Blenkinsop v Jeffrey Laurence Herbert as Trustee for the Blenkinsop Family Trust as Trustee for the Blenkinsop Family Trust No 2
[2016] WASC 280
•6 SEPTEMBER 2016
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: BLENKINSOP -v- JEFFREY LAURENCE HERBERT As Trustee For THE BLENKINSOP FAMILY TRUST As Trustee For THE BLENKINSOP FAMILY TRUST NO 2 [2016] WASC 280
CORAM: MASTER SANDERSON
HEARD: 26 AUGUST 2016
DELIVERED : 6 SEPTEMBER 2016
FILE NO/S: CIV 1994 of 2016
MATTER :The Blenkinsop Family Trust and the Blenkinsop Family Trust No 2
BETWEEN: SCOTT FREDERICK BLENKINSOP
Plaintiff
AND
JEFFREY LAURENCE HERBERT As Trustee For THE BLENKINSOP FAMILY TRUST As Trustee For THE BLENKINSOP FAMILY TRUST NO 2
Defendant
Catchwords:
Trusts - Right of trustee to refuse to allow beneficiary access to trust documents - Turns on own facts
Legislation:
Nil
Result:
Inspection allowed
Category: B
Representation:
Counsel:
Plaintiff: Mr W C J Zappia & Mr S F Blenkinsop
Defendant: Mr S C M Wong & Ms C M Guy
Solicitors:
Plaintiff: Scott Blenkinsop Legal
Defendant: HWL Ebsworth Lawyers
Case(s) referred to in judgment(s):
Marigold Pty Ltd v Belswan (Mandurah) Pty Ltd [2001] WASC 209
Rouse v IOOF Australia Trustees Ltd [1999] SASC 181
Schreuder v Murray [No 2] [2009] WASCA 145
MASTER SANDERSON: By way of a minute dated 28 August 2016 to re‑amend the originating summons the plaintiff sought relevantly the following orders (marking up omitted):
2.Pursuant to Order 58 Rule 2 of the Rules of the Supreme Court1971 and the Court's inherent jurisdiction as provided in section 16 of the Supreme Court Act 1935, determination of the following questions arising in the administration of the Blenkinsop Family Trust and the Blenkinsop Family Trust No 2 (each a Trust, together Trusts):
2.1Whether the Plaintiff is entitled, as a beneficiary of each Trust, to inspect and or copy the brief to counsel, including as amended from time to time (Brief), being prepared by the Defendant's solicitors in connection with the proceedings the subject of CIV 1537 of 2014 (Loan Account Proceedings) being a claim by Judith Anne Blenkinsop as a creditor (Creditor) for certain sums claimed to be payable by each Trust to the creditor.
2.2Whether the Plaintiff is entitled, as a beneficiary of each Trust, to inspect and or copy:
(a)The opinion delivered in response to the Brief, including any supplementary or amended opinion (Opinion).
3.Subject to the determination of the questions set out in sub‑paragraphs 2.1 and 2.2 hereof, orders the Defendant is directed to permit the Plaintiff to inspect and or copy the:
(a)Brief;
(b)Opinion;
4.The parties have liberty to apply.
5.The Plaintiff's costs of the application be assessed on the basis the Plaintiff be paid all the costs incurred by him (including by acting as on his own behalf) except insofar as they are of an unreasonable amount or have been unreasonably incurred, so that subject to these exceptions, he will be completely indemnified for his costs (including his own time).
Prior to the hearing the parties had agreed a statement of facts and matters. This statement neatly summarises the relevant factual matters and I will quote it in full:
1.The plaintiff is on the roll of practitioners of the State of Western Australia and a current certified legal practitioner (as that term is defined in the Legal Profession Act 2008 (WA)).
2.The plaintiff is a Primary Beneficiary and General Beneficiary of the Blenkinsop Family Trust (BFT) and Blenkinsop Family Trust No 2 (BFT2).
3.The terms of the BFT are expressed in the supplemental trust deed dated 25 September 1996 (BFT Trust Deed).
4.The terms of the BFT2 are expressed in a deed of settlement dated 25 October 1993, (BFT2 Trust Deed).
5.The plaintiff together with his mother, Judith Ann Blenkinsop and his siblings, Ross Alexander Blenkinsop, Christine Marion Thurtell, Kim Rosina Holland and Tracey Ann Jakovich are the current guardians of BFT and BFT 2 (Guardians).
