Webster (Trustee) v Murray Goulburn Co-Operative Co. Limited

Federal Court of Australia|2018-06-29|Before: Beach J

Silkman v Shakespeare Haney Securities Ltd (2011) 5 BFRA 483; [2011] NSWSC 148 Tierney v King [1983] 2 Qd R 580 Webster (Trustee) v Murray Goulburn Co-Operative Co. Limited [2017] FCA 995 Webster (Trustee) v Murray Goulburn Co-Operative Co. Limited (No 2) [2017] FCA 1260 Ford HAJ and Lee WA, Principles of the Law of Trusts (1st ed, The Law Book Company Limited, 1983) Ford and Lee: The Law of Trusts (Thomson Reuters, online) Heydon JD and Leeming MJ, Jacobs' Law of Trusts in Australia (8th ed, LexisNexis Butterworths, 2016) Mowbray WJ, Lewin on Trusts (16th ed, Sweet & Maxwell, 1964) Tucker L, Le Poidevin N and Brightwell J, Lewin on Trusts (19th ed, Sweet & Maxwell, 2015)

Date of hearing: 27 March 2018

Division: General Division

National Practice Area: Commercial and Corporations

Sub-area: Corporations and Corporate Insolvency

Category: Catchwords

Number of paragraphs: 179

Counsel for the Plaintiff: Mr N O'Bryan SC with Mr M Symons

Solicitor for the Plaintiff: Elliott Legal

Counsel for the First to Third and Fifth to Thirteenth Defendants: Ms W Harris QC with Mr J Kirkwood

Solicitor for the Second Defendant K&L Gates

Solicitor for the First, Third and Fifth to Thirteenth Defendants: Herbert Smith Freehills

Counsel for the Fourth Defendant: Mr CT Moller

Solicitor for the Fourth Defendant: Corrs Chambers Westgarth

BETWEEN: JOHN WILLIAM CRUSE WEBSTER AS TRUSTEE FOR THE ELCAR PTY LTD SUPER FUND TRUST Plaintiff

AND: MURRAY GOULBURN CO-OPERATIVE CO. LIMITED (ACN 004 277 089) First Defendant

MG RESPONSIBLE ENTITY LIMITED (ACN 601 538 970) AS RESPONSIBLE ENTITY OF THE MG UNIT TRUST Second Defendant

PHILIP W TRACY (and others named in the Schedule) Third Defendant

JUDGE: BEACH J DATE OF ORDER: 29 june 2018

The plaintiff's interlocutory application filed on 23 February 2018 be dismissed.
The plaintiff pay the second defendant's costs of and incidental to that application, such costs to be taxed in default of agreement, and to be paid forthwith.
Costs otherwise be reserved. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

BEACH J: 1 The plaintiff has made an application in these representative proceedings seeking orders that the second defendant MG Responsible Entity Limited (MGRE) permit inspection of documents concerning inter-alia: (a) MGRE's retainer of Herbert Smith Freehills (HSF) and work done by HSF in relation to the Murray Goulburn Unit Trust (MGUT) structure and the product disclosure statement issued by MGRE on 29 May 2015 (PDS); and (b) MGRE's engagement of Mr John Karkar QC and Mr Kane Loxley and the advice given by them in relation to any claim MGRE may have against HSF. 2 MGRE is a wholly owned subsidiary of the first defendant, Murray Goulburn Co-Operative Co. Limited (MGCL). The third to thirteenth defendants were MGCL's and MGRE's directors. 3 Generally, HSF represents the first to third and the fifth to thirteenth defendants in these proceedings, with the fourth defendant being separately represented. But as the present application focuses upon HSF's retainer with MGRE, K&L Gates are acting for MGRE for the purposes of this application. 4 The plaintiff contends that the documents that he seeks to inspect are trust documents relevant to a third party claim which MGRE or the plaintiff as a beneficiary of the MGUT might bring against HSF for negligence concerning advice relating to the implementation of the MGUT and the PDS. 5 Now the plaintiff's application has not in form been brought as a preliminary discovery application seeking documents either from MGRE or HSF as a precursor to seeking the joinder of HSF to these proceedings. Rather, it has been brought on the basis that the plaintiff as a unitholder in the MGUT is entitled to inspect, in his capacity as a beneficiary, trust documents held by MGRE, being in essence the plaintiff's characterisation of the documents sought; I will put to one side whether this application should have been pursued in a separate proceeding. The apparent strategy of the plaintiff is to obtain inspection of documents to assist him in determining whether MGRE (as trustee) has a claim against HSF which MGRE ought to pursue but is not pursuing, thereby giving the plaintiff as beneficiary the right as he asserts to bring such an action against HSF. 6 Nevertheless, during oral argument the plaintiff shifted his position to assert that he was also seeking to make a preliminary discovery application in order to determine whether HSF ought be joined to the proceedings. I might say that little if any attempt has been made by the plaintiff to satisfy the usual preconditions to an order for preliminary discovery. 7 There was also considerable vagueness in the plaintiff's formulation of the potential claims that MGRE might have against HSF. 8 First, prior to oral argument the potential claim that the plaintiff had principally articulated was a claim by MGRE against HSF by way of indemnity in respect of any liability that MGRE might have to the plaintiff and group members in relation to the causes of action currently pleaded. 9 Second, during oral argument the plaintiff appeared to shift his position by asserting that MGRE could have an independent damages claim against HSF for negligence outside the ambit of any indemnity claim. What this could be was left at a level of generality that made its boundaries and content elusive. And I say that even taking into account the plaintiff's belated efforts in written submissions after the hearing to articulate MGRE's possible claims against HSF. 10 In summary, whatever the basis for the plaintiff's application and even considering both types of potential claims, his application should be dismissed.

(a) The MGUT and its genesis 11 On 22 November 2013, MGCL announced that following a capital structure review conducted over the previous nine months MGCL's board intended to develop and was likely to recommend to members the adoption of an enhanced capital structure that maintained farmer control but allowed external investment in MGCL. MGCL stated that the establishment of an ASX-listed unit trust, similar to the one successfully implemented by New Zealand dairy co-operative Fonterra, was considered logical and appropriate given the balance it provided in meeting capital needs for growth whilst maintaining supplier focus and control. MGCL stated that it would be undertaking a detailed development of the proposed capital restructure in the following months, including engagement with the various regulators that would be required to approve it, and consultation with suppliers (i.e. MGCL's shareholders). MGCL further stated that the joint lead advisers to MGCL were Lazard and Macquarie, with HSF acting as legal adviser. 12 The proposed capital structure was the subject of further development, leading on 15 April 2015 to MGCL publishing a capital structure booklet setting out the final proposed capital structure for the purpose of seeking its approval by shareholders at an extraordinary general meeting on 8 May 2015. 13 The final proposed capital structure had the following elements: (a) MGCL proposed to create a unit trust as a special purpose funding vehicle that would issue units to investors pursuant to an IPO. Units would be listed on the ASX. Unitholders would be entitled to receive distributions equivalent to any dividends or other distributions paid to shareholders in MGCL. Unitholders would not have any voting rights in relation to the operation or affairs of MGCL. This unit trust was ultimately formed as the MGUT. (b) The unit trust would be a managed investment scheme, registered under the Corporations Act 2001 (Cth). It would be managed by a responsible entity that was a wholly-owned subsidiary of MGCL. The board of the responsible entity would be the same as the board of MGCL. The responsible entity would have a beneficial interest in notes and convertible preference shares issued by MGCL, which would be held on trust for the responsible entity through a sub-trust. MGRE was the responsible entity established under this structure and to issue units in the MGUT. The commercial rationale underlying the units to be issued by MGRE in the MGUT was to give unitholders an economic exposure to MGCL and its business. MGRE and the MGUT (and the units therein) were to be reliant upon MGCL's financial performance and the terms and performance arising under notes and preference shares issued by MGCL to a sub-trust (distributions and dividends under such notes and shares received by MGRE were to be distributed to unitholders of the MGUT) and other agreements. (c) The responsible entity's powers, rights and liabilities in relation to the unit trust would be governed by, inter-alia, the Corporations Act, the unit trust's constitution, a continuous disclosure deed poll, and a relationship deed. The capital structure booklet described in some detail, inter-alia, how the continuous disclosure deed poll and relationship deed were intended to facilitate the responsible entity's compliance with its continuous disclosure obligations under the ASX Listing Rules and the Corporations Act. (d) In addition to raising funds from unitholders via the unit trust, MGCL also proposed to raise funds via a supplier share offer under which suppliers would be invited to apply for further shares in MGCL. 14 The distributions to be paid to unitholders were to be calculated pursuant to a profit sharing mechanism deed. Simplistically described, the profit sharing mechanism governed the setting by MGCL of the Farmgate Milk Price (FMP) and the allocation of received funds of MGCL to milk payments to suppliers, income tax and net profit after tax (NPAT). The NPAT was to be available for the payment of dividends on shares in MGCL and distributions payable to unitholders in the MGUT. The profit sharing mechanism aimed to align unitholders' economic interests with the economic interests of suppliers to MGCL. When the FMP was relatively high, MGCL would allocate a higher proportion of the Milk Pool (earnings before tax and milk payments) to the NPAT available for dividends to shareholders and distributions to unitholders. When the FMP was relatively low, the reverse would operate. It is apparent that MGCL's distributable profits and accordingly NPAT (a proportion of which would be "paid" ultimately to unitholders) was a function of MGCL's sales revenue, costs of goods sold, and other costs and expenses. 15 On 1 May 2015, MGCL published a prospectus containing the supplier share offer. The prospectus, inter-alia: (a) described in detail the elements of the proposed capital structure; and (b) included forecast financial information concerning MGCL's business. 16 On 8 May 2015, MGCL announced that at the EGM shareholders had voted in favour of adopting the new capital structure. 17 Over the course of May 2015, the proposed arrangements concerning the MGUT were put in place including the following: (a) On 1 May 2015, the MGUT was established by the MGUT constitution (in substance a form of trust deed), with MGRE as trustee. MGRE had been registered as a company on 29 August 2014. (b) On 18 May 2015, a relationship deed was entered into by MGCL and MGRE. On 26 May 2015, a continuous disclosure deed poll was made between MGCL and MGRE. Generally, MGCL was obliged to provide information to MGRE to enable the latter to meet its continuous disclosure obligations (see ss 111AC, 111AE, 111AL, 111AP, 674 and 675 of the Corporations Act) and its obligations to prepare full year and half year financial reports. (c) On 28 May 2015, the MGUT was registered as a managed investment scheme, with MGRE as responsible entity. 18 On 29 May 2015, the PDS for the IPO of units in the MGUT was lodged with ASIC. The PDS contained substantially the same description of the elements of the proposed capital structure, and forecast financial information, as the prospectus. The PDS was issued on or around 29 May 2015 and invited members of the public, including allegedly the plaintiff and group members, to subscribe for units in the MGUT. A unit was a "financial product" under s 763(1)(a) of the Corporations Act. The PDS was a "Product Disclosure Statement" within the meaning of s 761A and Subdiv B of Div 2 of Pt 7.9 and was required to be given to the plaintiff and group members under s 1012B. It was also a "disclosure document or statement" within the meaning of s 1022A(1) and given or made available to the plaintiff and group members within the meaning of s 1022B(1)(c)(ii). 19 On 3 July 2015, the MGUT was admitted to the Official List of ASX Ltd on a conditional and deferred settlement basis. 20 On 7 July 2015, units in the MGUT were issued to the plaintiff and other persons who acquired units pursuant to the offer in the PDS. Following the issue of units on 7 July 2015, there were 6,144 unitholders holding 209,198,581 units. 21 At this point, it is also appropriate to make reference to the evidence of Ms Amy Alston, MGRE's and MGCL's general counsel and corporate affairs director, who deposed at [17] of her affidavit: [O]n 22 November 2013 MGCL announced, in connection with the Capital Structure Review, that joint lead advisers to MGCL were Lazard and Macquarie, with HSF acting as legal adviser. As legal adviser, HSF provided legal services and advice to MGCL and (after its formation) MGRE in connection with the development and establishment of the capital structure, the due diligence process, the Prospectus and the PDS. HSF did not provide any opinion on any financial, business or operational, statistical, accounting or taxation (including stamp duty) information in the Prospectus or PDS. PricewaterhouseCoopers Securities Ltd (PwCS) acted as Investigating Accountant in relation to the Financial Information in the Prospectus and the PDS and provided the Independent Limited Assurance Reports contained in the Prospectus and the PDS.

