Alsop Wilkinson v Neary

3. The trustee must consult the beneficiaries and inform the court of their attitude. 24 It must always be remembered that the prime purpose of the exercise is to see that the trust is properly administered with regard to its status in the present case as a charitable trust. 25 With these matters in mind, I now turn to the submissions that have been made by counsel. 26 Mr Blake SC for the plaintiff, made written submissions dated 27 February 2006 and made a series of points which can be summarised as:

1. The established practice in applications for judicial advice of the court is not to compel legal advice as to a trustee's case or defence to be provided to other parties to the litigation.

2. The principles of natural justice do not require provision of the legal advice of a trustee to other parties to litigation. 27 As to Mr Blake's first proposition, I think, with respect, it is too widely stated. I have read the cases that he refers to, some of which contain what I might call only throw away lines or words directed to what I called primitive applications in Re Perpetual Trustee Co Ltd [2003] NSWSC 1185. I have already dealt with what I consider to be the current leading cases on the topic and I do not consider there is any established practice in the present sort of case to deny complete access to other parties to a s 63 application or other parties who are properly endeavouring to assist the court in the determination of the s 63 application. 28 Certainly, as I said in Re Permanent Trustee Australia Ltd (1994) 33 NSWLR 547 and as is made clear in the English practice note, one withholds confidential information and, if one follows the English practice note, information which, although not privileged material in the s 63 application, would be privileged material as against the objectors in the principal proceedings. I will return to this point later. 29 The confidential material would include commercially sensitive information. It would also include counsel's assessment of the facts of the case and his or her opinion as to how a judge might react to the various affidavits or witness statements and probably how the law related to the facts. It would also extend to counsel's opinion of the chances of success. However, on the other side of the line to my way of thinking would be counsel's statement of what the law is, particularly if that statement was made as a result of stating what various judges had said in the leading cases. 30 As far as natural justice is concerned, as Mr Blake points out, what is appropriate in terms of natural justice depends on the circumstances of the case: Kioa v West (1985) 159 CLR 550, 584. 31 Mr Blake says that the court's jurisdiction under s 63 is to provide in an essentially administrative case, private advice to a trustee. However, he then acknowledges that "The court is essentially engaged solely in determining what ought to be done in the best interests of a trust estate and not in determining the rights of adversarial parties." 32 Mr Blake tends to rely on the second part of that statement, but in my view the first part is equally valuable, that is, that the court is not dealing with a s 63 application in order to give a trustee some advantage in litigation by allowing it to use trust funds to defend its position, but rather is making a determination which is best for the trust estate. 33 Insofar as that application involves questions of law then the court is assisted not only in having the trustee's counsel giving an opinion as to the questions of law (not the law as it relates to the facts but the law in general), but also in receiving comment on that statement by the objectors' counsel. Normally, the court is best placed to make a decision by hearing the best statements of two opposing views. 34 With respect, Mr Blake's submission does not make me deviate from the basal proposition in Re Permanent Trustee Australia Ltd that, in an application such as the present, (which might be distinguished from a primitive application or an application in a corporate struggle), the court withholds from the objector any confidential information or perhaps material which would be privileged in the principal application, but otherwise is interested in obtaining its comments on the material whether that material is contained in counsel's advice or otherwise. 35 Mr Parker SC for the objectors, argued that there was no valid way of distinguishing the Permanent Trustee case and it must be borne in mind that the court had to consider the benefit of the trust in pursuing the litigation as well as whether there was a sufficiently arguable case. He put that really questions of privilege had little part to play. 36 In answer to the comment I made during the hearing that the changed rules on preliminary discovery may indicate a changed public policy that there should be greater disclosure by people in litigation of their case to their opponents, Mr Parker in additional submissions put that this matter was relevant because the plaintiffs could hardly be prejudiced by disclosure of opinions to the extent that such disclosure would only reveal material which would need to be discovered in due course. 37 I have already called attention to the English practice note on the subject. I will set out various relevant parts which, to my mind, with respect, are common sense and are relevant to applications in this court as well as in England: "Evidence 7.1 The trustees' evidence should be given by witness statement. In order to ensure that, if directions are given, the trustees are properly protected by the order, they must ensure full disclosure of relevant matters, even if the case is to proceed with the participation of beneficiaries as defendants. 