6.At a director's meeting held on 28 June 2013 a resolution of the trustee companies BFT and BFT2 was passed that the net income of the trusts be distributed solely to Kim Holland, the plaintiff's sister and a Primary and General Beneficiary of both trusts (2013 Distribution) in circumstances where Ross Blenkinsop had left the meeting and proposed to have another meeting the following day at his house and Christine and Judith voted against the resolution. The consent of the Guardians of each of BFT and BFT2 was not obtained for the 2013 Distribution.
7.There was no appointment of the net income of the BFT and the BFT2 by the trustees for the 2014 and 2015 financial years.
8.On 23 April 2014, Judith, a beneficiary of BFT and BFT2 commenced CIV 1537 of 2014 claiming that:
a.Blenkinsop Nominees as the then trustee of BFT was indebted to her for the sum of $1,969,995.13; and
b.Silverglade Pty Ltd, as the then trustee of BFT2 was indebted to her for the sum of $2,526,455.56.
(Loan Account Proceedings)
9.On 20 November 2014 Judith made an application for summary judgment in the Loan Account Proceedings (SJ Application). Some of the legal costs for the defence of the SJ Application on behalf of the trusts was initially paid for by the plaintiff (SJ Defence Costs).
10.The plaintiff was subsequently reimbursed by the trusts for the SJ Defence Costs.
11.On 20 July 2015 the SJ Application was dismissed.
12.On 15 December 2015, this Honourable Court removed the then existing trustees of both the BFT and BFT2 and appointed Mr Jeffrey Lawrence Herbert as trustee of both the BFT and the BFT2 under s 77 of the Trustees Act 1962 (WA).
13.Mr Herbert remains the trustee of the BFT and the BFT2 (Current Trustee).
14.The Current Trustee has instructed his solicitors, HWL Ebsworth Lawyers, to prepare, and HWL Ebsworth have prepared, a brief to Senior Counsel in relation to the claims made in the Loan Account Proceedings (Brief).
15.The Current Trustee has a right of indemnity to be paid the costs of preparing the Brief and counsel's fees out of the assets of BFT and/or BFT2.
16.By way of email dated 11 May 2016 to HWLE the plaintiff made a request of the Current Trustee for access to the draft Brief.
17.By way of email from HWLE to the plaintiff dated 13 May 2016 the Current Trustee did not permit the plaintiff to access the draft Brief.
18.The plaintiff made a further request for access to the Brief, by way of letter dated 26 May 2016.
19.By way of letter dated 30 May 2016 from HWLE to the plaintiff the Current Trustee did not accede to the plaintiff's further request.
(Subsequent to the statement of facts being agreed, senior counsel who had been instructed delivered an opinion. That prompted the amendment of the originating summons. The parties agreed the fact the opinion had been provided did not change the nature of the application. All it did was mean that not only did the plaintiff want access to the brief to counsel he actually wanted access to the opinion.)
It was the plaintiff's primary submission that as a beneficiary of the trust he was entitled to unfettered access to the documents of the trust including the brief to counsel and the opinion. In making this submission heavy reliance was placed by counsel for the plaintiff on the court of appeal decision in Schreuder v Murray [No 2] [2009] WASCA 145. On behalf of the trustees it was submitted the trustees had a discretion to refuse to provide the plaintiff with copies of the documents he sought and that in the circumstances they had exercised that discretion properly. Counsel for the defendant submitted the Schreuder decision had no application.
It is convenient to start with an analysis of the Schreuder decision. The court, McLure, Pullin and Buss JJA all agreed in the outcome. Pullin JA provided relatively short reasons for doing so. His Honour said at [2] ‑ [12]:
PULLIN JA: The respondent is a beneficiary of a testamentary trust. She commenced proceedings seeking an order of the court that the appellant be removed as trustee of the trust because of alleged breaches of trust. During the course of the proceedings, an issue arose about whether the appellant was obliged to produce for inspection certain letters, emails and/or invoices for which he claimed legal professional privilege.