(b) Chronology of the present proceedings 22 On 16 May 2016, representative proceedings were filed by the plaintiff in the Supreme Court of Victoria under Pt 4A of the Supreme Court Act 1986 (Vic) as a unitholder in the MGUT on behalf of all persons who purchased units in the MGUT pursuant to the PDS and/or on market in the relevant time frame. 23 The plaintiff made claims against MGRE arising under the Corporations Act including in summary the following sets of claims: (a) First, the plaintiff made claims that the PDS contained misleading representations and that the information in the PDS was not up to date at the time it was given, and that the PDS was thereby defective within the meaning of s 1022A(1)(a) of the Corporations Act. These claims concerned certain aspects of the forecast financial information contained in the PDS. It was further alleged that but for the alleged misdisclosures the plaintiff and group members who purchased units pursuant to the PDS would either not have acquired units at all, or would have acquired units at a lower price. (b) Second, the plaintiff made claims that MGRE failed in the period between 3 July 2015 and the commencement of trading on 27 April 2016 to disclose information correcting the misdisclosures in the forecast financial information, which failure was said to involve breaches of ss 674(2) and 1041H of the Corporations Act. 24 The plaintiff relied on the issue of 18,000 units to him on 7 July 2015 pursuant to the offer in the PDS to establish his standing to bring those claims. 25 On 20 October 2016, the plaintiff foreshadowed an intention to seek to amend his pleading to bring further claims arising from MGCL's announcement of a Milk Supply Support Package (MSSP) on 27 April 2016. On 25 October 2016, the plaintiff purchased a further 10,000 units on market, and sought to rely on that purchase to establish his standing to bring the further claims. 26 On 9 May 2017, the proceedings in the Supreme Court of Victoria were cross-vested to this Court by an order of Croft J, given the related ACCC prosecution that is also in my docket and listed for a two week trial in September 2018. The present proceedings are now treated as being brought under Pt IVA of the Federal Court of Australia Act 1976 (Cth). 27 On 24 August 2017, the plaintiff sold all of his 28,000 units on market. Upon that sale, the plaintiff therefore ceased to be a unitholder in the MGUT. 28 On 25 August 2017, on an application by the defendants for summary dismissal of the proceedings, I struck out the plaintiff's then version of his statement of claim (Webster (Trustee) v Murray Goulburn Co-Operative Co. Limited [2017] FCA 995). I considered that the pleading in its then form did not properly formulate the allegation that statements in the PDS contained misleading representations. But I refused the defendants' application for summary dismissal and gave the plaintiff an opportunity to apply to replead. 29 On 8 September 2017, the plaintiff applied for leave to file and serve a proposed further amended statement of claim. This version of the statement of claim repleaded allegations of disclosure failures relating to the forecast financial information as published in the PDS, and the MSSP. It also contained, for the first time, a proposed claim against MGRE alleging breaches of fiduciary duty and s 601FC(1) of the Corporations Act relating to the capital structure of MGCL, MGRE and the MGUT. 30 On 27 October 2017, I declined to grant the plaintiff the leave sought (Webster (Trustee) v Murray Goulburn Co-Operative Co. Limited (No 2) [2017] FCA 1260) (Webster v Murray Goulburn (No 2)). I considered that aspects of the proposed pleading were embarrassing as being opaque, vague or too general, although I considered that most of the proposed pleading was unobjectionable. I gave the plaintiff a further opportunity to submit a revised proposed pleading taking into account my analysis and reasons. 31 On 8 November 2017, the plaintiff submitted yet another proposed further amended statement of claim (the November statement of claim), which on 9 November 2017 I granted leave to the plaintiff to file and serve. 32 Whilst in different form, most of the subject matter of the November statement of claim was in substance the same as the proposed further amended statement of claim filed on 8 September 2017. It alleged disclosure failures in respect of forecast financial information as published in the PDS, and the MSSP, as well as breaches of fiduciary duty and s 601FC(1). The amendments were not unresponsive to my comments in Webster v Murray Goulburn (No 2).

