions in opposition to the application for production of the documents.

22    It says that the application by Ms Gibson is based upon the proposition that a person who was a member of the Fund at the time that a document was brought into existence has a joint privilege in any document concerning the Fund to which legal professional privilege applies. As to that proposition, it says that membership alone is an insufficient interest to establish joint privilege. It says that, in the circumstances of the Fund (particularly the way in which the interests of beneficiaries are structured), the member must be invested in the option to which the document relates at the time that the document was brought into existence in order for there to be joint privilege in the document. Implicit in the submission is the proposition that members were ‘invested’ in the options that were selected and the interest of the member in the Fund was limited to that ‘investment’. That is to say, the contributed funds of the member were applied to that investment such that the member’s interest was confined to that particular investment. The submission relies upon a passage in the reasoning in Kayler-Thomson at [94]-[95] as having rejected the proposition it says is advanced by Ms Gibson to the effect that membership alone is sufficient. It maintains that the alleged finding in Kayler-Thomson is binding upon Ms Gibson. Finally, it says that Ms Gibson is precluded from advancing any other reason to support the present application that was not raised in the earlier application by Mr Kayler-Thomson. In that respect it relies upon what it alleges to be the application of the doctrine of Anshun estoppel.

23    Each of the above contentions is said to be a complete answer to the application. If none of them are found to be such an answer then the following claims are made as to each of the three categories of documents that have been described above.

24    As to documents in period (1), namely those brought into existence before the relevant option was made available to members of the Fund, Colonial contends that there was no joint privilege where the documents were brought into existence during the ‘set up’ phase for an investment option. It uses the term ‘set up’ to refer to the period before the option was added as an available option that could be selected for the Division in which the member was invested. It relies upon findings said to have been made in Kayler-Thomson. It also relies upon the reasoning of Buss JA (McLure JA agreeing) in Schreuder v Murray (No 2) [2009] WASCA 145; (2009) 41 WAR 169 at [94(d)] to the effect that there will be a joint privilege if the trustee and the beneficiary have a joint interest in the subject matter of the privileged communications, information or documents ‘when they occur or come into existence’.

25    As to documents in period (2), Colonial claims that even after the option has been added, a member has no interest in documents relating to the option unless and until the member has selected the option for some of their funds.

26    As to documents in period (3), Colonial claims that a member has no interest in documents brought into existence after the member ceases to select the option for the member’s funds, even though the member continues to be a member of the Fund. It also claims that the relevant document brought into existence after Ms Gibson ceased to be invested in the FirstRate Term Deposit option did not concern any aspect of prior conduct or arrangements concerning that option at a time when it had been selected by Ms Gibson.

27    In short, Colonial claims that Ms Gibson only has a joint privilege in those documents that were brought into existence at a time when her contributed funds were said to have been invested in the option to which the documents relate, relevantly FirstRate Saver or FirstRate Term Deposit.

28    Ms Gibson contends that her claim that the documents should be produced for inspection is not based upon the proposition that her membership of the Fund at the time the relevant documents were brought into existence is a sufficient basis upon which to claim that there is joint privilege. Rather, she submits that there is joint privilege because in addition to her membership of the Fund, the documents concerned the administration of an aspect of the Fund in which she had an interest at the time that the document was brought into existence because they concerned an option that would be made available to her as a member of the Fund who could choose the relevant option. By extension, once the option was established, any documents the subject of legal professional privilege that were thereafter brought into existence were the subject of a joint privilege because they concerned an option that Ms Gibson could select (even if she had not selected the option at the time the document was brought into existence).

29    Both parties rely upon provisions of the Deed to support their contentions. Relevantly for present purposes, at all material times, the Deed provided as follows:

(1)    In Clause 2.1:

Each Beneficiary has a beneficial interest in the Assets of the Fund. A Beneficiary does not have any interest in a particular Asset but only has an interest in the Assets of the Fund as a whole;

(2)    The Fund was to include ‘Investment Portfolios’ as determined by the trustee (being the investment options to which reference has been made) (cl 2.9);

(3)    Colonial as trustee of the Fund was required to maintain the Investment Portfolios in such a way as to identify assets and liabilities of the Fund which are attributable to each Investment Portfolio (cl 2.10);

(4)    Each Investment Portfolio may be divided into units (cl 2.11);

(5)    Colonial as trustee of the Fund may establish new Investment Portfolios (cl 2.13);

(6)    In Clause 2.17:

Despite any other provision of the Deed, the liability of the Trustee to pay benefits to a person relates to all Assets of the Fund to which the liability is attributable and is not attributable to any particular Investment Portfolio, or Division or Plan or Class;

