Crowe v Stevedoring Employees Retirement Fund Pty Ltd
[2003] VSC 316
•3 September 2003
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
No. 8648 of 2002
| GRAHAM CROWE | Plaintiff |
| v | |
| STEVEDORING EMPLOYEES RETIREMENT FUND PTY LTD (ACN 058 013 773) (as Trustee of the Stevedoring Employees Retirement Fund) | Defendant |
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JUDGE: | Balmford J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 20 & 21 August 2003 | |
DATE OF JUDGMENT: | 3 September 2003 | |
CASE MAY BE CITED AS: | Crowe v Stevedoring Employees Retirement Fund | |
MEDIUM NEUTRAL CITATION: | [2003] VSC 316 | |
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TRUSTS – SUPERANNUATION – whether trustee obliged to furnish accounts and deliver up certain documents and information to beneficiary – whether documents in question were “internal working documents” – whether Re Londonderry’s Settlement [1965] 1 Ch 918 is applicable to superannuation schemes – Re Londonderry’s Settlement to be followed – provision of material not prohibited by Re Londonderry’s Settlement – orders made in accordance with originating motion.
Corporations Act 2001 – s.1017C(5)
Corporations Regulations – reg.7.9.45
Superannuation Industry (Supervision) Act 1993
Superannuation Industry (Supervision) Regulations 1994 – reg.2.40
Supreme Court (General Civil Procedure) Rules 1996 – Rule 54.02
Attorney-General v Breckler (1999) 197 CLR 83
Byron Environment Centre Incorporated v Arakwal People (1997) 78 FCR 1
Cowan v Scargill [1985] Ch 270
Dillon v Burns Philp Finance Ltd (unreported, decided on 20 July 1988)
Hartigan Nominees Pty Ltd v Rydge (1992) 29 NSWLR 405
McDonald v Horn [1995] 1 All ER 961
Minehan v AGL Employees Superannuation Pty Ltd (1998) 134 ACTR 1
Re Fairbairn [1967] VR 633
Re Londonderry’s Settlement [1965] 1 Ch 918
Re Whitehouse [1982] Qd R 196
Spellson v George (1987) 11 NSWLR 300
Schmidt v Rosewood Trust [2003] 3 All ER 76
Tierney v King [1983] 2 Qd R 580
Telstra Super Pty Ltd v Flegeltaub (2000) 2 VR 276
Vidovic v Email Superannuation Pty Ltd (unreported, decided on 3 March 1995)
Wilkinson v Clerical Administrative and Related Employees Superannuation Pty Ltd (1998) 79 FCR 469
Wilson v Law Debenture Trust Corp plc [1995] 2 All ER 337
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr J.D.S. Barber | Clements Hutchins & Co |
| For the Defendant | Dr I. Hardingham | Blake Dawson Waldron |
HER HONOUR:
Introduction
This proceeding was initiated by originating motion on 17 December 2002. Leave was given to the plaintiff in the course of the hearing to file a further amended originating motion, counsel for the plaintiff having indicated that he wished to clarify his client’s claim, on the basis of information obtained in the course of the defendant’s opening and the cross-examination of the defendant’s witnesses. By the further amended originating motion filed on 21 August 2003 the plaintiff seeks the orders set out below. (For convenience of reference the original numbers have been retained, despite the deletion of certain orders previously sought.)
The following orders are sought, either expressly or impliedly, under Rule 54.02 of the Supreme Court (General Civil Procedure) Rules 1996 or otherwise:
2.That the defendant provide to the plaintiff an accounting of the source or sources of the monies used by the defendant to fund the increase in the classification base wage (“CBW”) to $712 per week.
4.That the defendant provide to the plaintiff an accounting of the increase in the CBW to $712 per week.
5.That the defendant provide to the plaintiff an accounting of the smoothing reserve fund for the period from 1 July 1997 until the reserve fund ceased to exist.
6.That the defendant produce for inspection by the plaintiff:
(a)all minutes or other written records of the increase in the CBW to $712 per week and of the discussion or negotiations leading to that increase;
(b)correspondence or copies of correspondence between the defendant and employers and between the defendant and the Maritime Union of Australia relating to that increase and any discussion or negotiations leading to that increase;
(c)documents evidencing the source of the funds which were used to increase the CBW to $712 per week;
(d)any documents recording the purpose for which the CBW was increased to $712 per week;
(e)documents recording the amount of the increase in the CBW to $712 per week;
(g)copies of the actuarial reports on the Stevedoring Employees Retirement Fund as at 1 July 1997, 1999, and 2000 and any written advice by the defendant’s actuary to the defendant relating to the amount of the 2000 or 2001 surplus and the entitlements of members of the Stevedoring Employees Retirement Fund to receive any part of it.