(c) The present application and its genesis 33 Let me now describe the genesis of the present application. 34 The plaintiff's application has its origin in correspondence between the plaintiff's solicitors and HSF in late-2017 and early-2018, which it is necessary to consider. I would note that some correspondence was directed to/from HSF as solicitors for the first to third and fifth to thirteenth defendants, some correspondence was directed to/from HSF as solicitors for MGRE, and one letter was written directly by MGRE's general counsel. 35 On 21 November 2017, the plaintiff's solicitors wrote to HSF: We refer to the Plaintiff's Further Amended Statement of Claim (FASOC) filed in the proceeding on 10 November 2017. In paragraphs [63] to [69] of the FASOC, allegations are made that the second defendant was placed in a position of conflict of duty and interest and also breached its duties to act in the interests of unitholders and to treat unitholders equally and impartially. The purpose of this letter is to place you on notice that: (a) the plaintiff considers that the second defendant should receive the benefit of independent advice concerning the question whether it may have a claim against Herbert Smith Freehills in respect of the claims brought by the plaintiff against the second defendant in this proceeding. Of particular concern to the plaintiff is the possibility that Herbert Smith Freehills may have breached its duties to the second defendant, arising either in contract or the law of negligence, in respect of: i. advising and implementing a structure which placed the second defendant in a position of unavoidable conflict of interest and duty and in which the second defendant was unable to perform its duties to unitholders due to the creation of a contractual regime governing the rights and powers of the second defendant which denied the second defendant the opportunity to require the production of information from the first defendant or to independently analyse the information which was provided to it; and ii. acting as "Australian legal adviser to Murray Goulburn" in connection with the offer made pursuant to the PDS, for which work Herbert Smith Freehills received "[a]pproximately $1,100,000 (excluding disbursements and GST)". Herbert Smith Freehills presumably had significant involvement in the due diligence undertaken in preparing the PDS and given that Herbert Smith Freehills had undertaken $1,100,000 worth of legal work it may be inferred that Herbert Smith Freehills either (i) did not identify that the PDS was not up to date or contained the Misleading PDS Representations (as alleged by the plaintiff) or (ii) took no step to advise the second defendant of a need to test or question the underlying financial results and forecasts to ensure that the second defendant had reasonable grounds for making the representations contained in the PDS. (b) if the second defendant takes no action to bring a claim against Herbert Smith Freehills in accordance with Federal Court Rules 2011 (Cth) r 15.04 or fails to demonstrate to the plaintiff that the second defendant has received seriously considered and independent advice to the effect that it should not bring a claim against Herbert Smith Freehills by the time when a third party claim against Herbert Smith Freehills is due to be filed pursuant to r 15.04, the plaintiff will advise the Court that: i. the second defendant has failed to exercise rights against the second defendant's solicitors held on trust for unitholders; ii. the second defendant has provided no sufficient explanation for its failure to exercise rights against the second defendant's solicitors held on trust for unitholders; iii. the plaintiff intends if there is a claim against Herbert Smith Freehills to use the Vandepitte [v Preferred Accident Insurance Corpn of New York [1933] AC 70 at 79] procedure to join Herbert Smith Freehills directly; and iv. as a preliminary matter, and to ensure that a claim against Herbert Smith Freehills is properly capable of being sustained, the plaintiff will seek preliminary discovery from the second defendant and Herbert Smith Freehills in connection with the proposed claims against Herbert Smith Freehills; (c) Given the matters set out above, Herbert Smith Freehills is now likely obliged to advise its professional indemnity insurers concerning the possibility of a claim being brought against it in this proceeding. In addition to the matters set out above, it may now be necessary for Herbert Smith Freehills to consider whether it can properly act for any defendant to this proceeding. Not only does it appear that Herbert Smith Freehills' existing clients fall into three categories with distinct interests: (a) the first defendant, being Murray Goulburn Co-Operative Co Ltd, which established the MG Unit Trust as a mechanism for raising capital; (b) the second defendant, being the trustee of and the responsible entity for the MG Unit Trust; (c) the third, and fifth to thirteenth defendants, each of whom were directors of both the first and second defendants, but also: Herbert Smith Freehills' interest in defending the claim which the second defendant (or in its stead, the plaintiff) is likely to make against it, put Herbert Smith Freehills' personal interests into a fourth and necessarily conflicting category to those of the other defendants. We recognise that if Herbert Smith Freehills is now unable to continue to act for any (or all) of the defendants for whom it currently acts, it may be necessary for one or more of the defendants to have additional time to prepare their defences. If any of the defendants makes such a request because it has been necessary to engage new solicitors, the plaintiff will act reasonably in agreeing any necessary but brief extension for the filing of a defence and/or third party claim against Herbert Smith Freehills. We would be grateful for your prompt confirmation that you have brought this letter to the attention of each of your clients for whom you act in this proceeding and your advice as to how they and your firm intend to proceed. 36 According to MGRE, this letter exposed at the outset the apparent purpose of the correspondence that I am describing and the present application, namely, to try to disrupt both MGRE's and the other defendants' defence of the proceedings and their continued representation by HSF, who have represented them since the proceedings commenced. I do not need to linger on the question of purpose as I would dismiss the plaintiff's application for other reasons. 37 At the time the plaintiff's solicitors sent their 21 November 2017 letter, the plaintiff was not a unitholder of the MGUT. According to MGRE, he had no standing to make the claims or applications foreshadowed in that letter. Subsequently, on 27 November 2017, the plaintiff purchased a fresh unitholding in the MGUT, presumably to re-enliven his standing. 38 I would also note one other matter about the 21 November 2017 letter, namely, that it seems to be contemplating only that MGRE may have had an indemnity claim against HSF. 39 On 29 November 2017, HSF wrote to the plaintiff's solicitors, stating that they were instructed to respond as follows: 1. Neither we nor our clients presently see any basis for the claims you suggest might be made by the second defendant against Herbert Smith Freehills. 2. Our clients do not agree with the suggestion that their interests are in conflict with, or in any way divergent from, the interests of Herbert Smith Freehills. 3. Nevertheless, our clients propose to consider obtaining independent advice of the type you describe after their defences are filed next month. 40 On 11 January 2018, the plaintiff's solicitors wrote to HSF: The purpose of this letter is to inform you that should the second defendant by 4pm on 25 January 2018 fail to: (a) commence a cross-claim against Herbert Smith Freehills; (b) indicate to the plaintiff in writing that it will bring a claim against Herbert Smith Freehills; or (c) demonstrate to the plaintiff that the second defendant has received seriously considered advice to the effect that it should not bring a claim against Herbert Smith Freehills, the plaintiff will take the steps referred to in our letter of 21 November 2017 and will seek orders in respect of the plaintiff's foreshadowed claim against Herbert Smith Freehills at the 9 February 2018 case management hearing. 41 According to MGRE, the third alternative referred to in (c) is significant. As referred to below, MGRE subsequently obtained advice from counsel. It did what the plaintiff demanded be demonstrated. And it informed the plaintiff's solicitors that it had done so (by letter dated 6 February 2018 described below), and confirmed that it considered that grounds did not exist to bring a third party claim against HSF. But nevertheless, and despite what was suggested in option (c) in the 11 January 2018 letter, the plaintiff pressed on and ultimately filed the present application. MGRE says that this reinforces the inference that the real object of the plaintiff's application was to disrupt the defendants' defence of this proceeding. That may be so, but I do not need to decide the point. 42 On 25 January 2018, HSF wrote to the plaintiff's solicitors stating that it was instructed to confirm that MGRE intended to obtain advice from counsel in relation to the matters outlined in the 21 November 2017 letter. HSF also stated that by communicating this MGRE did not intend to waive any privilege. 43 On 31 January 2018, the plaintiff's solicitors wrote to HSF: We refer to your letter dated 25 January 2018 in which you advised that "the second defendant intends to obtain advice from counsel in relation to the matters outlined in your 21 November 2017 letter". Having first raised the question of the second defendant's possible claim against Herbert Smith Freehills in our letter of 21 November 2017, we then requested by our letter of 11 January 2018 that the second defendant indicate by 4pm on 25 January 2018 whether it would: (a) commence a cross-claim against Herbert Smith Freehills; (b) confirm in writing that it would bring a claim against Herbert Smith Freehills; or (c) demonstrate to the plaintiff that it had received seriously considered and independent advice to the effect that it should not bring a claim against Herbert Smith Freehills. Your letter of 25 January 2018 does not indicate that the second defendant has taken any step to seek advice (or do anything else) in relation to any of the steps described above. The delay is likely to prejudice the utility of the 9 February 2018 case management hearing and is likely to delay the progress of the proceeding to trial. Request to inspect documents Cognisant of the second defendant's reservation of its rights to rely upon your letters of 29 November 2017 and 25 January 2018 in relation to the question of costs, the plaintiff now seeks to inspect the following documents which we expect are within the possession of the second defendant or which the first defendant is obliged to make available to the second defendant pursuant to the Relationship Deed to which the first and second defendants are party (MGC.028.001.0042): (a) the retainer agreement(s) pursuant to which Herbert Smith Freehills was engaged to: i. advise in relation to and document the unit trust structure known as the "MG Unit Trust" of which the second defendant is the trustee and responsible entity; ii. advise in relation to and document the relationship between the first defendant and the second defendant, including as concerns the drafting of the Relationship Deed entered into by the first and second defendants (MGC.028.001.0042); iii. advise in relation to and document the obligations of the first defendant and the second defendant in favour of beneficiaries (including unitholders), including as concerns the drafting of the Continuous Disclosure Deed Poll (MGC.028.001.0010); and iv. advise in relation to, conduct due diligence in relation to, and document the public offer of units made by the Product Disclosure Statement issued by the second defendant on 29 May 2015; (b) documents recording communications with and concerning Herbert Smith Freehills' work pursuant to those retainer agreement(s), including documents recording advice given by Herbert Smith Freehills. These documents are sought in anticipation of it being necessary for the plaintiff to either (i) personally commence a claim against Herbert Smith Freehills upon the second defendant's failure to act; or (ii) ensure that any claim commenced by the second defendant against Herbert Smith Freehills adequately asserts all rights which the second defendant holds on trust for unitholders. The plaintiff is a unitholder and thus a beneficiary of the MG Unit Trust. The Constitution of the MG Unit Trust imposes no restriction upon the ordinary entitlement of a beneficiary to inspect trust documents. The plaintiff therefore seeks that the second defendant agree by 4pm on 5 February 2018 to permit the plaintiff's inspection of all documents falling within the categories stated above by 16 February 2018. Should the second defendant not agree to permit inspection of the documents as requested, the plaintiff intends to seek orders facilitating inspection at the case management hearing listed on 9 February 2018. Should the second defendant oppose orders of the Court permitting inspection of the documents requested in circumstances where the second defendant continues to be represented by Herbert Smith Freehills, the plaintiff intends to raise Herbert Smith Freehills' position of conflict with the Court and reserves his right to seek consequential orders. Independent advice The plaintiff wishes to record his concern that the counsel who are engaged to advise the second defendant in relation to the commencement of a third party claim against Herbert Smith Freehills ought to be and be seen to be entirely independent of Herbert Smith Freehills. The plaintiff considers that counsel who are regularly engaged by Herbert Smith Freehills in relation to the defence of group proceedings of this sort may not meet such a test of independence from Herbert Smith Freehills. Should the second defendant fail to commence a third party claim against Herbert Smith Freehills because the advice received was not sufficiently independent from Herbert Smith Freehills, it may leave the second defendant open to further claims of breach of its duties to unitholders being added to the claims already made in the proceeding. This is both undesirable and avoidable. Conclusion We would be grateful for your prompt confirmation that you have brought this letter to the attention of each of your clients for whom you act in this proceeding. 44 MGRE has made three points regarding this correspondence: (a) First, what was sought in the 31 January 2018 letter by the plaintiff's solicitors was effectively that which had been foreshadowed in the 21 November 2017 letter. But there was no utility in seeking the production of such documents prior to MGRE obtaining the advice it had foreshadowed in its letters of 29 November 2017 and 25 January 2018. If the plaintiff was correct in his apprehension that the advice would support the bringing of a claim against HSF, then MGRE could be expected to act upon it without the need for the plaintiff to take matters into his own hands. Further, the plaintiff's solicitors' letter of 11 January 2018 foreshadowed that he would take the step of seeking access only if MGRE failed to obtain legal advice of the kind which it had already informed the plaintiff that it would obtain. (b) Second, the plaintiff purported to assert an entitlement to dictate, limit or second guess MGRE's choice of counsel, by imposing the condition that "counsel who are regularly engaged by Herbert Smith Freehills in relation to defence of group proceedings of this sort" may not be sufficiently independent to provide advice. (c) Third, the threat to raise HSF's as yet unestablished "position of conflict" with me and "seek consequential orders" was in terrorem. 45 MGRE says that each of these matters further illuminated the true purpose of the plaintiff's pursuit of this matter. Again, I do not need to linger on this question of purpose. 46 On 2 February 2018, HSF wrote to the plaintiff's solicitors, stating inter-alia: We are instructed to inform you that the second defendant has sought that advice, and expects to receive it shortly. Again, by informing you of this, the second defendant does not intend to waive any privilege it has in the advice or any other document. 47 On 6 February 2018, Ms Alston wrote directly to the plaintiff's solicitors: We write to inform you that the second defendant has sought and obtained the advice of counsel, John Karkar QC and Kane Loxley, regarding the matters raised in your letter dated 21 November 2017. The second defendant considers that grounds do not exist to bring a third party claim against Herbert Smith Freehills and does not propose to do so. By so informing you the second defendant does not intend to waive any privilege it has, including in the advice received from counsel. 48 On 7 February 2018, HSF wrote to the plaintiff's solicitors, stating: We write further to put you on notice that, if the plaintiff presses for orders concerning production of documents by the second defendant, and for orders concerning discovery, and the Court is minded to make orders on those topics, our clients will submit that the Court should make the timetabling orders 10-15 contained in the attached marked up copy of our client's proposed orders. In our view, if the plaintiff wishes to seek orders for the production of documents by the second defendant, he needs to make an application, supported by proper material which establishes a basis for the orders he seeks. Your email does not, for example, identify whether he is seeking such orders by way of preliminary discovery, or under trust law in his capacity as a beneficiary, and in either event, your correspondence does not establish any basis for such orders. 49 Now I would note in relation to this letter that HSF precisely raised with the plaintiff's solicitors the distinction between a preliminary discovery application and a claim to the right to inspect by reason of being a trust beneficiary. Notwithstanding, the plaintiff's application when later filed only strictly raised the latter question. 50 On 9 February 2018, I made orders timetabling any application that the plaintiff might make for the production or inspection of documents from MGRE, with such application to be filed by 23 February 2018. 51 On 19 February 2018, the plaintiff's solicitors wrote to HSF: We refer to the orders of the Court made on 9 February 2018. Those orders provide inter alia that the Plaintiff may serve any interlocutory application for the production of documents by the Second Defendant by 23 February 2018. The Plaintiff holds units issued by the Second Defendant. He intends to bring his application pursuant to trust law principles and supplemented, if necessary, by s 33ZF of the Federal Court of Australia Act 1976 (Cth). By our letter of 31 January 2018, we have already requested production of certain categories of documents. Following receipt of a letter of 6 February 2018 from Amy Alston, General Counsel and Company Secretary for the Second Defendant, we understand that the Second Defendant has received advice from John Karkar QC and Kane Loxley regarding the matters raised in our letter dated 21 November 2017 (Karkar and Loxley advice). The Plaintiff now requests a copy of the Karkar and Loxley advice. On the principles in Schreuder v Murray (No 2) (2009) 41 WAR 169, we do not expect that the Second Defendant may maintain a claim of privilege over the Karkar and Loxley advice. Nor do we expect that the Second Defendant may otherwise resist producing a copy of the Karkar and Loxley advice. Please provide a copy of the Karkar and Loxley advice to us by 5pm on 19 February 2018. Production of the Karkar and Loxley advice may narrow the scope of any application to be filed by the Plaintiff pursuant to the orders made on 9 February 2018 or even avoid the need for any application to be filed. If the Second Defendant refuses to produce the Karkar and Loxley advice, please provide an explanation for that refusal. 52 It is apparent from this letter that the basis being pursued did not involve a preliminary discovery application. 53 HSF responded to the plaintiff's solicitors later that same day, stating: We are instructed by the second defendant (MGRE) to respond as follows: 1. to date, the advice it has received from Mr Karkar QC and Mr Loxley has been oral advice in conference; 2. it is intended that Mr Karkar QC and Mr Loxley will provide written advice following Mr Karkar QC's return from leave overseas; 3. MGRE maintains privilege in the oral advice that has been provided, and the written advice to be provided, to it by Mr Karkar QC and Mr Loxley; and 4. MGRE does not agree with the assertions in your letter that it may not maintain a claim of privilege in the advice, or otherwise resist producing that advice, on the principles in Schreuder v Murray (No 2) (2009) 41 WAR 169, or otherwise. Among other things, MGRE does not agree that the principles referred to in Schreuder v Murray concerning joint privilege have any application to Mr Karkar QC's and Mr Loxley's advice. MGRE reserves all of its rights in relation to any application that the plaintiff chooses to bring. 54 Ms Alston has deposed that MGRE has now received the written advice of Mr Karkar QC and Mr Loxley, and MGRE remains satisfied that grounds do not exist to bring a third party claim against HSF. 55 On 23 February 2018 the plaintiff filed his application seeking the following orders: 1. The Second Defendant permit the Plaintiff to inspect: a. documents concerning the Second Defendant's retainer of Herbert Smith Freehills and the work performed pursuant to that retainer: i. the retainer agreement(s) pursuant to which Herbert Smith Freehills was engaged to: 1. advise in relation to and document the unit trust structure known as the "MG Unit Trust" of which the second defendant is the trustee and responsible entity; 2. advise in relation to and document the relationship between the first defendant and the second defendant including as concerns the drafting of the Relationship Deed entered into by the first and second defendants (MGC.028.001.0042); 3. advise in relation to and document the obligations of the first defendant and the second defendant in favour of beneficiaries including unitholders including as concerns the drafting of the Continuous Disclosure Deed Poll (MGC.028.001.0010); and 4. advise in relation to, conduct due diligence in relation to, and document the public offer of units as made by the Product Disclosure Statement issued by the second defendant on 29 May 2015; ii. documents recording communications with and concerning Herbert Smith Freehills' work pursuant to those retainer agreement(s) including documents recording advice given by Herbert Smith Freehills; b. documents concerning the Second Defendant's engagement of John Karkar QC and Kane Loxley of counsel to advise in relation to claims which the Second Defendant might have against Herbert Smith Freehills: i. documents recording instructions given to John Karkar QC and Kane Loxley and any documents with which John Karkar QC and Kane Loxley were briefed; ii. documents recording any advice given by John Karkar QC and Kane Loxley in conference; iii. any written advice given by John Karkar QC and Kane Loxley. 2. The Second Defendant permit inspection of documents in the categories set out in paragraph 1 above by producing to the Plaintiff electronic copies of those documents by such date as is ordered by the Court. 56 In support of this application, the plaintiff has relied upon affidavits sworn by his solicitor on 6 February 2018 and 23 February 2018. I would also note that the plaintiff filed submissions on 23 February 2018 in conjunction with the application. On 9 March 2018, MGRE filed its submissions. It also filed an affidavit sworn by Ms Alston on that date. On 16 March 2018, the plaintiff filed reply submissions. 57 Let me briefly mention another matter concerning a request by the plaintiff for the identities of the due diligence committee described in the defence filed by the first to third and fifth to thirteenth defendants. The chronology is as follows: (a) On 14 March 2018, the plaintiff requested the identities of the actual persons comprising the due diligence committee and the names of their firms and employers. (b) On 16 March 2018, HSF refused the request on grounds that its purpose was unclear and that the information was irrelevant to any pleaded issue. (c) On 19 March 2018, the plaintiff stated that the reason for the request was to ascertain whether HSF played any, and if so what, role in the due diligence process and the drafting of the PDS. It was said that the information would assist the plaintiff to decide whether he should pursue further the question of the joinder of HSF as a third party to the proceeding by the Vandepitte procedure. (d) On 21 March 2018, HSF again refused to provide the identities on the basis that the purpose identified by the plaintiff was not a proper purpose for a request for particulars in the proceedings. 58 The hearing of the plaintiff's application took place before me on 27 March 2018. At the hearing I gave leave for the following to be filed: (a) further submissions by the plaintiff, which were filed on 29 March 2018 and accompanied by a further affidavit by the plaintiff's solicitor; and (b) reply submissions by MGRE, which were filed on 6 April 2018 and accompanied by an affidavit by MGRE's solicitor.