(7)    A beneficiary of the Fund is entitled to the benefits applicable to the Division in which the beneficiary has invested (cl 6.1);

(8)    Contributions by a beneficiary are to be allocated units in the Investment Portfolio notified by the beneficiary and permitted by the Trustee (cl 11.1);

(9)    A beneficiary of the Fund may ‘elect to switch amounts between Investment Portfolios’ if permitted to do so by Colonial as trustee (cl 13.1);

(10)    Colonial is required to keep records for the account of each beneficiary which show, amongst other things, the contributions made, movements in the value of the units allotted to the account, taxes, fees and charges, ‘amounts paid from the Fund (including benefits and transfers) in respect of the Beneficiary from the account’ and ‘any provisions for any payments from the account in respect of the Beneficiary’ (cl 14);

The issues for determination

30    The following issues arise on the application:

(1)    As a matter of principle, when will joint legal professional privilege exist as between a trustee and a beneficiary?

(2)    What was determined in Kayler-Thomson?

(3)    Is Ms Gibson bound in any way by the reasoning or decision in Kayler-Thomson or, if not, is Ms Gibson otherwise prevented from raising the contentions raised in support of the present application?

(4)    If no to (3), as to documents brought into existence in each of the three different periods, is the timing of the creation of the document a reason why joint privilege as between Colonial and Ms Gibson cannot arise in the document?

(5)    How should each of the five questions referred for determination be answered?

Issue (1): As a matter of principle, when will joint legal professional privilege exist as between a trustee and a beneficiary?

31    The relevant principles concerning joint privilege as between trustee and beneficiary were summarised by Buss JA (McLure JA agreeing) in Schreuder. As to when there will be a joint privilege, his Honour said (at [94]):

(d)     There will be a joint privilege if:

(i)     the confidential communications, information or documents relate to legal services in connection with the management or administration of the trust; and

(ii)     the trustee (in his or her capacity as trustee) and the beneficiary (in his or her capacity as a beneficiary, and either alone or as a member of a class of beneficiaries) have a joint interest in the subject matter of those confidential communications, information or documents when they occur or come into existence.

(e)     The joint interest of the trustee will derive from his or her duties to the beneficiaries or in respect of the trust fund, and the joint interest of the beneficiary will derive from his or her vested interest in the trust fund, in combination with the nature and character of the relevant communications, information or documents.

(f)     The beneficiary will not be entitled to a joint privilege with the trustee if the confidential communications, information or documents relate to legal services obtained for the benefit of the trustee personally (for example, if the trustee seeks legal advice as to his or her personal rights or liabilities in connection with an alleged breach of trust or threatened legal proceedings against him or her personally).

32    The decision in Schreuder concerned a testamentary trust. Consequently, the Court was not concerned with a trust of the kind being administered by Colonial the subject of these representative proceedings. In particular, the trustee of the testamentary trust did not undertake the development of investment options to be presented to individual beneficiaries as the basis for selecting an ‘Investment Portfolio’ to be maintained by the trustee on a unitised basis.

33    Further, the distinction being addressed in Schreuder was between legal advice taken by the trustee in undertaking the task of administering the vested interest of the beneficiary and legal advice concerning the personal rights or liabilities of the trustee. A beneficiary with a vested interest is entitled to due administration of the trust. It is the fact that the trustee is undertaking that obligation on behalf of the beneficiaries with a vested interest that gives rise to the joint privilege.

34    Given that the documents have been discovered by Colonial it may be accepted that they relate to the investment options the subject of the representative proceedings. In that regard, no issue is taken with the following finding in Kayler-Thomson at [16]:

In the present case, it was common ground that the administration of the trust involved presenting to members (beneficiaries) various investment options. The choices made by the member (perhaps with the assistance of an investment adviser) would then be implemented by Colonial in the management and administration of the Funds such that the requisite part of the funds being administered would be invested in that way and the interest of the member would be determined by the outcomes of those choices. Information would be made available by Colonial as trustee of the Funds to enable those choices to be made. Therefore, a significant part of the administration of the Funds involved the identification of the investment options and their appropriate presentation to members.

35    Further, the conclusion reached in Kayler-Thomson that the principles as to joint privilege apply to a trust with the characteristics of the Trust was not disputed by Colonial.

36    The issue here is whether Ms Gibson has a joint privilege in communications recording legal advice taken by Colonial in relation to an investment option which did not form part of the Investment Portfolio for Ms Gibson at the time the advice was taken either because (a) the option was still being developed and so was not yet available; or (b) all the funds contributed by Ms Gibson were allocated to an Investment Portfolio that did not include the investment option.