7.That the defendant provide to the plaintiff copies of the materials described in item 6.
The plaintiff also seeks orders that the plaintiff pay the defendant’s reasonable costs of the provision of the documents sought, and the defendant pay the costs of the proceeding.
Mr Barber, for the plaintiff, indicated that he was relying on Rule 54.02(2)(b)(i) and (iii) which reads as follows:
(2). . . a proceeding may be brought for¾
.. .
(b)an order directing an executor, administrator or trustee to¾
(i)furnish and, if necessary, verify accounts;
.. .
(iii)do or abstain from doing any act;
Dr Hardingham, for the defendant, did not suggest that reliance on this provision was inappropriate.
The plaintiff is a retired stevedore, the date of his retirement apparently being 13 September 1998, and is a member and beneficiary (described as a “retained benefit member”) of the Stevedoring Employees Retirement Fund (“the fund”). The defendant (“the trustee”) appears to have been established for the sole purpose of acting as the trustee of the fund. Four directors of the trustee are appointed by the Maritime Union of Australia (“the Union”) and four directors are elected every two years by the fund’s Participating Employers. Contributions are made to the fund by both employees and employers. The fund has some 12,500 members and 50 participating employers. Rule 3(a) of the trust deed of the fund provides for the appointment by the trustee of the Actuary of the fund (“the Actuary”). (References to the trust deed, which has been amended a number of times, are to the form in which it stood at 21 August 1998.)
Rule 43 of the trust deed, providing for variation of the Rules, sets out the main purpose of the fund as follows:
43.These Rules may be altered or modified by a decision of the Trustee after obtaining the advice of the Actuary. . . . No alteration shall be made which:
(a)Alters the main purpose of the Fund as a fund to provide retirement or other benefits for Employees and their dependents.
“Employee” is defined in Rule 3(p) of the trust deed as a member or employee of the Union, or an employee of one of several relevant organisations.
Paragraph 5 of the introductory section of the trust deed provides that it is to be interpreted according to the law of New South Wales, but it is not suggested that there is any relevant difference between the law of New South Wales and the law of Victoria.
The fund contains a defined benefit area and an accumulation style benefit area. The plaintiff receives benefits in both areas. The trust deed provides that, in the defined benefit area, benefits are defined by the multiplication of three factors, including the CBW, discussed further below; the number of fund service weeks, namely the number of weeks for which the member has been employed in the industry and a member of the fund; and the fund service factor, which has been 18% since about 1994. The calculation of the benefit received by members in the defined benefit area is thus unrelated to the performance of the fund in the market.
The CBW was originally defined as the “ordinary weekly base rate of pay” of the employee in question, but the definition has since been modified. In 1998 the CBW was increased to provide for a floor level of $712 per week, so that members previously on a CBW below that amount were moved up to $712; no change was effected to those who were on a CBW of $712 or above. It can be seen from the orders sought in the originating motion that this increase is the focus of much of the material sought by the plaintiff. The increase was negotiated as part of enterprise agreement negotiations with particular employers. It initially applied only to employees of a participating employer referred to in the evidence of Mr Newson, chief executive officer of the trustee, as “Patricks”. Mr Newson’s evidence on the point has some internal inconsistencies, due no doubt to inadvertence, but it appears that by the end of June 1999 employees of most if not all of the participating employers had received that increase.
In the accumulation style area of the fund are retired members who have kept their benefit in the fund, members who have made voluntary contributions in excess of normal contributions, and others. The return on investments from year to year is turned into an interest rate which is credited to the accumulation accounts. Until 1 July 1999 the trustee had a policy of smoothing the interest rate on accumulation benefits over several years. In a year of high returns, not all of the interest would be credited to members; some would be retained and used to increase payments in a year of low returns. The other focus of the relief sought by the plaintiff is the smoothing reserve fund through which this policy was administered.
Rules 41 and 41A of the trust deed read as follows, so far as relevant:
41.Whenever determined by the Trustee but in any event . . . at intervals not exceeding two years, the Trustee shall cause the Actuary to make an actuarial investigation and valuation of the Fund and shall supply to him all such information as the member [sc. Actuary] may require for this purpose. The Actuary shall furnish to the Trustee a written report upon the results of the member [sc. actuarial] investigation and valuation and a copy thereof shall be furnished by the Trustee to the Participating Employers and the Union. If the results of the investigation reveals [sic] a surplus . . . the Trustee may, with the agreement of the Participating Employers and the Union, resolve to apply part or all of such surplus to:
(a)increase pensions to existing Pensioner Members, or
(b)increase the scale of benefits either for Fund Service or Past Service, or
(c)improve the terms on which such benefits are available, or
(d)reduce future contributions required of Members and Participating Employers, or
(e)adopt some combination of (a), (b), (c) or (d) above subject to the approval in writing of the Actuary.