SUMMARY OF PLAINTIFF'S APPLICATION 59 The plaintiff originally put his application on the following basis. The plaintiff points out that he is a unitholder in the MGUT, of which MGRE is the trustee. The plaintiff has made claims against MGRE concerning inter-alia misleading statements made in the PDS issued by MGRE and dated 29 May 2015, the repetition of the misleading statements made in the PDS upon MGRE filing the PDS with the ASX prior to the listing of units issued by MGRE on the ASX and MGRE's failure to correct those representations at any time before 29 February 2016 and/or 27 April 2016, and for breach of equitable and statutory duties. It is said that such conduct has been the or a cause of the losses suffered by group members or a sub-set of group members. 60 The plaintiff seeks to inspect trust documents held by MGRE which are relevant to any third party claim which MGRE might properly bring against HSF in this proceeding. The plaintiff says that it is likely that claims in negligence may be brought against HSF as concerns: (a) structuring advice and the implementation of a structure which caused MGRE to occupy a position which was unavoidably in conflict with its obligations owed as the trustee and responsible entity to unitholders; (b) the conduct of the due diligence process undertaken in connection with the offer made pursuant to the PDS; and (c) the disclosure of the operation of the structure and its inherent conflicts in the PDS (notwithstanding the evidence of Ms Alston that I have set out earlier). 61 The plaintiff says that as a unitholder he has an entitlement to see trust documents. 62 The plaintiff says that it may be inferred that the documents requested exist as HSF's role as solicitors for MGRE may be observed from documents available to the plaintiff. HSF is named in the PDS as the "Australian legal adviser to Murray Goulburn in connection with the Offer (excluding in relation to taxation and stamp duty matters)" and as the "Australian legal adviser" in the Corporate Directory. Whilst "Murray Goulburn" is defined within the "Important Notes" section of the PDS to refer to MGCL, and MGRE is referred to as the Responsible Entity, the plaintiff says that it may be inferred that HSF acted as the solicitors to each of MGCL and MGRE in respect of MGRE's preparation of the PDS. HSF's details are recorded on the first page of the MGUT constitution, and its insignia appears on every page of the document. The plaintiff also says that other documents recording the arrangements between MGCL and MGRE which have been provided to the plaintiff were apparently drafted by HSF. 63 As concerns the categories relating to the engagement of and advice received from Mr Karkar QC and Mr Loxley of counsel, the plaintiff says that it may be inferred that: (a) instructions and documents were given to Mr Karkar QC and Mr Loxley of counsel to permit the advice to be given; and (b) that an officer of MGRE or MGRE's solicitor made notes of the advice given in conference. 64 The plaintiff says that the application to inspect the trust documents is made in this proceeding for the following reasons. First, he says that there is a relationship between the application to inspect the documents and this proceeding. MGRE has informed the plaintiff that MGRE does not intend to bring a third party claim against HSF. The plaintiff wishes to give consideration as to whether he may properly join HSF as a party to this proceeding to advance claims which ordinarily should be brought by MGRE in its own right. Second, the plaintiff asserts that he seeks to avoid a multiplicity of proceedings. It is said that the alternative to making the application to inspect trust documents in this proceeding would require a further proceeding to be commenced in the Supreme Court of Victoria. 65 The plaintiff submits that the principles concerning when a beneficiary may bring proceedings directly against a third party on a cause of action that a trustee has against the third party were recently set out in Colin R Price & Associates Pty Ltd v Four Oaks Pty Ltd (2017) 251 FCR 404 at [102] to [105] per Rares, Murphy and Davies JJ. I accept that special circumstances must be shown, although what is embraced by that phrase is an open question; the authorities discuss some well recognised examples. 66 The plaintiff accepts that MGRE's decision not to bring a claim against HSF may not of itself provide the requisite special circumstances for him to commence a claim against HSF directly. But the plaintiff points to Deutsch v Deutsch (2012) 6 ASTLR 386; [2012] VSC 227 at [40], where six situations were identified in which special circumstances have been held to exist to permit the plaintiff to take such a course. The first of those categories was where "the plaintiff is most materially interested in due enforcement of the claims, or would be most seriously prejudiced if they were abandoned or not duly prosecuted". The plaintiff says that given MGRE's position, it is undeniable that the plaintiff, on behalf of group members, is most materially interested in the enforcement of any claim against HSF. Further, he contends that the plaintiff and group members would be seriously prejudiced if a viable claim against HSF exists which is not pursued. However, so the plaintiff says, he cannot judge whether there is a viable claim in negligence against HSF without first knowing the basis upon which HSF was engaged, what work HSF did and what advice was given in the course of that engagement. Accordingly, the plaintiff says that the inspection of the trust documents, which may be expected to give the plaintiff an understanding of these matters, is a necessary precursor to him being able to assess whether there is a viable claim against HSF. 67 Further, the plaintiff says that documents concerning the engagement of and advice given by Mr Karkar QC and Mr Loxley are similarly relevant to whether special circumstances exist. But the plaintiff accepts that if MGRE has received "impeccable" advice that there is no cause of action against HSF, then there could be no serious prejudice to the plaintiff and group members by claims against HSF not being advanced. 68 In relation to my jurisdiction and power to make the orders sought, the plaintiff relies upon ss 22, 32 and 33ZF of the Federal Court of Australia Act. He says that the inspection of the documents is very closely connected with the advancement of claims against HSF which, if they have merit, would properly be brought for the benefit of group members in this proceeding. He says that it would be contrary to the interests of justice if MGRE were to fail to exercise its rights against HSF in circumstances where there was a meritorious claim and thereby to deny group members an avenue to recover their losses. Further, the plaintiff says that it is necessary or appropriate for me to make orders permitting inspection to ensure that justice is done in the proceeding. 69 As to the plaintiff's principal argument that he has an entitlement to inspect documents as a beneficiary, the plaintiff points to the following matters. 70 He says that the terms of the MGUT constitution establish that (at cl 3.1(a)): The beneficial interest in the Fund is divided into Units including one MG Unit. Each Unitholder has a beneficial interest in each asset of the Trust to the exclusion of any other beneficial interest but no Unitholder has a beneficial interest in any particular asset of the Trust to the exclusion of any other Unitholder. The term "Fund" is defined by cl 1.1 to mean "all the cash, investments, rights and other property of the Trust." 71 He says that the documents that he seeks to inspect are "other property" of the MGUT in respect of which cl 3.1(a) gives the plaintiff a proprietary interest, and submits that his right to inspect the documents arises as a result of that interest. 72 The plaintiff relies upon Heydon JD and Leeming MJ, Jacobs' Law of Trusts in Australia (8th ed, LexisNexis Butterworths, 2016) at [17-16] (Jacob's Law of Trusts) where the authors describe beneficiaries' right of access to documents. Further, he submits that for the reasons identified in Deutsch v Trumble (2016) 52 VR 108 at [66] to [73] the proprietary approach (I will elaborate on this later) should be applied. Indeed, he goes so far as to say that any departure by me from the proprietary approach would be an impermissible departure from the considered dicta in Breen v Williams (1996) 186 CLR 71 where Dawson and Toohey JJ said that the proprietary approach had been "accepted in this country" and "the right of access of a beneficiary to trust documents arises because of the beneficial interest of the beneficiary in the trust property and it is in that sense that the right may be described as proprietary" (at 89). I would say now that I do not propose to adopt the proprietary approach. But if I had that would not avail the plaintiff. In the exercise of my discretion I would still dismiss his application. 73 The plaintiff further says that no relevant exceptions referred to in the authorities applies here to deny access. In particular: (a) it does not appear that MGRE owes any duty of confidence in respect of the documents sought to any third party; (b) the documents sought are not documents which could evidence MGRE's own reasons for making any decision; (c) the documents sought do not bear upon MGRE's own motives and reasons for the exercise of any discretion; and (d) there is no term of the MGUT constitution which precludes a unitholder from exercising a right to inspect the relevant trust documents. 74 I would say now that even if the proprietary approach applies, the exceptions are not a rigid or closed class. But there is in any event little doubt that I have a broad and overriding discretion to permit or refuse inspection in the exercise of my jurisdiction involving the administration of trusts including the inspection of trust documents; that jurisdiction arises under the Corporations Act in relation to statutory trusts such as the MGUT, and otherwise under my accrued jurisdiction. 75 Finally, during oral argument the plaintiff raised two additional matters. 76 First, he sought to put an additional basis for his application such that it should also be treated as a preliminary discovery application. But in my view the preconditions for this have not been made out. 77 Second, he sought to suggest that in addition to any indemnity claim that MGRE may have against HSF, it may also have a separate damages claim. And he submitted that both claims could be pursued by the plaintiff (as beneficiary) if MGRE (as trustee) did not pursue them.