37    It was not suggested that there are any authorities that consider the issue of joint privilege in the context in which it arises in the present case. Therefore, in order to answer the questions reserved for consideration, resort is required to general principle and its proper application to the circumstances of the present case.

Issue (2): What was determined in Kayler-Thomson?

38    The first point to note is that the basis upon which the application for production of the privileged documents was refused in Kayler-Thomson was that the status of Mr Kayler-Thomson as a representative applicant did not confer upon him an entitlement to the joint privilege of each of the members of the class of persons as described in the representative proceedings. As it was found that Mr Kayler-Thomson did not himself have a claim to joint privilege, the application was dismissed: at [90].

39    The reason that Mr Kayler-Thomson was found not to have a personal claim to joint privilege was because (a) most of the documents were brought into existence before he was a member of the Fund (at [93]); and (b) as to the remaining documents, they were brought into existence before any funds of Mr Kayer-Thomson were invested in the FirstRate Saver or the FirstRate Term Deposits (being investment options that were described in the reasons in Kayler-Thomson as Deposit Options) (at [94]).

40    As to (b), the finding was expressed in the following terms at [94]:

Of the remaining items…, they were brought into existence before any funds of Mr Kayler-Thomson were invested in any of the Deposit Options. As has been explained the complaints raised in these proceedings concern conduct in relation to the rates of interest applicable for the Deposit Options. No other aspect of the management or administration of the Funds is in issue. Therefore, even though Mr Kayler-Thomson was a member at the time of the documents…he had no interest in the management or administration of the Deposit Options at the time.

41     I went on to further explain that finding in the following way (at [95]):

It was suggested for Mr Kayler-Thomson that his interest as a member was sufficient. In effect, he had a personal joint privilege in respect of all documents that related to the management and administration of the Funds when he was a member. The Court was not taken to any authority that considered a case where the nature of the member's interest in the trust meant that he was unaffected by the management and administration of a considerable part of the investment and returns earned by the trust. The point may be a significant one in different circumstances such as where the trustee seeks to resort to the assets of the trust by way of exoneration or where a trustee seeks to enforce a right to be indemnified out of the trust assets. However, where the basis upon which the documents are produced is the performance of a discovery obligation that relates to a complaint about a particular aspect of the administration of the trust being an aspect in which Mr Kayler-Thomson has no personal interest, it is difficult to see how there is a joint privilege. The joint privilege must be co-extensive with the right to due management and administration. There is no evidence to suggest that, in the circumstances, Mr Kayler-Thomson had such a personal right in respect of the management and administration of the affairs of the Funds to which the discovered documents relate.

42    It can be seen that the reasoning was based upon rejecting a contention advanced by Mr Kayler-Thomson that his interest as a member at the time that the documents were brought into existence was sufficient. However, the reasoning also involved the acceptance of the proposition that Mr Kayler-Thomson did not have a personal interest in the steps taken in the administration of the Fund in respect of investment options in which he was not invested at the time that the relevant steps were taken.

43    As has been observed, Ms Gibson disavows any claim that her interest as a member is a sufficient basis to be able to claim joint privilege. Rather, the contentions advanced by Ms Gibson on the present application seek to demonstrate how a person may have a personal interest in the administration of the Fund in respect of investment options which were not selected at the time that the relevant steps were taken. The contentions rest upon two propositions. First, a contention that a consideration of the terms of the Deed demonstrate that each beneficiary had an interest in the whole of the assets of the Fund and therefore each beneficiary had a personal interest in the whole of its administration. Second, a contention that the management and administration of the Trust ought not be viewed as a series of isolated events that occurred at an instant in time. Rather, administration occurs over a period in a way that means that conduct at one point will affect the way the trust is administered at a later point. Further, legal advice has ongoing effect. So, where the advice concerns the characteristics of investment options that are proposed to be made available to beneficiaries then the advice, if implemented and acted upon by the Trustee in a manner that affects the characteristics of those investment options, will have operative effect for the purposes of the management and administration of that option and will continue to have that operative effect unless and until those characteristics are changed by a decision made by Colonial as trustee. On that basis it is contended that a person who is a member at the time the advice is taken and who subsequently chooses an investment option (or is presented with that option as part of the way the Fund is managed and operated) has a joint interest in the subject matter of the legal advice.

44    These contentions were not addressed in Kayler-Thomson by reason of the way in which the claim was advanced on that occasion. As has been explained, Mr Kayler-Thomson sought to rely upon his status as a member of the Fund and the fact that he was a representative applicant for other members.

45    Nevertheless, it must be accepted that the reasoning in Kayler-Thomson at [94]-[95] states a conclusion that is contrary to the contentions advanced by Ms Gibson, albeit in circumstances where the contentions now presented were not there considered. In particular, there was no detailed focus upon the manner in which the funds of a member were ‘invested’.

