Rollo Ventry Wakefield Gray v BNY Trust Company of Australia Limited

Supreme Court of NSW|2009-04-22|Before: Bergin CJ

The application of all of the principles discussed does not lead to the conclusion that the legal professional privilege does not apply against the first eight respondents. They are no longer directors of the Bank. Their interests are adverse to those of the Bank. Their purpose in seeing the documents is not to serve the interests of the Bank or to enable the discharge of their duties as directors but to serve their own interests in the litigation. 54 The real issue for determination in this application is whether the privilege claim made by the defendant is unsustainable by reason of the Court's order that the plaintiff pay part of the defendant's costs and that the defendant was entitled to indemnification out of the assets of the Estate for its costs of the previous litigation. The cases referred to above do not address this particular issue. However the SA Bank case points up the character of the relationship between the plaintiff and the defendant in this case. In aspects of the previous litigation the plaintiff was an adversary of the defendant. His present purpose in seeing the documents is, in part, to support his claims in the Accounts Motion in which he is attempting to allege, inappropriately in my view, that the defendant was not justified "in recovering indemnity from the estate" for the costs that were awarded by Austin J. Austin J has already decided that matter adversely to the plaintiff. Be that as it may, it is necessary to focus on the relationship at the time the documents were created. There is no doubt that at the time the documents were created in relation to the main proceedings in which the plaintiff was suing the defendant the communications were privileged. The plaintiff's claim against the defendant for revocation was unjustified and he was ordered to pay the defendant's costs. The defendant was also entitled to be indemnified out of the assets of the Estate for its costs. This does not in my view mean that the plaintiff has a proprietary interest in the documents in the sense that the cases recognise beneficiaries' entitlement to access trust documents. These documents were not for the benefit of the plaintiff. They were documents created for the purpose of the defendant defending itself against the unjustified litigation against it by the plaintiff. The fact that an order was made that the plaintiff pay the defendant's costs coupled with an order of its entitlement to indemnification, does not in my view convert the privileged advice received by the defendant to defend itself into an advice for the benefit of the plaintiff and thus a trust document to which the plaintiff is entitled to access. 55 At the time he abandoned his revocation claim the plaintiff did not discontinue the balance of his proceedings against the defendant. There were still some minor claims against the defendant but the defendant did not seriously resist the remaining minor claims. These related to the items of jewellery and a small amount of money. The defendant was ordered to pay the plaintiff's costs of that aspect of the previous litigation against it from the time of the abandonment of the revocation claim once again with an entitlement to indemnification out of the Estate. It appears that the reason Austin J allowed indemnification in relation to this aspect of the defendant's costs and its obligation to pay the plaintiff's costs was because his Honour regarded it as appropriate for the defendant to remain represented in the litigation to assist him impartially with some difficult questions of law where the two beneficiaries were adversaries. The documents created during this phase of the litigation were however paid for out of the Estate and at a time when the plaintiff and the defendant were not, in reality, adversaries. In my view the plaintiff is entitled to access to the documents in relation to the main claim (excluding the communications in relation to the revocation claim) in the previous litigation.

56 The plaintiff and the defendant were not adversaries in relation to the Cross-Claim against the defendant's brother. They were litigating for the same outcome - that the plaintiff's brother should repay to the Estate the loans he received from the deceased. The defendant's communications with its solicitors and barristers were to assist the defendant in achieving an outcome that would be to the plaintiff's benefit, at least as to half of the amounts to be repaid. If there had been an application by the plaintiff's brother to access those communications, the plaintiff may well have been able to claim common interest privilege to object to access being granted to his brother: Bulk Materials (Coal Handling) Pty Ltd v Coal & Allied Operations Pty Ltd (1988) 13 NSWLR 689. The plaintiff is entitled to have access to the communications between the defendant and its solicitors and barristers in respect of the Cross-Claim against the plaintiff's brother.

Conclusion 57 The plaintiff is not entitled to access to the communications between the defendant and its solicitors and barristers in respect of the plaintiff's claim against the defendant for the revocation of the grant of Probate. The plaintiff is otherwise entitled to access to the communications between the defendant and its solicitors and barristers in relation to the previous litigation. I will grant the defendant a short adjournment to decide whether it wishes to maintain a claim of privilege over the narratives in the Mallesons' accounts in respect of which approval is sought in the Accounts Motion. I list the matter on 4 September 2009 at 9.30 am for the purpose of the defendant indicating its position in that regard. On that date I will also hear any argument as to costs of this application if the parties are unable to agree on a costs order. **********

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Family Provision Act 1982(NSW)

CITATION : Rollo Ventry Wakefield Gray v BNY Trust Company of Australia Limited (formerly Guardian Trust Australia Limited) [2009] NSWSC 789