In Murray v Schreuder [2009] WASC 51, Newnes J (as he then was) held that the documents were relevant to an issue in the proceedings, namely whether legal costs incurred by the appellant were reasonably and properly incurred [64]. That is not challenged on this appeal. The documents and the invoices all related to legal advice obtained for the purposes of the administration of the trust and not for the benefit of the appellant personally (Murray v Schreuder [35]). Newnes J held that no proper claim for privilege had been made and that it was not sufficient merely to assert that a document was the subject of legal professional privilege [38]. Secondly, his Honour observed that the appellant's claim for legal professional privilege was based on the 'premise that [the respondent], as a beneficiary, has no entitlement, as of right, to inspect the documents held by [the appellant] relating to the administration of the trust' [44]. Newnes J noted that in this respect counsel for the trustee relied on Avanes v Marshall (2007) 68 NSWLR 595. Newnes J observed that it had long been regarded as law that in the case of nondiscretionary trust, where a beneficiary had a vested or contingent interest, the beneficiary had a prima facie right to inspect any property forming part of the trust estate, including the trust documents used by the trustee in the administration of the trust [45]. His Honour observed at [54] that in Avanes v Marshall Gzell J concluded that the approach of the Privy Council in Schmidt v Rosewood Trust Ltd [2003] 2 AC 709 should be adopted by Australian courts. The Privy Council said in that case that:
'[N]o 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 (734).'
Newnes J referred to the reasons of Bryson AJ in McDonald v Ellis [2007] NSWSC 1068 who took a contrary view and declined to follow Avanes v Marshall [55]. Newnes J said that he too would decline to follow Avanes v Marshall or Schmidt insofar as they might be thought to apply to a nondiscretionary trust where the beneficiaries had a vested or contingent interest. Newnes J pointed out that the trust in this case was not a discretionary trust. In the circumstances, his Honour was unable to see any basis upon which the appellant was entitled to maintain a claim of legal professional privilege in respect of legal advice obtained in relation to the administration of the trust against the respondent. The conclusion was that the respondent was entitled as a beneficiary to inspect such advice [60]. Newnes J also made some observations about O 26 r 8 to which I do not need to refer. The result was that the appellant was ordered to file and serve an affidavit containing a list of all the legal advice he had received and the invoices he had received from his legal advisors in respect of the administration of the estate, and to produce the documents referred to on the list.
The appellant appeals on three grounds, they being that:
(1)his Honour erred in law by determining that no claim for privilege had been made out due to lack of evidence;
(2)his Honour erred in law in his determination that the respondent had an entitlement to inspect the documents for which privilege was claimed; and
(3)his Honour erred in his determination of the significance of O 26 r 8.
If ground 2 fails, then grounds 1 and 3 fall away.
In the written submissions to this court, the appellant again relied upon Avanes v Marshall and in effect, submitted that if the reasoning in that case had been applied, the respondent's application should have been dismissed.
Avanes v Marshall was a case in which the plaintiffs sued for various breaches of trust and in the course of those proceedings, discovery was given. The first and second defendants, who were the trustees of a testamentary settlement, claimed client legal privilege with respect to certain documents. Gzell J reviewed various authorities and considered Schmidt's case in some detail and then said:
'The consequence is that according to Schmidt, there is no longer a general rule that a beneficiary has a right to inspect trust documents that is subject to exceptions, notably concerning the reasons for the exercise of the trustee's discretion and confidentiality in third parties. In each case it is a matter for the Court to exercise its discretion by balancing competing interests. Lord Walker suggested (at 730) that in Re Londonderry's Settlement and more recent cases, including the Australian decisions of Spellson, Hartigan Nominees and Rouse, the courts have begun to work out in detail the way in which the Court should exercise its discretion [11].'
…
In my view, the approach in Schmidt should be adopted by Australian courts. The decision should not be regarded as abrogating the trustee's duty to keep accounts and to be ready to have them passed, nor the trustee's obligation to grant a beneficiary access to trust accounts. But when it comes to inspection of other documents there should no longer be an entitlement as of right to disclosure of any document. It should be for the Court to determine to what extent information should be disclosed. I propose to adopt that approach in determining this application [15].
Gzell J then perused the documents and reached a decision about the individual documents in question.
It may be assumed that, in both Avanes and this case, the documents detailing communications between the trustee and legal advisors were documents with respect to which the trustee was entitled to maintain the privilege 'against the rest of the world' (Phipson on Evidence, 14th ed, 20 ‑ 29). However, the beneficiary is not a person who falls within the category of persons against whom privilege may be claimed. In Farrow Mortgage Services Pty Ltd (in liq) v Webb (1996) 39 NSWLR 601 at 608, Sheller JA, Waddell AJA agreeing said:
'Two or more persons may join in communicating with a legal adviser for the purpose of retaining his or her services or obtaining his or her advice. The privilege which protects these communications from disclosure belongs to all the persons who joined in seeking the service or obtaining the advice. The privilege is a joint privilege. So is it also if one of a group of persons in a formal legal relationship communicates with a legal adviser about a matter in which the members of the group share an interest. Communications by one partner about the affairs of the partnership or a trustee about the affairs of the trust are examples. Implicit in the relationship is the duty or obligation to disclose to other parties thereto the content of the communication. Accordingly no privilege attaches to such communications as against others who, with the client, share an interest in the subject matter of communication. But the parties together are entitled to maintain the privilege 'against the rest of the world': Phipson, par 20-28 and par 20-29.'