Issue (3): Is Ms Gibson bound in any way by the reasoning or decision in Kayler-Thomson or, if not, is Ms Gibson otherwise prevented from raising the contentions raised in support of the present application?

46    The application brought by Mr Kayler-Thomson was interlocutory. It did not result in a final decision. Orders which are made to operate with finality so as to quell a controversy by extinguishing a cause of action operate in a different manner to interlocutory orders: Kuligowski v Metrobus [2004] HCA 34; (2004) 220 CLR 363 at [25]. Interlocutory orders are made until further order and a Court remains in control of its interlocutory orders: Hogan v Australian Crime Commission [2010] HCA 21; (2010) 240 CLR 651 at [29].

47    Therefore, the reliance by Colonial upon the reasoning in Tomlinson v Ramsey Food Processing Pty Ltd [2015] HCA 28; (2015) 256 CLR 507 at [22] was misplaced. It was concerned with the consequences of ‘the rendering of a final judgment’. See also, D A Christie Pty Ltd v Baker [1996] 2 VR 582 at 602 (Hayne JA, Charles JA agreeing).

48    Further, the principles associated with what is described as ‘Anshun estoppel’ apply in circumstances where a matter which could and should have been raised in earlier proceedings are sought to be raised in later proceedings. They do not pertain where, as here, there are successive applications within the same proceedings: Harvard Nominees Pty Ltd v Tiller (No 4) [2022] FCA 105 at [178] (Jackson J).

49    Generally, the Court will refuse to entertain a second interlocutory application made by the same party to revisit the same interlocutory issue in the same proceedings unless there has been a material change in circumstances or there is reliance upon material that was not available upon reasonable inquiry at the time of the earlier application: Nominal Defendant v Manning (2000) 50 NSWLR 139 at [11]-[17] (Mason P). Neverthleless, it may be accepted that the concerns that inform the principles of issue estoppel and Anshun estoppel may be brought to bear by a Court in declining to entertain a second interlocutory application as to the same subject matter: See also, Castillon v P&O Ports Ltd [2007] QCA 364; [2008] 2 Qd R 219 at [67] (Holmes JA). Principles of abuse of process may also apply.

50    The present application by Ms Gibson is not an instance where there is a repeat application by the same party. The decision made in Kayler-Thomson was an interlocutory decision that addressed the particular basis upon which the application was advanced. It was an application that turned upon the personal circumstances of Mr Kayler-Thomson. It did not determine claims to joint privilege that may be made by other members of the Fund based upon their personal circumstances. Indeed, it was common ground that the position of the second representative applicant was not to be determined on the earlier interlocutory application: Kayler-Thomson at [134].

51    In any event, it must be doubtful as to whether Ms Gibson could be constrained as to any application that she might make as a representative applicant by conduct of Mr Kayler-Thomson undertaken at a time when Ms Gibson was not a representative applicant and had not yet been given an opportunity to decide whether to opt out of the proceeding. This must be especially so in circumstances where, as has been explained, the decision in Kayler-Thomson rested on the finding that any claim to joint privilege could not be advanced by Mr Kayler-Thomson on the basis of his status as a representative applicant but rather depended upon his personal position. Class members are only privies in interest with respect to and to the extent of the common claims which are the subject of the proceeding: Dyczynski v Gibson [2020] FCAFC 120; (2020) 280 FCR 583 at [251] (Murphy and Colvin JJ). The finding that Mr Kayler-Thomson had not demonstrated a claim to joint privilege was not a claim in respect of which Ms Gibson was privy.

52    The observations of French J in Zhang v Minister of Immigration, Local Government and Ethnic Affairs [1993] FCA 715 at [41] (p 43) as to the possible application of Anshun estoppel principles in the context of representative proceedings were concerned with a circumstance in which all aspects of the proceedings which concerned an application for judicial review were dealt with on the basis that they were common questions. The question was whether those other applicants might be prevented from bringing judicial review claims that raised contentions that had not been advanced in the representative proceedings. Therefore, his Honour was dealing with a very different question to that which arises where there are successive interlocutory applications by different representative applicants in the same representative proceedings asserting a claim to joint privilege that depends upon the personal circumstances of the representative applicant (and not upon their representative status).

53    For those reasons, the contentions for Colonial to the effect that Ms Gibson was somehow prevented from bringing the present application by reason of the earlier interlocutory adjudication in Kayler-Thomson must be rejected.

Issue (4): If no to (3), as to documents brought into existence in each of the three different periods, is the timing of the creation of the document a reason why joint privilege as between Colonial and Ms Gibson cannot arise in the document?