ANALYSIS 78 Now as I have said, the plaintiff says that he is entitled to inspect the relevant documents to assess whether MGRE has a viable claim against HSF that he might pursue in this proceeding for the benefit of himself and group members. 79 This general assertion gives rise to a number of topics that I need to deal with in the following sequence.

(a) Is any claim against HSF held on trust for unitholders? 80 I agree with MGRE that even if MGRE did have a cause of action against HSF by way of indemnity in respect of the plaintiff's claims in relation to the capital structure or the PDS, it would not hold that cause of action on trust for the benefit of unitholders. It would not be a claim which MGRE would or could have a duty to prosecute for the benefit of unitholders. Rather, as MGRE submits, any such cause of action would enure for the benefit of MGRE in its personal capacity. And any decision by MGRE not to sue on such a cause of action could not involve a failure by it, as trustee, to protect the trust estate or the interests of beneficiaries in the trust estate. 81 The plaintiff relevantly sues MGRE for compensation alleging that it: (a) breached its fiduciary duties and its duties under s 601FC(1) of the Corporations Act to unitholders by reason of various features of the capital structure of MGCL, MGRE and the MGUT; and (b) issued a PDS that was defective within the meaning of s 1022A of the Corporations Act because it contained misleading representations and contained information that was not up to date at the time it was given, but for which the plaintiff and group members would not have acquired units at all or would have acquired units at a lower price. 82 Now it is these claims made by the plaintiff in respect of which the plaintiff contends that MGRE may have a claim against HSF by way of indemnity. 83 But if MGRE were to be found liable to compensate the plaintiff and group members in respect of the claims that they have made on these grounds, MGRE would be personally liable to pay such compensation. It would not be entitled to indemnify itself out of trust assets to do so, given that a trustee's right of indemnity in relation to liabilities is relevantly limited to liabilities properly incurred by the trustee in the carrying out of the trust. 84 I agree with MGRE that if the plaintiff's claims were prosecuted and established by the plaintiff and group members against MGRE, the liability of MGRE to the plaintiff and group members would not be properly incurred by MGRE in its capacity as trustee of the MGUT. If the plaintiff's allegations are established, then MGRE would have breached its obligations under the Corporations Act and breached its duties towards unitholders. MGRE could not recoup from the scheme fund any compensation payable to group members or expenses incurred in the successful prosecution of their claims against MGRE. It is counterintuitive to suggest otherwise. 85 Accordingly, even if MGRE did have available to it a third party claim against HSF, it would be a claim that it holds in a personal capacity for its own benefit. Such a claim would not be held on trust for the benefit of unitholders. 86 It also follows, as MGRE correctly contends, that the question of whether there are "special circumstances" would not then arise. 87 Now the plaintiff has three responses to these points being the following: (a) First, putting to one side the indemnity claim, MGRE may have a claim against HSF which is not a personal claim. (b) Second, the fact of being disentitled to indemnification out of trust assets may not prevent rights against legal advisers being held on trust. (c) Third, there is commercial utility in the plaintiff being permitted to join HSF. 88 Let me deal with each argument in turn.

A separate cause of action in damages 89 The plaintiff says that whether or not MGRE has a claim against HSF in its so-called "personal" capacity says nothing about and does not gainsay the possibility that a separate claim may exist against HSF that may be brought on behalf of the trust itself and its beneficiaries (the MGUT unitholders). Now I agree with that proposition but only in the generality with which it has been expressed. Let me elaborate on how the plaintiff puts such a claim. 90 The MGUT constitution, first disclosed to the ASX on 3 July 2015, is dated 1 May 2015, and the MGUT was established on 1 May 2015. The plaintiff says that it may be inferred that HSF's work in advising in relation to the Murray Goulburn capital structure and assisting with the implementation of the capital structure was not at an end on 1 May 2015 when the MGUT was established. The plaintiff says that critical steps remained to be undertaken: (a) On 18 May 2015, the relationship deed was made. (b) On 26 May 2015, the continuous disclosure deed poll was made. (c) On 26 May 2015, the MGUT constitution was amended. (d) On 28 May 2015, MGUT was registered as a managed investment scheme, with MGRE as its responsible entity. (e) On 1 July 2015, the MGUT constitution was amended again. 91 The plaintiff says that it may further be inferred that work was performed by HSF throughout the time leading up to the lodgement of the PDS with ASIC on 29 May 2015. 92 He says that before the steps listed above were undertaken, MGRE had assumed the obligations of a trustee. From 28 May 2015 MGRE had also assumed the statutory obligations of a responsible entity. The plaintiff says that it cannot be the case that when HSF advised in relation to, and assisted with the implementation of, the trust structure and the drafting and finalisation of the PDS on and after 1 May 2015: (a) HSF gave that advice or assistance without reference to advice given by HSF before 1 May 2015; or (b) HSF gave the advice or assistance otherwise than for the benefit of the plaintiff or any other group members as actual (or even anticipated) beneficiaries of the trust. 93 The plaintiff says that if HSF advised and assisted on a basis which solely took into consideration the "public law obligations contained in the Corporations Act as a precursor to the offering of units in the MGUT" as MGRE submits, HSF must not have taken into consideration: (a) MGRE's fiduciary duties to future beneficiaries which subsisted on and after 1 May 2015 and statutory duties which subsisted on and after 28 May 2015; (b) the interests of all future investor beneficiaries (i.e. unitholders other than perhaps MGCL or its related entity holding the initial MG Unit in the MGUT) in MGRE's ability to properly perform, and its proper performance of, its obligations as trustee of the MGUT. 94 The plaintiff says that MGRE's assertion that grounds do not exist to bring a third party claim against HSF lacks a sound basis if it relies upon an incorrect legal assumption that MGRE's rights against HSF are purely personal. It is said that any rights which MGRE may have against HSF in respect of the performance of work on or after 1 May 2015 are held for the benefit of the trust and cannot simply be assumed to be personal to MGRE. 95 But the plaintiff accepts that that does not mean that MGRE necessarily has a cause of action against HSF. He says that this remains to be determined from the terms of the retainer and the advice and work that HSF actually performed, being the first category documents which are sought by the plaintiff. The plaintiff also says that proper consideration of whether there are rights against HSF which might be advanced for the benefit of unitholders is particularly important if MGRE succeeds in its pleaded defence that MGRE is not liable for certain acts by operation of cl 7.4 of the MGUT constitution. Clause 7.4 provides that: The Trustee may take and act upon: (a) the opinion or advice of counsel or solicitors instructed by the Trustee in relation to the interpretation of this deed or any other document (whether statutory or otherwise) or generally as to the administration of the Trust or any other matter in connection with the Trust; and (b) the opinion, advice, statements or information from any bankers, accountants, auditors, valuers, architects, engineers and other persons consulted by the Trustee who are in each case believed by the Trustee in good faith to be expert in relation to the matters upon which they are consulted, and the Trustee will not be liable for anything done, suffered or omitted by it in good faith in reliance upon such opinion, advice, statements or information. 96 The plaintiff says that the effect of cl 7.4 was not disclosed in any of the capital structure booklet, the prospectus or the PDS, and so MGRE's ability to avoid liability in reliance on this clause may be doubted. Nonetheless, so the plaintiff says, if MGRE avoids liability on that basis, it is even more important that MGRE in its capacity as trustee gives due consideration to the question of whether rights may be advanced against HSF which would permit losses sustained by beneficiaries to be recovered. 97 Further, the plaintiff says that it should be noted that whilst the plea in paragraph 31B of the defence filed by the first to third and fifth to thirteenth defendants is specifically concerned with cl 7.4(b), the advancement of the defence in respect of the "preparing, approving, issuing, lodging with ASIC, and giving to the ASX, the PDS" and "preparing the Forecast Financial Information" appears to concede that work done in the period prior to the issuance of units to unitholders on 7 July 2015 was work done by MGRE in its capacity as trustee. Accordingly, it is said that this undermines any argument that the engagement of solicitors or other professionals in the period from 1 May 2015 was undertaken in the trustee's so-called "personal" capacity. 98 The plaintiff says that it is also anomalous that HSF in acting as solicitors for inter-alia MGRE makes no reference in the defence prepared by it on MGRE's behalf to its own role in the "due diligence process, overseen by a due diligence committee established by the boards of MG and MGRE" (see e.g. paragraph 21A of the defence filed by the first to third and fifth to thirteenth defendants) despite HSF being identified as the "Australian legal adviser" on page 269 of the PDS, and being identified as the "Australian legal adviser to Murray Goulburn in connection with the Offer" to whom "[a]pproximately $1,100,000 (excluding disbursements and GST) is payable by Murray Goulburn for such services up to the date of this PDS" on page 127 of the PDS. The plaintiff says that given the fees payable, it may be inferred that HSF participated in the due diligence process. He says that the principal legal adviser for a securities issuer ordinarily does so. If the due diligence was for any reason insufficient or defective, there is an obvious possibility that HSF may be liable if it had any responsibility for it. The plaintiff says that that potential liability is unconnected factually and legally with the bases of liability which may apply to MGCL or MGRE. It is said that this is a simple but obvious example, alongside the common law of negligence or breach of the contract of retainer, of a liability which might arise for HSF which is not dependent upon, or even connected with, the potential liabilities of MGCL or MGRE. 99 Now I accept that one could theoretically posit a claim that MGRE might have against HSF that was not a personal claim but a trust claim, or in other words a non-indemnity claim outside MGRE's liability to the plaintiff and group members. But this is all frankly in the realm of speculation. And in any event, MGRE has obtained the advice of senior counsel and it is not established that it is in the best interests of the MGUT or the beneficiaries as a whole to pursue such a claim. One must recall that the plaintiff is only acting for some of the beneficiaries and not all. The interests that he represents are not the interests of all beneficiaries. I do not consider that the plaintiff would have established or could establish special circumstances. And even if I am wrong, I would still refuse the plaintiff's application in the exercise of my discretion.

Whether disentitlement to indemnification prevents rights against legal advisers being held on trust 100 The plaintiff makes another point. 101 The plaintiff says that MGRE confuses the circumstances in which: (a) a trustee is disentitled from indemnification by their conduct; and (b) when a trustee's action or incurring of a liability is for the trustee's personal benefit rather than for the benefit of the trust. 102 The plaintiff refers to Ford HAJ and Lee WA, Principles of the Law of Trusts (1st ed, The Law Book Company Limited, 1983) at [1407] where it is explained, citing Jacubs v Rylance (1874) LR 17 Eq 341; Doering v Doering (1889) 42 Ch D 203: It is clear that if he [a trustee] has committed a breach of trust for which he is liable to compensate he cannot obtain recoupment until he has provided compensation. This result rests on the principle that a defaulting trustee cannot claim as against the beneficiaries any beneficial interest (in this context the trustee's lien for recoupment) until he has made good his default. 103 Further, the plaintiff refers to Moriarty v Various Customers of BA Peters Plc [2008] EWCA Civ 1604, where it is said that Lord Neuberger addressed this principle at [16], and continued at [17] to "accept that the principle is of general application and could apply in the present more commercial type of circumstances if justified by the facts". However, I would note that Lord Neuberger did not consider that it was justified in the circumstances of that case: "[u]nfortunately for the appellants, I do not consider that the principle can apply here unless it is to be significantly extended" (at [17]). 104 Without going into unnecessary detail at this point given that the plaintiff's application is to be dismissed for a myriad of other reasons, I do not think that MGRE has confused any such principles. And in any event, its more straightforward point, which I have accepted, is that if MGRE's claim against HSF is a personal claim, then the plaintiff has no direct entitlement to bring it now, and particularly where there is presently no insolvency scenario or regime applying.