This part of Farrow has subsequently been either adopted as correct or referred to with approval in Mercantile Mutual Insurance (NSW Workers Compensation) Ltd v Murray [2004] NSWCA 151; (2004) 13 ANZ Ins Cas 61-612 [41] (Mason P, Handley JA and Brownie AJA agreeing); Temwell Pty Ltd v DKGR Holdings Pty Ltd [2003] FCA 967 [12] (Ryan JA); Re Doran Constructions [2002] NSWSC 215; (2002) 194 ALR 101 [7] (Campbell J); Yunghanns v Elfic Pty Ltd (No 2) [2000] VSC 113; (2000) 1 VR 92 [22], [30], [34] - [35] (Warren J) and Pulitano v Ginbey [1999] WASC 5 [22] (Sanderson M).
A trustee is the trustee of property for the benefit of the beneficiaries of the trust. The trustee and beneficiaries have a correlative duty and interest in the proper administration of the trust. The duty of the trustee includes a duty to properly perform the trust by adhering to and carrying out the terms of the trust. The beneficiaries have an interest and, indeed, a right to compel proper administration of the trust. The trustee and the beneficiaries are in a 'formal legal relationship' and if the trustee obtains legal advice concerning the proper administration of the trust, then any legal professional privilege attaching to the advice obtained is the joint privilege of both the trustee and the beneficiaries. As such, the trustee and the beneficiaries, being entitled to joint privilege, may not maintain the privilege against each other.
The appellant's reliance on Schmidt, as approved in Avanes v Marshall, is, with respect, misplaced. The issue dealt with in Schmidt was the issue about the right of a beneficiary of a discretionary trust to inspect trust documents. Schmidt said nothing about whether a trustee could refuse to disclose to a beneficiary documents containing legal advice about due administration of the trust on the ground of legal professional privilege. In Avanes, legal professional privilege had been claimed by the trustee, but the reasons of Gzell J did not examine the basis for that claim or consider whether or not the trustee and the beneficiary had joint privilege. Gzell J explained the issue he was examining in his reasons where he said:
'In the course of discovery, the first and second defendant trustees of a testamentary settlement claimed client legal privilege with respect to certain documents numbered 1 to 3 and 5 to 10.
The plaintiff challenged the claim on the principal basis that the documents were trust documents in which the plaintiff had a proprietary interest. Re Londonderry's Settlement [1965] 1 Ch 918 was relied upon. Aspects of that case were over-ruled by the Privy Council in Schmidt v Rosewood Trust Ltd [2003] 2 AC 709 and I invited further submissions on the impact of that decision [1] ‑ [2].'
Having reached the conclusion that Schmidt should be followed, Gzell J then examined the documents in question and decided whether or not they should be disclosed. I note that at [20] there was a concession by the trustee that a legal opinion of counsel apparently concerning the due administration of the trust was a trust document, and this was made available for inspection.
In this case, ground 2 of the appeal raises an issue about whether legal professional privilege may be maintained, and not whether a beneficiary may inspect trust documents because of a proprietary interest in them. That being so, it is not necessary to decide whether I should decline to follow Avanes for the reasons given by Bryson AJ in McDonald v Ellis.
Buss JA analysed the position in somewhat greater detail. However, his Honour was careful to delineate precisely what was being decided. He referred to the grounds of appeal and then said at [66]:
After sustained questioning from this court, counsel for the appellant eventually formulated the legal principle on which he submitted ground 2 is based. He said that a trustee can always assert legal professional privilege against a beneficiary, and claimed that this proposition is supported by the decisions in Avanes and Re Cowin (1886) 33 Ch D 179.
In my view, counsel for the defendant was correct to assert that Schreuder's case was not relevant to the present application. It concerned a question of privilege and whether the right of privilege could be asserted in the particular circumstances of that case. The privilege in question was litigation privilege. The court held because it was a joint privilege it could not be asserted in the context of the dispute. But here the claim made by the defendant is not as to privilege at all. What is said is that the trustee is entitled to deny the plaintiff access to the relevant documents because he has a discretion to do so and that in the circumstances he has properly exercised that discretion.