54    For reasons that have been given, the issue as to whether there is a joint privilege as between Colonial and Ms Gibson in respect of documents recording legal advice obtained by Colonial as to matters that are relevant to the issues raised by her claim (now brought as a representative applicant) depends upon the nature and extent of the duty owed by Colonial to Ms Gibson to duly administer the Trust. That is because the joint privilege derives from the performance of the Trustee of that duty. It is why privileged documents that concern the personal position of the trustee rather than the execution of the duties and responsibilities of that person as trustee do not give rise to a joint privilege with the beneficiaries of the trust. It is also why it is only a beneficiary who can demonstrate that the documents relate to the performance of the duty to administer the trust in respect of an interest of the beneficiary that give rise to a joint privilege with that beneficiary.

55    Therefore, the question whether the joint privilege is confined to documents that were brought into existence at a time when Ms Gibson had selected the investment option to which the documents relate must depend upon an understanding of the duty owed to Ms Gibson as to the administration of the Fund which in turn depends upon an understanding of the nature and extent of the interest of Ms Gibson in the Fund.

56    The duty owed by Colonial to Ms Gibson to duly administer the Fund arose upon Ms Gibson becoming a member of the Fund. The issue between the parties concerns whether the duty owed to Ms Gibson to duly administer those aspects of the Fund that concerned the FirstRate Saver and the FirstRate Term Deposits only came into existence when (a) Ms Gibson had chosen the relevant investment option; (b) the choice had been accepted by Colonial as trustee; and (c) in consequence of (a) and (b), the funds contributed by Ms Gibson were being administered on the basis of a unit allocation in that investment option.

57    As has been mentioned, Ms Gibson advanced two contentions as to why the duty was not so confined, namely:

(1)    the terms of the Deed demonstrate that each beneficiary had an interest in the whole of the assets of the Fund and therefore an interest in the whole of its administration while a member; and

(2)    advice taken as to the investment options that continued to have operative effect for the purposes of the management and administration of that option at a time when Ms Gibson was invested in the option (or could invest in the option) was a part of the administration of the Fund in which Ms Gibson had an interest.

The contention that each member had an interest in the administration of the whole of the Fund

58    The Fund is required to be administered according to the terms of the Deed. The Deed provides that each beneficiary has an interest in the assets of the Fund as a whole. No beneficiary has an interest in a particular asset. Further, the liability of Colonial as trustee to pay benefits to a person ‘relates to all Assets of the Fund to which the liability is attributable and is not attributable to any particular Investment Portfolio, or Division or Plan or Class’. The amounts to be recorded in respect of each beneficiary concern the units allocated in the Investment Portfolio notified by the beneficiary and permitted by the Trustee.

59    Therefore, regard to the terms of the Deed as a whole demonstrates that the interest of a beneficiary is not confined to the units allocated in the beneficiary’s Investment Portfolio. Rather, the record maintained of those allocations determines the extent of the interest that the beneficiary has in the assets of the Fund as a whole. Significantly, the liability of Colonial to pay benefits from the Fund is not attributable to any particular Investment Portfolio or Division. Rather all of the Assets of the Fund that are held to pay benefits to beneficiaries are burdened with that liability irrespective of the particular investment choices made by an individual beneficiary as to the investments that make up that beneficiary’s Investment Portfolio. Despite the establishment of the Investment Portfolio, the member remains invested in the assets of the Fund as a whole.

60    It follows that each beneficiary has an interest in the due administration of the Fund as a whole. The Assets of the Fund were not separated or allocated. The interest of a beneficiary is not confined to a unitised share in each of the investments in the beneficiary’s Investment Portfolio. The choice by Ms Gibson as to an investment option did not result in the funds of the member being ‘invested’ in that option. Her interest was not even confined to all of the assets in the Division (that is, in the case of Ms Gibson, the part of the Fund comprising beneficiaries who had contributed to the Product). Rather, her choice of investment options resulted in Colonial arranging for her interest to be attributed to the nominated investment. It was on that basis that the share of each beneficiary in the assets of the Fund as a whole was determined by reference to the value of the attributed units for that beneficiary. That is, it was to be regarded as caused by that investment choice even though it remained an interest in the Fund as a whole. The choice of the investment option would result in Colonial arranging the investment to be made by the Fund (relevantly for present purposes in the FirstRate Saver or the FirstRate Term Deposits). However, the member’s interest in the Fund was not confined to that investment. The investment itself was not held solely for the member who chose the investment. Rather it became an Asset of the Fund as a whole that was attributed to the member for the purpose of calculating the extent of the member’s interest in the Fund.