7.2 Applications for directions whether or not to take or defend or pursue litigation should be supported by evidence including the advice of an appropriately qualified lawyer as to the prospects of success and other matters relevant to be taken into account, including a cost estimate for the proceedings and any known facts concerning the means of the opposite party to the proceedings, and a draft of any proposed statement of case. … 7.4 All applications for directions should be supported by evidence showing the value of the trust assets, the significance of the proposed litigation or other course of action for the trust and why the court's directions are needed … . 7.6 If a beneficiary of the trust is a party to the litigation about which directions are sought, with an interest opposed to that of the trustees, that beneficiary should be a defendant to the trustees' application, but any material which would be privileged as regards that beneficiary in the litigation should be put in evidence as exhibits to the trustees' witness statement, and should not be served on the beneficiary. However if the trustees' representatives consider that no harm would be done by the disclosure of all or some part of the material, then that material should be served on that defendant. That defendant may also be excluded from part of the hearing, including that which is devoted to discussion of the material withheld." 38 7.7(3) provides that: "The evidence must explain what, if any, consultation there has been with beneficiaries, and with what result. In preparation for an application for directions in respect of litigation, the following guidance is to be followed: …. (3) In relation to a charitable trust the trustees must have consulted the Attorney General, through the Treasury Solicitor, as well as the Charity Commissioners …". 39 It is clear that if the English directions were applicable in the present case, the present application is deficient in evidence. That, however, does not concern me on this application. The thing that does concern me is that the English directions clearly favour the approach that not only are hostile beneficiary objectors to be given as much material as possible without prejudicing the trustee's case, there must be consultation in charitable trust matters with representatives of the Attorney General. 40 All this material reinforces the view that the objectors should be given access to as much of Mr Blake's opinion as does not: (a) disclose confidential information; and (b) contain material which is privileged in the principal litigation. 41 Mr Blake's opinion and supplementary opinion are said to have been made available to the court "on a confidential basis" whatever that means. In fact they have been kept by a judge and not let out of his chambers. 42 I cannot give this judgment without referring to some parts of the opinion, but I will be very conservative and only refer to those matters which could not be the subject of confidentiality or privilege. I will then publish these reasons and stand the matter over for a short time for short minutes so that there can be a proper objection made to any of my preliminary rulings. 43 The first 31 pages of the opinion merely set out the history of the main proceedings and judicial advice proceedings, the questions arising and the advice that has been sought. Pages 32 to 41 set out more or less verbatim various parts of the Canons of the Church and judgments of the courts bearing upon them. Pages 41 to 62 deal with matters of facts and documents all of which have already been made public. Pages 62 to 74 merely set out propositions of law supported by long quotations from the authorities. Pages 74 to 94 under the heading "(c) Conclusions" constitute opinions of counsel which in the principal litigation would be privileged as against the objectors and I believe should not be disclosed. 44 Pages 94 to 108 deal with facts which are already in affidavits filed in the proceedings. 108-115 are in the same plight. 45 Pages 115 to 125 set out long extracts from the cases and state legal principles. 46 The section headed "(c) Conclusions" commencing on pages 125 to 144 may well be privileged on the same basis as the previous conclusions. Pages 144 to 153 appear to deal with facts which are within the knowledge of all the participants and 153 to 156 deal with legal principles. 47 Pages 156 to 165 under the heading "(c) Conclusions" appear to me to be privileged in the principal litigation. 48 Pages 166 through to 168 state facts and 168 to 172 state principles of law and these are not confidential in any way. The heading "(c) Conclusions" commencing on 172, however, does introduce a further passage of privileged material which goes on until 179. 49 I will not describe what is on pages 179 to 182, but apart from para 390 which merely quotes from Wheeler v Philip Morris Ltd (1989) 97 ALR 282 at 311, the material might be considered to be privileged. There are some conclusions which also fall into the privileged category up to the top of 184. Pages 184 to 185 being paras 395-396 are not privileged. 50 The supplementary opinion of 27 February 2006 states conclusions and may well be privileged in the principal proceedings. 51 Accordingly, in my view I should permit inspection by the objectors of Mr Blake SC's opinion of 13 December 2005 except paras 100-164, 256-300, 327-343, 363-394 and so much of the Table of Contents as refer to any of those paragraphs. 52 However, the only formal order I make is to stand the proceedings over until 11 May 2006 at 9.30 am for short minutes to be brought in and further directions made.

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