Avanes v Marshall & Ors (2007) 68 NSWLR 595 Bacon v Bacon (1876) 34 LT 349 Brown v Oakshott (1849) 12 Beav 252 Bulk Materials (Coal Handling) Services Pty Ltd v Coal & Allied Operations Pty Ltd (1988) 13 NSWLR 689 Buzzle Operations Pty Ltd (in Liq) v Apple Computer Australia Pty Ltd [2009] NSWSC 225 Devaynes v Robinson (1855) 20 Beav 42 Garratt's Limited v Thanga Thangathurai [2002] NSWSC 39 Gouraud v The Edison Gower Bell Telephone Company of Europe (1888) 57 LJ Ch 498 Gray v Gray [2004] NSWCA 408 Gray v Gray [2005] NSWCA 129 CASES CITED : Gray v Guardian Trust Australia [2002] NSWSC 1218 Gray v Guardian Trust Australia Ltd [2003] NSWSC 704 Gray v Guardian Trust Australia Ltd [2003] NSWSC 887 Re Londonderry's Settlement [1965] Ch 918 Mayor and Corporation of Bristol v Cox (1884) 26 Ch 678 McDonald v Ellis [2007] NSWSC 1068 Minet v Morgan (1873) LR 8 Ch App 361 Schmidt v Rosewood Trust Ltd [2003] 2 AC 709 State of South Australia & Anor v Barrett & Ors (1995) 64 SASR 73 Talbot v Marshfield [1865] 62 ER 728 Thomas v Secretary of State for India in Council (1870) 18 WR 312

5 Austin J heard the proceedings on 13 and 14 August 2002 and in his judgment delivered on 18 December 2002, his Honour concluded that the loans were made to the plaintiff's brother and directed the filing of Short Minutes of Order to finalise the matter. His Honour also directed that there should be an order in those Short Minutes that the defendant verify and file its accounts: Gray v Guardian Trust Australia [2002] NSWSC 1218. Those orders were filed and made by his Honour on 21 February 2003. 6 In his judgment of 1 August 2003 in relation to costs in respect of those proceedings (Gray v Guardian Trust Australia Ltd [2003] NSWSC 704 (the Costs Judgment)) Austin J identified the issues before him as follows:

7 In response to a question from me, the parties conceded that it was appropriate for the Court to deal with all questions of costs of the proceeding (including the cross-claim) and also Guardian's claim to be indemnified for any costs from the assets of the estate. The parties did not agree that I should deal with any aspect of Guardian's right of recourse to the estate for the costs of administration other than costs in respect of the proceeding and cross-claim. 7 His Honour referred to a number of additional matters that needed consideration where executors or other personal representatives are involved in litigation and concluded that there were good reasons for the defendant to have remained represented during the hearing, given the particular antagonism between the plaintiff and his brother and the need for the Court to be given relatively impartial assistance on some difficult issues of law: at [9]-[11]. In respect of the plaintiff's abandoned claim for the revocation of the grant of Probate, his Honour identified the issue as being whether the circumstances were sufficient to justify the plaintiff's commencement and subsequent maintenance of the proceedings and whether the defendant's conduct disentitled it from recovery of any costs. The plaintiff contended before Austin J that his costs for the period 5 October 1999 to 5 June 2001, when the claim for revocation was abandoned, should be paid by the defendant, with no right of reimbursement from the estate. 8 His Honour concluded that: the plaintiff was not justified in commencing the proceedings for the revocation of the grant of Probate: [49]; the plaintiff should pay the defendant's costs of the proceedings in the period from November 1999 to 5 June 2001 when the Cross-Claim was filed: [59]; the defendant should pay the plaintiff's costs of the proceedings from 5 June 2001 to 21 February 2003 but that the defendant was entitled to be indemnified from the assets of the estate in respect of its own costs as defendant and in respect of the payment of the plaintiff's costs during that period: [64] and [78]; that although the plaintiff was substantially successful in the main claim the defendant "was acting reasonably in its role as a litigant and did not in substance" contest the plaintiff's claims after the revocation claim was abandoned and in the circumstances the defendant was entitled to be indemnified out of the Estate: [78]; and that there should be no order that the plaintiff's brother pay the defendant's costs of the Cross-Claim, but that the defendant be indemnified out of the assets of the Estate for all costs of the Cross-Claim reasonably incurred. Austin J noted that the practical effect of such an order would be that the defendant's costs of the Cross-Claim would be borne by the plaintiff and his brother equally: [89]. 9 Austin J delivered a further judgment in respect of an application for interest on costs: Gray v Guardian Trust Australia Ltd [2003] NSWSC 887. His Honour ordered that interest be paid on costs from the date of the order for costs and made no order as to costs in relation to the application for interest on costs: [36]-[ 37]. 10 The plaintiff's brother appealed from Austin J's judgment in relation to the findings that the deceased had loaned certain moneys to him and in respect of the question of interest on those loans: Gray v Gray [2004] NSWCA 408. That appeal was, in the main, unsuccessful and the Court of Appeal stood the matter over for the filing of Short Minutes of Order in respect of its judgment but that took what was described as "an inordinate length of time": Gray v Gray [2005] NSWCA 129. The plaintiff's brother then sought to adjust the orders for costs made by Austin J. Those costs orders were not adjusted and the plaintiff's brother was ordered to pay 90% of the plaintiff's costs of the appeal and the defendant's costs of the appeal. There was also a declaration that the defendant was entitled to be indemnified out of the Estate in respect of its costs of the appeal. 11 As can be seen from this history, the Court ordered that the defendant was entitled to have part of its costs of the previous litigation paid by the plaintiff or the plaintiff's brother and was entitled to indemnification out of the Estate in respect of those costs and the costs it was ordered to pay to the plaintiff. There was a relevant reservation in relation to those orders, referred to by his Honour at par [94] of the Costs Judgment as follows:

Q. What is the difference, why would it attach in one case and not another? A. Yeah, I don't quite know the answer to that, I'm sorry. I don't quite understand that, Mr Gray, as to where we are going with it, no. 30 I raised with Mr Wilson, counsel for the defendant, the issue of whether the defendant had waived any claim for privilege in respect of the narratives in Mallesons' accounts once it filed the Accounts Motion. The defendant did not object to and, as I understand the history of the litigation, it consented to the order made by Austin J on 21 February 2003 that it verify its accounts. That consent order needs to be viewed in the context of the reservation noted in the Costs Judgment that the plaintiff did not give up his right to contest or question the defendant's costs of the administration of the Estate, excluding the costs of the litigation. There is a serious issue to be determined as to whether, when the defendant filed its Accounts Motion and affidavits in support, it was no longer entitled to hold back part of the detail in those accounts on the basis of a claim of privilege: Garratt's Limited v Thanga Thangathurai [2002] NSWSC 39 at [69]. 31 Mr Wilson submitted that the defendant should not have to decide which of the Mallesons' accounts it will seek to have approved until the hearing of the Accounts Motion. I disagree. That would be a most unruly course and the parties would have no certainty as to the process in which they are engaged. It seems to me that, if the defendant is pressing on to have its accounts passed or approved which include the payments to Mallesons, it must produce the full accounts. However, having regard to the way in which this case was argued, which lacked some discipline, I will allow the defendant an opportunity to make a decision within a short timeframe as to whether it wishes to press all of the items in the accounts relating to the Mallesons' accounts. 32 Ms Murphy's evidence that the Mallesons' accounts contain material that "might be subject to legal privilege" combined with the defendant's failure to address with particularity each of the documents in respect of which privilege was claimed does not justify a claim in respect of any particular documents: Buzzle Operations Pty Ltd (in Liq) v Apple Computer Australia Pty Ltd [2009] NSWSC 225 at [21]-[22]. However Ms Murphy's evidence in relation to the expense that would be incurred if analysis of the individual documents were to occur is a reasonable concern for the defendant in its administration of the Estate. Although the defendant's evidence is, at this stage, inadequate to support a claim for privilege, it seems to me that the better course is for me to decide the matter of principle raised by the plaintiff and deal with the categories of documents during the different phases of the litigation.

Consideration 33 There are different views in the Equity Division of this Court regarding the approach to be adopted in relation to applications by beneficiaries to access trust documents which have been the subject of extra-curial and academic commentary: Avanes v Marshall & Ors (2007) 68 NSWLR 595; McDonald v Ellis [2007] NSWSC 1068; JC Campbell, Access by Trust Beneficiaries to Trustees' Documents Information and Reasons (2009) 3 Journal of Equity 97; Georgia Dawson, A Fork in the Road for Access to Trust Documents (2009) 3 Journal of Equity 39. There is no need to analyse these different approaches in this application. It is accepted that the documents over which privilege is claimed were paid for out of the Estate. There is however an issue as to whether payment in the circumstances of this case, by order of the Court after protracted litigation, means that such documents are "trust documents", in the sense that entitles the plaintiff to claim a proprietary interest and an entitlement to access to those documents.

23-49 Trustees who are sued for breach of trust or other relief in contentious trust proceedings are not liable to disclose legal advice obtained and paid for by them for the purpose of their defence. They may assert privilege for such advice in the normal way and beneficiaries' rights to disclosure under trust law make no difference. Similar considerations apply to communications with their lawyers for the purpose of their defence after commencement of proceedings, and in our view communications with their lawyers (paid for by themselves) before the commencement of proceedings in relation to their liability for breach of trust, though not to communications before commencement of proceedings in relation to the trust property. 37 In support of the proposition that the trustees were not obliged to disclose legal advice obtained and paid for by them for the purpose of their defence, the learned authors referred to Talbot v Marshfield with specific reference to it being explained in Re Londonderry's Settlement [1965] Ch 918 at 931-933, CA. That explanation by Harman LJ included reference to Lord Wrenbury's statement in O'Rourke v Darbishire [1920] AC 581 at 626-627:

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