61    Put another way, a default by Colonial as trustee in the due administration of any part of the Fund could affect the interest of all beneficiaries. For example, if Colonial did not arrange sufficient investments to match the selected investments and, in consequence, the returns generated by the Fund were less than those that would have been made if the investment had been undertaken, Colonial would still be obliged to record the interest of the beneficiary as if the investment had been undertaken. Further, the beneficiary would be entitled to insist upon resort to the whole of the assets of the Fund in order to recover the shortfall. Members contribute to the Fund and have an interest in the whole of the Fund. They are not confined to an interest in their selected investment.

62    However, that is not the end of the issue concerning joint privilege. Even where a beneficiary has a vested interest in the whole of the assets of a trust, issues arise as to whether the extent of any right to require the trustee to provide access to documents that concern the administration of the trust is coincident with the extent of the right of a beneficiary to due administration of the trust.

63    So, where a beneficiary seeks access to trust documents outside the context of litigation alleging breach of duty by the trustee of a trust, issues may arise as to whether a beneficiary with a right to the due administration of the whole of the trust has established a sufficient basis for the trustee to be required to produce any and all documents relating to the trust irrespective of their significance for the beneficiary. It may be that in such circumstances, the beneficiary must demonstrate a reasonable basis for the request. The extent to which that may be so could depend upon the legal understanding of the rationale for the right to seek the documents: as to which, see the authorities referred to in Kayler-Thomson at [62]. Therefore, it may be that the existence of the interest in the assets of the Fund as a whole is an insufficient basis for a beneficiary to have a right to inspect all of the documents relating to the administration of the Fund. Consequently, issues of joint privilege will not arise. Put another way, unless and until a beneficiary has established a reasonable basis upon which the trustee should be required to disclose documents in connection with the management and administration of the trust, the legal professional privilege is maintained by the trustee (either in the personal interest of the trustee or jointly for the trustee and the beneficiaries, as the case may be).

64    However, in the present case, no issue arises as to whether the documents must be disclosed. It is common ground that they are within the scope of the obligation upon Colonial to provide discovery. It is only because of the claim to legal professional privilege that they are not produced. Therefore, if they concern the management and administration of the Fund at a time when Ms Gibson was a beneficiary, there is a joint privilege. It is not necessary for Ms Gibson to demonstrate that the documents concern the management and administration of the FirstRate Saver or the FirstRate Term Deposits investment options. Nor is it necessary for Ms Gibson to demonstrate that she was a beneficiary who had chosen the relevant option as at the time that the document was brought into existence. The joint privilege is coincident with the extent of the activities undertaken in performance of the duty to duly administer the Fund and that duty relates to all of the assets of the Fund.

65    To be clear, simply being a member of the Fund is not enough. It is the combination of the fact that Ms Gibson is a beneficiary and the fact that all beneficiaries have an interest in the whole of the Fund and therefore in the due administration of the whole of the Fund that gives rise to the joint privilege. If the Fund had indeed been established on terms whereby the interest of each beneficiary was limited to the assets within a Division or to those nominated in the beneficiary’s Investment Portfolio then the fact that the person was a beneficiary would not have been a sufficient basis to demonstrate joint privilege in documents that related to the due administration of parts of the Fund in which the beneficiary had no interest.

66    Colonial relied upon the terms of the Superannuation Industry (Supervision) Regulations 1994 (Cth) to support its submission to the effect that a member’s interest in the Fund is to be characterised by reference to the benefits reflected in the member’s account (which is based upon the unitised amounts attributed to the member for each of the investment options in the member’s Investment Portfolio). However, the provisions in the Regulations relied upon by Colonial do no more than provide for the way in which a member’s benefit must be paid. They ensure that the funds contributed by members to superannuation are the subject of individual accounts for each member so that the amount of the member’s individual benefit can be determined at any point in time. None of those provisions are inconsistent with the member’s benefit taking the form of an interest in the Fund as a whole in circumstances where the amount of the benefit is determined by the record in the accounts that are required to be maintained by Colonial as trustee for the member’s Investment Portfolio. None of the provisions in the Regulations require the interest in the Fund to be confined to individual assets held by the trustee solely for the benefit of an individual member.

67    Further, contrary to the submission advanced by Colonial, no aspect of the reasoning of Sifris and Walker JJA in Shimson v MLC Nominees Pty Ltd [2021] VSCA 363 requires a conclusion that a member’s interest in a fund like the Fund is confined to assets that correspond to the investment options selected by the member.