A commercial utility? 105 Even if there is a commercial utility in joining HSF on an indemnity claim so that if MGRE is not good for any judgment, HSF can meet the shortfall with the plaintiff in essence stepping into the shoes of MGRE or pursuing it in essence as a creditor of MGRE, there are a number of difficulties. First, I do not consider a shortfall to be likely particularly given MGCL's capacity to indemnify MGRE and the amount of $195 million being retained by MGCL post the sale of MGCL's assets to Saputo Dairy Australia Pty Ltd; I do not consider the plaintiff's assessment of the value of all claims against MGRE to have significant probative value. Second, such a commercial argument still fails to face up to the fact that the indemnity claim in my view is at best only a personal claim of MGRE. In the absence of an insolvency scenario or regime applying, I do not see how the plaintiff could have the right to presently pursue it.

(b) The entitlement to inspect trust documents 106 The plaintiff says that he has an entitlement to inspect the documents sought. I disagree. Let me begin with a discussion concerning a continuing debate. 107 There have been two approaches in the authorities to whether a beneficiary may inspect documents held by a trustee. The first approach is referred to as the "proprietary" approach. The second approach is referred to as the "discretionary" approach. The "proprietary" approach can be traced to Re Londonderry's Settlement [1965] 1 Ch 918. The "discretionary" approach can be traced to the advice of the Privy Council in Schmidt v Rosewood Trust Ltd [2003] 2 AC 709. In Australia, some judges have followed the proprietary approach, for example Hartigan Nominees Pty Ltd v Rydge (1992) 29 NSWLR 405 at 435E per Mahoney JA (but cf Kirby P at 421G to 422A and Sheller JA at 444B); McDonald v Ellis (2007) 72 NSWLR 605 at [46] to [52]; and Deutsch v Trumble at [66] to [73]. Other judges have followed the discretionary approach, for example Avanes v Marshall (2007) 68 NSWLR 595 at [15]; Silkman v Shakespeare Haney Securities Ltd (2011) 5 BFRA 483; [2011] NSWSC 148 at [17] to [27]; and AIT Investment Group Pty Ltd v Markham Property Fund No 2 Pty Ltd [2015] NSWSC 216 at [66] to [90]. The different approaches also remain the subject of academic debate. For example, Jacobs' Law of Trusts at [17-16] states that "there are undoubted difficulties in both the proprietary approach and more modern approaches offered in substitution for it". Ford and Lee: The Law of Trusts (Thomson Reuters, online) at [9.7230] refers to the proprietary approach as a "largely discredited principle" and notes that one objection to it is that it "justifies argument that beneficiaries under strict trusts have the right to see not only the trust accounts but also all other documents in the possession or under the control of the trustees. This is not supported by case law". 108 Now I agree with MGRE that it is unsurprising that there have been different approaches taken. Not all trusts are the same. What might be appropriate for one kind of trust might not be so for another kind. One needs to consider the particular nature of the trust concerned and the types and classes of beneficiaries. Now the MGUT is not a confined, closed trust, with a known and relatively static cohort of beneficiaries, of a kind discussed in many of the decided cases. Rather, it is a large commercial trust with a very substantial number of listed and readily transferable units and a large and changeable body of unitholders. After the issue of units on 7 July 2015, there were 6,144 unitholders holding 209,198,581 units. As MGRE points out, it is a trust because of the requirements imposed by Pt 5C of the Corporations Act on commercial enterprises of this kind. Such a trust structure is seen as an appropriate commercial vehicle for large scale, liquid, retail investments. Further, it is inherent in the scale and nature of a managed investment scheme that the interests of the beneficiaries of such a trust will not necessarily be aligned. The equitable principles which underpin the entitlement of a single beneficiary of a trust to inspect trust documents may not be indiscriminately applied to the current context. On this point I should say that the observations of the Vice-Chancellor in Cowan v Scargill [1985] 1 Ch 270 at 290 to 292 should not be taken out of context. 109 Further, even on the proprietary approach it is recognised that the so-called right of a beneficiary to inspect trust documents is not unqualified but admits of a discretion to refuse access to documents having regard to the circumstances of the particular case, including the need to ensure that the trustee is able to discharge its obligations to the beneficiaries as a whole; see Rouse v IOOF Australia Trustees Ltd (1999) 73 SASR 484 at [92] to [103] per Doyle CJ. 110 Let me say now that I prefer the "discretionary" approach of Lord Walker of Gestingthorpe as he expressed the position in Schmidt v Rosewood Trust Ltd. And I do not consider that such an approach is to be limited to the scenario where the interest of the beneficiary is no higher than an actual or potential object of a discretionary trust. 111 First, given my jurisdiction I am entitled to supervise and intervene in the administration of the MGUT in order to regulate, inter-alia, access to trust documents in a manner that is appropriate and in the best interests of all beneficiaries. 112 Second, it is not imperative that I need to determine whether the documents are "trust documents". Moreover, I agree with Sheller JA in Hartigan Nominees Pty Ltd v Rydge at 444 where he expressed the view that an inquiry as to an applicant's proprietary interest was "if not a false, an unhelpful trail". 113 Third, to have a proprietary interest is neither a necessary nor sufficient condition to obtaining access. 114 Fourth, with respect I agree with the observations of his Lordship at [67]: However, the recent cases also confirm (as had been stated as long ago as In re Cowin 33 Ch D 179 in 1886) that no beneficiary (and least of all a discretionary object) has any entitlement as of right to disclosure of anything which can plausibly be described as a trust document. Especially when there are issues as to personal or commercial confidentiality, the court may have to balance the competing interests of different beneficiaries, the trustees themselves, and third parties. Disclosure may have to be limited and safeguards may have to be put in place. Evaluation of the claims of a beneficiary (and especially of a discretionary object) may be an important part of the balancing exercise which the court has to perform on the materials placed before it. In many cases the court may have no difficulty in concluding that an applicant with no more than a theoretical possibility of benefit ought not to be granted relief. 115 Generally, it is surprising that one still needs to debate these matters. A commercial and workable solution has been given to the problem by Lord Walker. It is surely better to devote ingenuity and intellectual effort to solving other problems that are more pressing rather than ruminating on a solution to an already solved problem. 116 Further, and for completeness, I should say that I do not consider that there is dicta in Breen v Williams (at 89) per Dawson and Toohey JJ of a type that compels me to adopt the proprietary approach, although even if I took such an approach the plaintiff's application still fails as I have said. The passage prayed in aid by the plaintiff is preceded by discussion making it plain that the appellant in that case was not making any trust claim over documents. And indeed their Honours said "[No] analogy can be drawn between her situation and that of a beneficiary under a trust". Further, their Honours' observations concerning Re Londonderry's Settlement of course pre-date Schmidt v Rosewood Trust Ltd. Further, their Honours were referring to the fact that Re Londonderry's Settlement had been accepted by some lower courts. I do not consider that their Honours' observations go anywhere close to the scenario that the High Court was contemplating in Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89 at [134] and [135]. 117 Further, and with respect to those who have declined to follow Schmidt v Rosewood Trust Ltd on the basis of the "clarity of the position existing prior to" Schmidt v Rosewood Trust Ltd, I am not convinced that there was any such clarity as to the boundaries and content of the proprietary approach or in its application, particularly when one also considers the exceptions in all their variety and vagueness. 118 But whichever approach is adopted, the conclusion is the same. The plaintiff has no entitlement to inspect the documents sought in the application. 119 Now the plaintiff puts his application on the basis of the proprietary approach. The plaintiff submits that the documents are "other property of the Trust", within the meaning of cl 1.1 of the MGUT constitution, in respect of which cl 3.1(a) gives the plaintiff a proprietary interest. But MGRE submits that beyond that bare assertion, there is little explanation by the plaintiff of how these documents could constitute trust property. Let me make some observations concerning the categories.

First category 120 The first category of documents sought concerns HSF's work on the capital structure and due diligence for the PDS. 121 Now MGRE has submitted that whilst there is no universal definition of what constitutes "trust property" or "trust documents", the documents sought here are unrecognisable as documents that have previously been held to constitute trust property or trust documents, such as documents containing or evidencing the terms of the trust, documents relating to dealings with trust property, the accounts of the trust or advice given to the trustee in relation to the exercise of a discretionary power to advance part of a trust fund to a beneficiary. It is said that no provision is made in the MGUT constitution which would render documents of the kind presently sought by the plaintiff as being "trust property" or liable to inspection by an individual beneficiary (cf e.g. Tierney v King [1983] 2 Qd R 580 at 583D to 583E per Matthews J, Kelly and Macrossan JJ agreeing). It is also said that there is no basis to infer that it was intended by anyone who might be regarded as a settlor of the MGUT (e.g. MGCL in relation to the notes and convertible preference shares issued to and held by the trustee of the sub-trust on trust for MGRE) that any individual unitholder would have an entitlement to inspect documents of the kind sought here (cf e.g. Hartigan Nominees Pty Ltd v Rydge at 446F to 446G per Sheller JA). Indeed, it is said that the type of social institution with which the MGUT is concerned, namely, a large commercial managed investment scheme with a very substantial body of transferable units and changeable unitholders, and the practicalities of its administration, militate overwhelmingly against any such intention. 122 Now to repeat what I have earlier said, the process by which the capital structure was developed commenced in 2013, from which time HSF was the legal adviser to MGCL, and MGRE was not in existence. The final proposed capital structure was published by MGCL on 15 April 2015 for approval by MGCL shareholders, by which time MGRE had been incorporated but the MGUT had not been established. The final proposed capital structure was further published by MGCL, together with financial information concerning MGCL, in the prospectus on 1 May 2015. In the course of May 2015, the MGUT was established and registered as a managed investment scheme, the relationship deed and continuous disclosure deed poll were made, and the PDS was published, but at that time none of the plaintiff and group members were unitholders. The documents sought concerning the capital structure are antecedent to the establishment of the trust itself and the coming into existence of any trust property. The advice given by HSF in order to facilitate the establishment of these structures, and on the content of these documents, was not given for the benefit of the plaintiff or any other group members as actual (or even anticipated) beneficiaries of the MGUT (cf Gray v BNY Trust Co of Australia Ltd (2009) 76 NSWLR 586 at [54]). 123 I agree with MGRE that the documents concerning HSF's work on the capital structure are not "trust documents". 124 Contrastingly the documents sought concerning the due diligence for the PDS, which was undertaken pursuant to public law obligations contained in the Corporations Act as a precursor to the offering of units in the MGUT, may be trust property or documents. 125 But even if all documents in this category were trust documents, I would refuse inspection for all the reasons that I have elaborated on elsewhere.