The defendants rely primarily on the decision of the Full Court of the South Australian Supreme Court in Rouse v IOOF Australia Trustees Ltd [1999] SASC 181. The relevant facts in that case were set out by Chief Justice Doyle (with whom Justices Perry and Martin agreed) in the following way:
IOOF, as trustee, is engaged in major litigation in which it purports to act in the interests of investors in a managed investment scheme. The investors for whom IOOF acts, and in relation to whom it is a trustee, number some 20,000. Some of those investors are concerned about IOOF's course of action, and about the wisdom of what it is doing. They have required IOOF to produce for their inspection a large number of trust documents. Over a period of time IOOF has done so. The Court is not in a position at present to decide whether IOOF should have done so more readily or sooner than it did so. A large amount of material has been disclosed. Concerned investors now want to inspect the contents of counsel's brief in the management dispute. Some of that material probably has an independent existence, and can be inspected on that basis without opening up counsel's brief. It is likely that some of that material has been inspected already. Much and perhaps most of what is withheld by IOOF is sensitive material which, if it fell into the hands of those opposed to IOOF in the management dispute, could be used to prejudice the position of IOOF and through it the interests of investors in the scheme. To say this is not to assume that IOOF is right, but merely to record that IOOF claims to be advancing the interests of investors in the scheme. The investors who seek to inspect counsel's brief have offered undertakings to protect the confidentiality of the material inspected. However, once they have inspected it, it is foreseeable that they will seek leave to use the information that they have gained in a manner that will be adverse to the course of action that IOOF is pursuing. Their ability to do so would be subject to the control of the Court. At this stage the investors do not assert a breach of trust or impropriety by IOOF in connection with the management dispute. The investors want to know whether they have grounds to do so.
The investors have certain rights under the Trust Deed. Those rights include the right to require the forest company to call a meeting of investors with the view to that meeting giving directions to IOOF.
In the inspection case the investors have not claimed that they have been prevented from exercising their rights under the Trust Deed. They have not claimed that their attempt to exercise those rights has been frustrated. Nor have they demonstrated that reasonable requests for information about the course of conduct being pursued by IOOF, as distinct from requests for access to primary documents, have been rejected. The matters just mentioned by me were not referred to by the judge, but as I understand things what I have said accurately reflects the position.
In that context the judge has considered whether IOOF is entitled to refuse to disclose to the relevant investors the contents of counsel's brief in the management dispute, and the contents of certain correspondence with the CIA. As I understand his reasons, the matters set out by me are findings that the judge made, expressly or implicitly. The judge did not decide a hypothetical issue.
The judge has decided that the investors do not have an unqualified right to inspect trust documents.
He has treated the documents in issue as confidential, and in my opinion was entitled to do so, subject only to the point that the circumstances of the correspondence between IOOF and the CIA remain unclear. The judge seems to have treated that correspondence as correspondence between a trustee and a beneficiary which might well be confidential. He recognised that it may be necessary for that issue to be examined more closely, and for an officer of the court to examine the correspondence: see para90 of the reasons.
The judge has decided that the confidential nature of the material in question, and its importance to IOOF in the management dispute, lead to the conclusion that IOOF is entitled to refuse to disclose it to the investors. He has decided, in effect, that IOOF's conduct of the management dispute should not be subject to a right in its beneficiaries to require disclosure of material prepared for the purpose of or in connection with that litigation.
He has not decided upon the claim to inspect documents pursuant to s 84B of the Trustee Act, nor upon the claim to have an inspector appointed pursuant to s84C.
He has not made any adverse findings about the appellants. He has not found that they would misuse information acquired by them as a result of an inspection. His decision is that the nature of the material in question is such that IOOF should not have to submit to it being inspected, even subject to undertakings as to confidentiality.
He has decided that on the premise that no specific allegation of breach of trust or impropriety is made against IOOF [72] - [81].
After setting out those facts his Honour then said there were three questions to be determined. He put the position as follows at [85]:
After that lengthy preamble, I come to the ultimate questions. They are three in number. First, are the relevant documents trust documents? Secondly, if they are, is the right of a beneficiary to inspect trust documents subject to any qualification? Thirdly, if it is, do the circumstances as described by me give rise to a discretion on the part of IOOF to refuse to permit inspection?
In the present case it is only the second and third questions which are relevant. His Honour reviewed the relevant authorities in some detail (at [88] ‑ [95]). He then concluded at [97] - [103]:
These decisions do recognise that the right of a beneficiary to inspect trust documents is not unqualified. They do not identify any underlying principle by reference to which the refusal of access may be justified.