68    Finally, the example given by Colonial as to what would occur in relation to legal advice taken by Colonial as the holder of a group insurance policy for the benefit of members who have selected an option for such cover to be arranged by Colonial proceeds upon a false premise. It treats the interest that a member has as a beneficiary who has made such a selection as being coincident with the interest that a member has as a contributor of monies to the Fund. A member who has not selected the insurance cover would have no interest in the due administration of the group insurance policy by Colonial nor in the due application of the proceeds of any claim. Such insurance proceeds do not form part of the Fund to which a beneficiary has contributed and in which the beneficiary has an interest by reason of such contribution. They are received by Colonial pursuant to the terms of the group insurance for the benefit of an identified insured. The fact that all members of the Fund have a joint privilege as to legal advice concerning the management and administration of the Fund would not give a member a basis to claim joint privilege in legal advice obtained by Colonial as to the general administration of a group insurance policy under which the member is not an insured or in respect of legal advice obtained concerning a claim by an individual that there was coverage for that individual under the policy.

The contention that legal advice continued to have operative effect

69    The further contention advanced by Ms Gibson proceeds on the basis that the first contention is not accepted. Therefore, given my conclusion as to the first contention it is not strictly necessary to consider the further contention. However, as it was the subject of significant argument, I will address the contention on the assumption (contrary to my conclusion) that the first contention has not been upheld.

70    Significantly, joint privilege arises where a beneficiary has a joint interest in the subject matter of the confidential communications, information or documents that relate to legal services when they occur or come into existence: Schreuder at [94](d)(ii).

71    In the present case, Ms Gibson was a beneficiary at the time that the documents were brought into existence, but she had not chosen the relevant investment options to which the documents relate. Assuming that the documents concerned whether, for those who had contributed funds for the Product, the FirstChoice Fund or the FirstRate Term Deposits should be introduced as an investment option or the form that such an investment option would take or the steps actually undertaken to establish the investment option then the contention is that for so long as the legal advice continued to be carried into effect it affected the characteristics of the investment option at the time it was subsequently chosen by Ms Gibson (or when it was subsequently available to be chosen by Ms Gibson).

72    Even if a beneficiary of the Fund did not have an interest in the Fund as whole, having regard to the particular characteristics of the Fund, each beneficiary in a Division would have an interest in the management and administration of the investment options that were being developed on the basis that they would be made available for selection by that beneficiary. Those steps, when undertaken, were part of the due management and administration of the aspects of the Fund in which such a beneficiary had an interest because they determined whether an investment option would be available and, if so, the form that it would take.

73    Assuming (contrary to my earlier finding) that the member did not have an interest in the Fund as a whole, the fact that individuals were invited to participate in a Division (in the case of Ms Gibson by investing in the Product) gave those individuals an interest in the decisions being made as to what investments to be made available to those members investing in the Division. The range of investments that Colonial decided to offer at any time confined the way in which the contributed funds would be managed and invested. The interest of a beneficiary like Ms Gibson was not confined to the selected invested options at any point in time. The beneficiary could choose an investment option and if that choice was accepted by Colonial as trustee then the beneficiary’s interest in the Fund would reflect the unitised value of the selected option.

74    The submissions for Colonial treated the interest of Ms Gibson as if it were confined to the investments that were selected for her Investment Portfolio at any point in time. On that basis, Colonial sought to confine the duty of due administration of her interest to what was done in respect of the selected investments for so long as they were selected. The terms of the Deed do not support a conclusion that the interest of beneficiaries like Ms Gibson is so confined (even assuming the member’s interest was confined to the Division in which the member was “invested”). They are entitled to due and proper consideration of the investment options to be made available and due and proper consideration of the structure of those options where they were formulated and established by Colonial or with the participation of Colonial.

75    It follows that if the first contention had not been upheld, I would have upheld the further contention at least to the extent that I have outlined. That is because the due and proper administration of the selections being presented to Ms Gibson was a significant part of the way her funds were being administered because of the mechanism by which members selected their Investment Portfolio. That mechanism identified the class of investments that could be chosen by a member. The management of the funds in each Division was not confined to implementing the selected investments, it included the decisions as to what to include in the menu of investments from which members could choose.

76    Therefore, even if the nature and extent of the interest of each member was confined to the investments in the Investment Portfolio from time to time, the way in which that portfolio was managed from time to time included all steps taken as to what would be made available to the member (not just the steps taken in relation to selected investments). Therefore, there was a joint privilege in all legal advice taken whilst the person was a member as to the investment options to be presented to members invested in the relevant Division (in the case of Ms Gibson being the documents in issue in the present case).