Second category 126 The second category of documents sought concerns Mr Karkar QC's and Mr Loxley's advice. These documents have been brought into existence in circumstances where the plaintiff: (a) first, is suing MGRE in adversarial litigation, alleging among other things a breach by MGRE of its fiduciary duties and its duties under s 601FC(1) of the Corporations Act to the plaintiff and group members, as well as the giving of a defective PDS under the Corporations Act, and claiming compensation from MGRE for those alleged breaches; and (b) second, has further threatened MGRE with a Vandepitte application to seek to join and sue HSF who have been representing MGRE and other defendants in this proceeding for negligence and breach of retainer in connection with the claims that the plaintiff makes against MGRE. 127 I agree with MGRE that documents brought into existence for the purpose of a trustee obtaining legal advice in circumstances where the trustee and beneficiary are in an adversarial relationship because the beneficiary is suing the trustee are documents of the trustee personally. At the least they could hardly be described as "trust documents" to which the plaintiff has any proprietary interest. But none of this matters because I would refuse access in any event.

Discretion 128 Even if the view were taken that the documents sought by the plaintiff included trust documents, access should be refused. 129 The MGUT is not a small closed trust with a limited number of beneficiaries. It is a large commercial trust with listed and tradeable units and a large and changeable body of unitholders. As MGRE points out, it has duties to administer the MGUT in the interests of all unitholders, not just the plaintiff and group members. 130 I agree with MGRE that it would likely create a substantial and unworkable precedent in the context of both MGRE and other large commercial trusts of this kind if a single unitholder (such as the plaintiff), who might hold no more than a single unit out of the more than 200 million units in the MGUT on issue, could demand to inspect broad categories of documents of the type sought here, including confidential documents relating to the giving of legal advice, simply by asserting an interest in trust property. 131 Moreover, I will not order production of documents to a unitholder in circumstances where the unitholder in question is suing the trustee and may use the documents to prejudice the trustee in its conduct of the litigation or other unitholders. Indeed, even though the documents are sought purportedly to pursue a claim against HSF, they could potentially prejudice MGRE (and other unitholders) in the conduct of its defence. 132 Now the plaintiff has a number of responses. 133 First, the plaintiff says that MGRE's submission that unitholders are not entitled to the regular rights of beneficiaries is directly contrary to the legislative policy underlying the requirement that managed investment scheme property be held on trust for the benefit of scheme members. 134 He says that responsible entities regularly rely upon their status as trustees to seek judicial advice from the Courts under the various Trustee Acts. Further, investors in managed investment schemes are recognised as being beneficiaries of a trust and as having equitable (and other) rights in that capacity. 135 Further, he says that scheme members have the regular rights and entitlements of trust beneficiaries, which is consistent with the policy underpinning the creation of a trust by s 601FC(2) of the Corporations Act. He says that the statutory structure or setting provides no basis to "read down" the rights of scheme members simply because the responsible entity is engaged in a commercial enterprise. 136 He says that the MGUT, of which MGRE is the trustee and responsible entity, was brought into existence within a legal regime which: (a) dictates that scheme property must be held on trust for scheme members; (b) deliberately creates a relationship of trust for the better protection of investors; and (c) in doing so is cognisant that scheme members, as beneficiaries, may have a wider range of remedies. 137 Further, he says that with regard to the decision in Rouse v IOOF Australia Trustees Limited, there is no disagreement with the proposition that "the right of a beneficiary to inspect trust documents is not unqualified" (at [97]), but he says that Doyle CJ's analysis at [101] to [103] shows that the qualification is limited by reference to the protection of the interests of the beneficiaries as a whole: Ultimately, I would rest the existence of the relevant discretion upon the need to reconcile the undoubted duty of a trustee to make disclosure to beneficiaries of information about the trust, and the undoubted duty to permit the inspection of trust accounts and trust documents, with the equally fundamental obligation of a trustee to conduct the affairs of a trust, and particularly a trust which involves the conduct or management of a business, in the interests of the beneficiaries as a whole. I consider that on occasions the reconciliation of these interests may entitle a trustee to decline to provide information to particular beneficiaries, when the trustee has reasonable grounds for considering that to do so will not be in the interests of the beneficiaries as a whole, and will be prejudicial to the ability of the trustee to discharge its obligations under the trust. It may be that the ultimate foundation of the discretion is the obligation of the trustee to discharge its duties to manage the affairs of the trust in the interests of the beneficiaries. I wish to make it clear that the discretion that I envisage is a limited one, and must always be limited by the general duty of disclosure by a trustee to which I have referred. The existence of the discretion cannot be used as an excuse for paternalism or to disregard the interests of beneficiaries. Its existence depends upon the need to protect the trustee's ability to discharge its obligations. The availability of the discretion will depend very much upon the circumstances of the particular case. I therefore conclude that the right of a beneficiary to inspect trust documents is qualified by the existence of the discretion to which I have referred. It is impossible and pointless to state the scope of the discretion with any precision. All that can be said is that there may be circumstances in which the trustee can properly claim that there are trust documents of a confidential nature that a trustee may refuse to disclose to particular beneficiaries in the interests of the discharge of the trustee's duties to the beneficiaries as a whole. Once again, lest I should be misunderstood, there is one other qualification that I would make. I do not, in what I have said, contemplate the use of that discretion to enable a trustee to deal in a partial or discriminatory manner as between beneficiaries or groups of beneficiaries, except to the extent that the necessary result of a proper exercise of the discretion may be that particular beneficiaries are not given access to a document. 138 In Rouse v IOOF Australia Trustees Limited, Doyle CJ (Perry and Martin JJ agreeing) confirmed the right of a managed investment scheme member to seek to inspect trust documents and described the trustee's duties of disclosure and to permit inspection as "undoubted". But the plaintiff accepts that where a discretion to refuse to permit inspection may arise is if the disclosure to particular beneficiaries is not "in the interests of the discharge of the trustee's duties to the beneficiaries as a whole". 139 But the plaintiff says that it is difficult to apprehend how the disclosure of documents which concern the engagement of external legal advisers several years ago might now compromise the discharge of the trustee's duties to the beneficiaries as a whole. He says that MGRE has not explained how any prejudice to the conduct of the trust or to the beneficiaries as a whole may follow from permitting inspection by the representative plaintiff in a group proceeding, in which many beneficiaries are represented, of documents concerning claims against a third party. 140 The plaintiff says further that it should also be noted that the reasons of Mahoney JA in Hartigan Nominees Pty Ltd v Rydge at 431F to 432B are concerned with the circumstances of a discretionary trust and that Mahoney JA's comments may be distinguished. The beneficiaries of the MGUT are clearly defined by their ownership of units and they have rights attaching to those units. Their entitlement to the rights attaching to their units is not subject to any exercise of discretion by MGRE. 141 Now all of what the plaintiff says has some merit, but in the present case such general statements described above must be qualified by the particular context that I am dealing with. The plaintiff does not represent all unitholders. The plaintiff's interests in this litigation are adverse to MGRE and other unitholders that he does not represent. Granting access may potentially be prejudicial to their interests, particularly in relation to the first category of documents sought. Further, the plaintiff's assertion of potential claims is speculative. Further, MGRE has determined to act on independent legal advice not to pursue any claim against HSF. 142 Second, the plaintiff referred me to Mowbray WJ, Lewin on Trusts (16th ed, Sweet & Maxwell, 1964), where the following was said in relation to the inspection of trust documents (at 618): A beneficiary has a right at all reasonable times to inspect the documents relating to the trust and, at his own expense, to be furnished with copies of them. The rule extends to cases submitted to, and opinions of, counsel taken by the trustees for their guidance in the discharge of their duty; for, as the expense falls upon the trust estate, the beneficiaries may see the cases and opinions for which they pay, but the right does not arise until the relation of trustee and beneficiary has been established to the satisfaction of the court. Even where litigation is pending against the trustees, they are bound to produce letters and copies of letters passing between them and their solicitors in relation to the matters in question in the action ante litem motam: and a trustee cannot claim privilege for communications passing between him and his co-trustee employed as his solicitor. But, where a trustee against whom such litigation is pending obtains an opinion from counsel for his own protection, such case and opinion are usually protected … [footnotes omitted] 143 It is said that the documents sought by the first category fall squarely within categories of documents passing between a trustee and solicitors which a beneficiary has long been held to have an entitlement to inspect. It is said that MGRE's proposition that the documents sought are "unrecognisable as trust property" is wrong. And it is said that it may be noted that even in Re Cowin; Cowin v Gravett (1886) 33 Ch D 179, North J referred at 185 to the 8th edition of Lewin on Trusts for the proposition that "[a]ll documents held by the trustee in that character must be produced by him to the cestuis que trust, who in equity are the true owners". 144 Now let me pause here for a moment. The reference to the 16th edition of Lewin on Trusts by the plaintiff carries little weight. Much has changed since 1964, including the delivery of the decision of Re Londonderry's Settlement. 145 Further, I have reviewed the latest edition of this text (Tucker L, Le Poidevin N and Brightwell J, Lewin on Trusts (19th ed, Sweet & Maxwell, 2015)). There has been a considerable shift in treatment. For example, as to the general rule that "[a] beneficiary has a right at all reasonable times to inspect the documents relating to the trust, and at his own expense to be furnished with copies of them", the 19th edition now adds the following qualification (at [23-015]): [The] rule did not, however, mean that a beneficiary had a right to inspect all documents owned or held by the trustees in their capacity as such. There were exceptions, formulated in Re Londonderry's Settlement and later cases, to the right of disclosure in the case of documents relating (in particular) to the reasons for trustees' decisions on the exercise of their powers and discretions, and other documents relating to the conduct of their trusteeship. [footnotes omitted] 146 And all of this is expressed in the latest edition as being general propositions that were accepted before the Privy Council's decision in Schmidt v Rosewood Trust Ltd. Lewin on Trusts now considers that decision to be the leading case governing disclosure by trustees to beneficiaries. I have already addressed that decision above. 147 Third, the plaintiff says that the existence of an adversarial relationship subsisting between the plaintiff and MGRE does not preclude the plaintiff from inspecting the two categories of documents sought, as the documents are solely relevant to possible claims against HSF. The plaintiff asserts that the documents sought were not brought into existence for the purpose of MGRE defending itself in the proceeding. 148 The plaintiff says that none of the cases suggest that the existence of an adversarial relationship has any bearing upon the question whether documents created for the purpose of the defence of the claim will be trust property or personal to the trustee. He says that there is no suggestion in the cases that documents which concern the exercise of rights against a third party will not be trust property. 149 In Gray v BNY Trust Company of Australia Ltd at [54], Bergin CJ (in Eq) identified that documents brought into existence by a trustee for the purpose of defending a claim brought by a beneficiary are personal and not for the benefit of the plaintiff: 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. 150 Dura (Australia) Constructions Pty Ltd v Hue Boutique Living Pty Ltd [2011] VSC 477 at [20] also adopted the approach of considering the relationship between the beneficiary and the trustee at the time when documents were created. At [21] to [31] the relationship in that case was described, and the plaintiff says that it is apparent that the documents in that case were created when "the parties were engaged in clear conflict" and "heading towards the commencement of the very litigation in which the parties are now engaged". But he says that there is no suggestion that the documents concerned the trustee's rights against a third party. 151 Again in Hancock v Rinehart (2015) 106 ACSR 207; [2015] NSWSC 646 at [360], there was focus upon "[d]ocuments relating to the trustees' defence of proceedings brought against them by beneficiaries" not being trust documents. 152 Now all of this is true so far as it goes, but it provides no real answer. Even though the plaintiff purports to seek access for the purposes of determining whether MGRE has a claim against HSF, giving such access may prejudice MGRE (and other unitholders), particularly in relation to the first category of documents that are relevant to the plaintiff's claims against MGRE.