Despite the lack of guidance from the case law, I consider that the trustee must be entitled to refuse access to trust documents, and not only when that is done to maintain the confidentiality of the reasons for the exercise of a discretion when the beneficiaries have no right to access to those reasons. To begin with, there may be cases in which an obligation of confidentiality attaches to documents in possession of the trustee by virtue of the circumstances in which those documents were received. The fact that a person is a beneficiary may mean that the obligation of confidentiality is not an objection to the person inspecting the documents, but in my opinion it is conceivable that there will be cases where a trustee receives a document under circumstances such that, to allow inspection by a beneficiary, would give rise to a breach of obligations of confidentiality imposed upon the trustee. The present case does not fall in this category, because the assertion of confidentiality is made by IOOF, and is not made in response to an obligation imposed upon IOOF.
However, it seems to me that it would be right to recognise that a trustee might refuse to permit inspection of trust documents on grounds of confidentiality, however the claim of confidentiality might arise. To say that is not to say that it will always be open to a trustee to claim confidentiality. It is to do no more than acknowledge that in principle a trustee should be able to advance a claim of confidentiality in answer to a right of inspection asserted by a beneficiary. Whether the claim is a valid answer in a particular case will depend upon the particular circumstances.
There must be various situations in which a trustee, particularly a trustee conducting a business, would be put in an impossible position if the beneficiary of the trust could, as a matter of right, claim to inspect documents in the possession of the trustee and relevant to the conduct of the business. It is readily conceivable that there will be situations in which an undertaking of confidentiality is not sufficient protection. The fact that the trust is one in which numerous beneficiaries have an interest, and the further fact that those beneficiaries may have differing views about the wisdom of the course of action being pursued by the trustee, only serve to emphasise, in my opinion, the need for the law to recognise some scope for a trustee to refuse to disclose information on the grounds that it is confidential and on the further ground that the disclosure is not in the interests of the beneficiaries as a whole. I make that observation on the basis and on the assumption that the ultimate right of the beneficiaries will be to have the trustee removed if they are dissatisfied with the approach of the trustee.
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.
Some care must be exercised in determining precisely what it was that Rouse decided. The answer is provided by Doyle CJ at [55]. That paragraph reads as follows:
It needs to be emphasised that the function of the Court in these proceedings is to decide whether the trustee has a discretion to refuse to permit inspection, not to decide whether that discretion, if it exists, should be exercised. Its exercise is a matter for IOOF.
As I read his Honour's decision what has to be determined in the context of this case is whether or not the circumstances give rise to a discretion in the defendant to refuse inspection of the documents. If it does then it is up to the trustee to decide how that discretion should be exercised. If it does not then the trustee has no discretion at all and must hand over the documents.
In my view, this is not a case where the discretion arises. There is nothing in the evidence which suggests either that the plaintiff will disclose the information he obtains to anyone else or that the information is of such a sensitive nature that disclosure to the plaintiff will in some way compromise the position of the trustee and the other beneficiaries. I accept there are complicated family arrangements at play and there is much bad blood between the parties. I also accept this is a trust not of a commercial kind but of a family nature. But taking the evidence as a whole I have been unable to find anything which would suggest the defendant would be justified in refusing the plaintiff access to the brief to counsel and the opinion.
For the sake of completeness I should mention the one case in this State which appears to have adopted the decision in Rouse. It is the decision of White AUJ in Marigold Pty Ltd v Belswan (Mandurah) Pty Ltd [2001] WASC 209. Although his Honour expressly adopted the decision in Rouse the case itself went off on a question as to the scope of inspection of the documents which ought be permitted. Ultimately his Honour allowed inspection of the documents with certain omissions to protect confidentiality. It does not seem to have been an issue between the parties that the right to inspect trust documents was unfettered. It was accepted by counsel that it was not. It was the degree of confidentiality which was to be maintained which divided the parties.
In this case the plaintiff did offer as a fall-back position to enter into a confidentiality regime with respect to the documents. I can see no warrant for ordering that step. As the agreed facts make plain the plaintiff is a legal practitioner. He would be aware that he has been granted the right to inspect these documents in his capacity as a beneficiary of the trust; he has not been granted the right to look at the documents on any other basis. But once that position is reached it does not seem to me that there is any need for the imposition of a confidentiality regime.
The plaintiff in his amended originating summons sought quite specific orders as to costs. Doubtless this question of costs will be the subject of further submissions and I will make final orders after hearing those submissions.
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