77    Finally, if indeed (contrary to the reasoning immediately above), the interest of a member like Ms Gibson was both confined to the investments that formed part of the Investment Portfolio from time to time and the management of those selected investments during the period when they were selected then it seems to me that documents brought into existence before or after the time when the investment was in the Investment Portfolio would not meet the requirement expressed in Schreuder. The reasoning in Schreuder links the joint privilege to the existence of an interest in the subject matter of the advice at the time that the privileged communication occurred. The contentions advanced by Ms Gibson sought to claim that the joint privilege arose if the advice was deployed or acted upon in some way (or otherwise influenced the characteristics of an investment option) at the time that the investment option the subject of the advice was chosen by the member. Therefore, applying Schreuder, it seems to me that aspect of the contentions advanced by Ms Gibson must be rejected.

78    I accept that upholding the first contention or the further contention (to the extent explained) means that my reasoning on the present application might be viewed as being inconsistent with my conclusion in Kayler-Thomson at [94]-[95]. However, as I have endeavoured to explain, in material respects the contentions advanced by Ms Gibson on the present application were not advanced by Mr Kayler-Thomson. The submissions on the present application depended upon a consideration of the terms of the Deed. Those terms were not addressed in the application by Mr Kayler-Thomson: see Kayler-Thomson at [51]. Further, my conclusion in Kayler-Thomson to the effect that Mr Kayler-Thomson had no interest in the management and administration of the ‘Deposit Options’ (that is, the FirstRate Saver and FirstRate Term Deposits) before he ‘invested’ in those options was reached without the benefit of submissions as to the nature of the interest of a beneficiary in the Fund. With the benefit of the submissions advanced on the present application, it is clear that a member of the Fund does not ‘invest’ in the investment options. Rather, the beneficiary contributes to the whole of the Fund.

79    The Product in which Ms Gibson invested determined the Division that applied to her contribution. Within the Division there were particular investment options from which selections could be made from time to time. Those selections when made resulted in the Investment Portfolio which comprised investments attributed to the member for the purpose of determining the extent of the benefit to which the member was entitled from the Fund. However, there was no sense in which the investment by the beneficiary was confined to the assets identified in the Investment Portfolio. Instead, the selected investment options determined the calculation of the extent of the interest of the beneficiary in the whole of the Fund and the beneficiary was entitled to resort to the whole of the Fund when seeking payment of the ‘benefits’ of the beneficiary (that is, the discharge of the trustee’s liability in respect of the beneficial interest of the beneficiary).

Issue (5): How should each of the five questions referred for determination be answered?

80    As to documents 1, 2 and 4, the submission for Colonial as to why those documents should not be required to be produced was that the documents were created before Ms Gibson was invested in the FirstRate Saver and FirstRate Term Deposit investment options. For reasons that have been given, that submission should not be accepted. It follows that Colonial and Ms Gibson share a joint privilege in each of those documents and the questions as to those documents should be answered in the affirmative.

81    As to document 3, Colonial again relies upon the fact that the document came into existence before Ms Gibson selected the FirstRate Saver as an investment option. For reasons already given, that is not a reason why there is no joint privilege. Colonial makes a further submission in the alternative to the effect that the document was ‘no longer relevant after 19 November 2009’ being nearly three years before Ms Gibson made her investment. However, that submission is advanced on the basis that the first contention for Ms Gibson is not upheld. That premise has been rejected. Therefore, it is not a reason why there is no joint privilege. The question as to document 3 should be answered in the affirmative.

82    As to document 5, Colonial describes the document as an email from a member of Colonial’s ‘Product team’ to an internal lawyer. It says that the email contains a request for legal advice regarding changes that were being proposed to interest rates offered on the FirstRate Term Deposits investments option. Colonial relies upon the fact that the document came into existence after Ms Gibson chose to no longer select the FirstRate Term Deposits investment option as part of her Investment Portfolio. For reasons that have been given, the fact that Ms Gibson was a member who had contributed to the Fund and thereby had an interest in the whole of the Fund gave rise to a joint privilege in the document even though it was brought into existence after Ms Gibson ceased to select the FirstRate Term Deposits investment option. Colonial submits that as the email seeks advice about a proposal and does not concern matters about Colonial’s prior conduct or arrangements that is a reason that supports its position that there was no joint privilege. However, for reasons that have been given, Ms Gibson had an interest in the due administration of the investments options that were to be available from time to time regardless of whether she was invested in them. Therefore, the question as to that document should be answered in the affirmative.

Conclusion and orders

83    For reasons that have been given each of the questions posed by the order of 12 August 2022 (as set out in Annexure A to those orders) should be answered in the affirmative because Colonial and Ms Gibson share a joint privilege in each of those documents.

84    Each party submitted that costs should follow the event. As Ms Gibson has been entirely successful there should be an order that Colonial pay the costs of and incidental to the determination of the questions in any event.

Associate:

Dated:    9 June 2023