(c) Legal professional privilege 153 The documents the subject of the plaintiff's application are very likely to be subject to legal professional privilege. The documents in the first category are likely to be the subject of legal advice privilege of both MGCL and MGRE. The documents in the second category are likely to be the subject of legal advice and litigation privilege of MGRE. MGCL and MGRE claim privilege in the documents the subject of the application. 154 Now the plaintiff has asserted that any privilege in the documents is also a joint one with all the unitholders, referring to Schreuder v Murray (No 2) at [94] per Buss JA. 155 But I agree with MGRE that no such joint privilege arises. 156 First, for there to be a joint privilege the documents must relate to legal services provided in connection with the management or administration of the trust (Schreuder v Murray (No 2) at [94(d)(i)]). But the nature and context of the documents sought do not relate to legal services "in connection with the management or administration of" the MGUT as such; particularly is that so concerning the first category. 157 Second, for there to be a joint privilege, MGRE (in its capacity as trustee) and the unitholders (in their capacity as beneficiaries) must have a joint interest in the subject matter of the documents when they come into existence (Schreuder v Murray (No 2) at [94(d)(ii)]). But as to the first category of documents, the plaintiff was not even a unitholder when the documents came into existence. Further, even if he had been, it is not apparent what interest he would have had as a unitholder in these particular documents. As for the second category of documents, the plaintiff also cannot have had a joint interest as he did not have any interest at all in the documents. They do not concern any claim held on trust for him. Further, any interest the plaintiff had was adversarial to MGRE. 158 I do not need to trouble myself further with these questions. Even if there was a joint privilege strictly speaking, I would not make an order for access for other discretionary reasons in any event.

(d) Jurisdiction and power 159 The plaintiff has relied on ss 22, 32 and 33ZF of the Federal Court of Australia Act in terms of my jurisdiction and power to make the orders sought. 160 Now MGRE contends that there are difficulties with the sources of both jurisdiction and power identified. 161 First, it accepts that s 32(1) confers jurisdiction on the Court in respect of matters not otherwise within its jurisdiction that are associated with matters in which the jurisdiction of the Court is invoked. The conferral of associated jurisdiction under s 32 is a conferral of jurisdiction in another federal matter in respect of which jurisdiction could be, but has not been, conferred on the Court. But MGRE says that neither the plaintiff's application to inspect documents nor any hypothetical application he might make under "the Vandepitte procedure" is such a matter. It is said that the documents sought are not relevant to the existence of any cause of action held on trust for the plaintiff or group members in this proceeding. At their highest, they could only be relevant to whether MGRE has a personal claim, held for its own benefit, against HSF for negligence or breach of retainer. But such a matter would not be within the associated jurisdiction under s 32(1). 162 Moreover, MGRE says that the plaintiff's claim to inspect the documents of the trustee is not part of the same federal "matter". It does not comprise the "same justiciable controversy". It is not the subject of the substantive proceeding in this Court and would not fall within what was at least formerly known as the "accrued jurisdiction" of the Court (cf Rana v Google Inc (2017) 350 ALR 280; [2017] FCAFC 156 at [17] to [20] and [27] per Allsop CJ, Besanko and White JJ). 163 Second, MGRE says that s 22 confers a power, not a jurisdiction. If the plaintiff's application does not otherwise raise a matter within the Court's jurisdiction, the power in s 22 is not available. Furthermore, that power is limited to granting "remedies to which any of the parties appears to be entitled in respect of a legal or equitable claim properly brought forward by him or her in the matter". But the plaintiff has neither a claim, nor any entitlement to a remedy, that would empower the Court to make the orders sought by the plaintiff on the present application. 164 Third, MGRE says that s 33ZF(1) similarly confers a power, not a jurisdiction. Section 33ZF(1) provides: In any proceeding (including an appeal) conducted under this Part, the Court may, of its own motion or on application by a party or a group member, make any order the Court thinks appropriate or necessary to ensure that justice is done in the proceeding. 165 Section 33ZF(1), whilst broad, is not unlimited, and any exercise of the power must fit within the statutory formulation as I discussed in Earglow Pty Ltd v Newcrest Mining Ltd (2015) 230 FCR 469 at [33] in the following terms: [A]lthough in a general sense s 33ZF(1) has been described as a plenary power, nevertheless it is not unlimited. It is in one sense both trite and question begging to assert that the power must be exercised judicially. But let me pass to the language of s 33ZF(1) itself. It uses the language "make any order the Court thinks appropriate or necessary to ensure that justice is done in the proceeding". Grammatically, "thinks" is to be applied distributively, so that it reads "thinks appropriate" or "thinks necessary"; there is no "is" before "necessary". But as applied distributively, "thinks appropriate" has a lower threshold than "thinks necessary". But in the composite phrase, the concept is "thinks appropriate … to ensure that justice is done in the proceeding" (emphasis added). In other words, although the words "thinks appropriate" have a lower threshold than "thinks necessary", nevertheless the relevant element of necessity in another guise is enshrined in the coupling of the words "to ensure that". In summary, the question becomes whether I think it is appropriate, to ensure that justice is done in the proceeding, to make the orders sought by Newcrest. It is not whether I think it to be merely convenient or useful per se. Section 33ZF(1) is not a licence for me to impose my own expansive case management philosophy. Rather, I must be satisfied that any order that is made satisfies the statutory test. Now I accept that s 33ZF(1) is a very wide power and ought not to be construed narrowly (McMullin v ICI Australia Operations Pty Ltd (1998) 84 FCR 1 at 4 and Owners of Shin Kobe Maru v Empire Shipping Company Inc (1994) 181 CLR 404 at 421). Nevertheless, any exercise of power has to fit within the statutory formulation. MGRE says that it is neither necessary nor appropriate to ensure that justice is done in the present proceeding to make the orders sought on the plaintiff's application. 166 Now these are all interesting questions. But given that I am able to dispose of the plaintiff's application on other grounds, I do not need to answer any of them.

(e) Summary 167 In summary I would reject the plaintiff's application for the following reasons. 168 First, given that MGRE has sought and obtained advice from senior counsel that justifies not pursuing a claim against HSF, I very much doubt that the plaintiff could establish special circumstances to justify bringing a claim in his capacity as a beneficiary against HSF that the trustee (MGRE) has chosen not to pursue. And if that be the case, the plaintiff does not have any legitimate let alone sufficient interest in obtaining the documents sought. Indeed, on this aspect, I am fortified in my approach by the terms of the plaintiff's solicitors' letter to HSF on 11 January 2018 and in particular their stipulation of option (c) as being adequate to address their concerns. 169 Second, in my view the documents sought are very likely to be covered by either the joint legal professional privilege of MGCL and MGRE, or the legal professional privilege of MGRE. I do not consider that the plaintiff at any time was a joint privilege holder. But if I am wrong on that question, in any event in the exercise of my discretion I would decline to order that there be inspection. The plaintiff and MGRE are now in an opposing interest. Moreover, the documents sought could potentially be used adversely to the interests of MGRE, even though the plaintiff purportedly seeks them to consider whether MGRE might have a claim against HSF. Inspection could cause prejudice to MGRE in the conduct of its defence of these proceedings. 170 Third, and relatedly, the plaintiff does not act for all unitholders. Other unitholders that are not represented by the plaintiff may be prejudiced if the plaintiff gains access to the relevant documents to the extent that MGRE is prejudiced. 171 Fourth, to the extent that the documents are sought to be inspected in order to identify whether MGRE has an indemnity claim against HSF in respect of the plaintiff's claims, in my view such an indemnity claim would be a personal claim of MGRE and not a claim which would be trust property or a trust claim. In my view, the plaintiff would have no right to bring it against HSF if MGRE chose not to pursue it, particularly absent any insolvency scenario or regime being currently applicable. 172 Fifth, to the extent that the plaintiff seeks the documents as being relevant to a separate claim for damages that could be brought by MGRE against HSF, that is, separate from any indemnity claim, I agree that such a claim would be trust property or a trust claim. And, moreover, I am prepared to accept in favour of the plaintiff that there would be a legitimate commercial interest in pursuing it and adding another perceived "deep pocket" to the proceedings (see the plaintiff's supplementary submissions filed on 29 March 2018); indeed I would accept this even if one was considering only an indemnity claim by MGRE against HSF (assuming that the plaintiff could pursue it as a beneficiary, which in any event I have found otherwise). But there is a problem with such a claim. It is all in the realm of speculation and seems to have been an afterthought by the plaintiff's advisers. It was not clearly articulated in the plaintiff's solicitors' correspondence prior to his application being filed. What was articulated was an indemnity claim that MGRE might have against HSF and the basis for an indemnity claim. In any event, given that MGRE has obtained the advice of senior counsel pointing against the existence or utility of pursuing a separate claim against HSF, in the exercise of my discretion I would decline to grant the inspection sought. 173 Sixth, I do not consider that the plaintiff has any relevant proprietary interest as beneficiary in the documents sought. But even if I am wrong, for all the above reasons I would decline to grant the inspection sought in the exercise of my discretion. 174 Seventh, in my view the plaintiff has not established the necessary preconditions enlivening my power or discretion to grant preliminary discovery. But even if he had, I would have declined to order discovery for all of the above reasons.

COSTS 175 MGRE has sought an indemnity costs order and submits that I should order that the costs be paid forthwith. As to the indemnity costs order it has submitted the following: (a) The plaintiff, properly advised, should have known that the application had no prospects of success. The plaintiff's stated basis for making the application in this proceeding was wholly misconceived. The plaintiff had no proprietary or other interest in the documents sought in the application and no entitlement to inspect them, and the documents were obviously privileged. (b) Further, having regard to both the correspondence that preceded the application and its lack of merit, it can only be concluded that the true object of this application was to try to disrupt both MGRE's and the other defendants' defence of the proceeding and their continued representation by HSF, the firm which has represented them in the proceeding since it was commenced. MGRE says that the application has evidently been brought for an ulterior or collateral purpose and is an abuse of process. 176 I will not make an indemnity costs order. I have not found that MGRE's ulterior or collateral purpose argument has been made out. Moreover, although I have dismissed the plaintiff's application, I do not consider that it was so hopeless such as to warrant an indemnity costs order. 177 But I do agree with MGRE for the reasons that it has advanced that I should order that the plaintiff pay its costs to be taxed and paid forthwith. 178 First, MGRE has been forced to incur significant costs in responding to the application, including briefing separate solicitors in the face of the threat by the plaintiff to disrupt its conduct of the application by contending that HSF was in a position of conflict on the application and to seek consequential orders, and in addressing issues that would not otherwise have arisen in the proceeding. 179 Second, MGRE should not have to await the final determination of the proceeding, which is likely to be some time away, to recover its costs. The application raised a discrete point which was in some respects collateral to the main proceeding and the current parties. MGRE should not be significantly delayed from recovering its costs. I certify that the preceding one hundred and seventy-nine (179) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Beach.

SCHEDULE OF PARTIES VID 508 of 2017 Defendants Fourth Defendant: GARY HELOU Fifth Defendant: KENNETH W JONES Sixth Defendant: NATALIE AKERS Seventh Defendant: WILLIAM T BODMAN Eighth Defendant: PETER J O HAWKINS Ninth Defendant: MICHAEL F IHLEIN Tenth Defendant: EDWIN DUNCAN MORRIS Eleventh Defendant: GRAHAM N MUNZEL Twelfth Defendant: JOHN P PYE Thirteenth Defendant: MARTIN J VAN DE WOUW

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