If the result of the investigation reveals a deficiency, the Trustee, with the Agreement of the Participating Employers and the Union, may resolve to remove such deficiency in part or in total by making such changes in the terms and conditions of the Fund as are considered necessary, subject to the approval in writing of the Actuary.
41A.(1) This rule operates in spite of anything to the contrary in
Rule 41.
(2)When an actuarial investigation conducted under Rule 41 indicates, in the opinion of the Actuary, that as a result of a surplus . . . the Fund Service Benefit may be increased to 18 per cent of each Member’s Classification Base Wage for each week of the member’s Fund Service, the Actuary shall give a certificate to that effect for the purposes of Rule 26 and Rule 27 [relating to contributions], and for the purposes of sub–clause (3) of this Rule.
(3)(a)contributions thereafter required of members and Participating Employers shall be reviewed by the Actuary and advice in that regard given by the Actuary to the Trustee, the Union and the Participating Employers;
(b)any surplus thereafter arising . . . shall be applied to reduce future contributions required of Members and Participating Employers on a basis agreed between the Participating Employers and the Union; and
(c)nothing shall require a Normal Contribution by Employees in excess of an amount equal to 4.8 per cent of Member’s Classification Base Wage or contributions by Participating Employers in respect of Employees at a rate which, in total, exceeds 12.6 percent of Member’s Classification Base Wage, except as permitted in Rule 26(4)(c) and (d).
A certificate was given by the Actuary under Rule 41A(2) on 18 June 1993.
The plaintiff’s solicitors initially made enquiries of the trustee in connection with the information and materials sought by their client in a letter dated 10 February 2000. Correspondence continued for some time, and some materials were provided to them by the trustee. However, the plaintiff was not satisfied with the replies which his solicitors received. The penultimate letter from the solicitors to the trustee was dated 21 June 2002 and ran to six pages, setting out the history of the correspondence and the concerns of their client, asking a number of questions, requesting copies of a number of documents, and finally indicating that, failing a satisfactory reply, their client would look to his remedies. No reply was ever received to that letter, which was forwarded by the trustee to its solicitors. The file of those solicitors does not indicate that they received any specific instructions in relation to it. A reminder letter was sent by the solicitors for the plaintiff on 23 July 2002, and similarly no reply was received. This proceeding was initiated, as has been said, on 17 December 2002 and some more material has been provided by the trustee to the plaintiff since that date. In the further amended originating motion the plaintiff seeks material which has not yet been provided.
Mr Barber referred me to the judgment of Gillard J in Re Fairbairn[1], where His Honour said:
If the trustees do not choose to put before the Court any information about the documents in their possession, or give any evidence of circumstances to justify their non-production, the Court may be more bold and would more readily draw inferences in favour of the plaintiff as to the contents of the documents than it might otherwise do. From the correspondence which passed between the trustees and the solicitors, it can be inferred that there are some relevant documents. But what they are and what they contain and what justification there may be for their non-production for inspection, the trustees have either failed or refused to inform the Court. These are matters peculiarly within the knowledge of the trustees. I, therefore, find that on the balance of probabilities they do contain information about the trust which the plaintiff is entitled to know.
He drew my attention to materials in which the trustee was put on notice that this point would be made if this matter were brought before the court.
[1][1967] VR 633 at 639
That passage is not entirely apposite in the context of the present matter, although it does have some relevance. Further, it highlights the invidious position of a person, in particular a trustee, holding money in which another person has an interest, and who wishes, for what may appear to the person holding the money to be good reason, to withhold from that other person information relating to that money. That position renders all the more significant the passage from the judgment of Macrossan J in Re Whitehouse[2] where his Honour said “the onus was nevertheless upon the trustees . . . to provide a full rather than a reluctant response to requests for information by the beneficiaries.”
[2][1982] Qd R 196 at 201
Mr Barber relied on the judgment of Powell J of the Supreme Court of New South Wales in Spellson v George[3] where His Honour was concerned with the question whether a person who was one of the potential objects of the exercise of a discretionary power of appointment in respect of a trust fund had the right to obtain information from the trustee. He said, in a passage generally approved by the Privy Council in Schmidt v Rosewood Trust[4] :
At the risk of being regarded as overly simplistic, it is as well to start with the fundamental proposition that one of the essential elements of a private trust, be it a discretionary trust or some other form of trust, is that the trustee is subject to a personal obligation to hold, and to deal with, the trust property for the benefit of some identified, or identifiable, person or groups of persons: . . . It is, so it seems to me, a necessary corollary of the existence of that obligation that the trustee is liable to account to the person, or group of persons for whose benefit he holds the trust property, . . . and, that being so, the trustee is obliged not only to keep proper accounts and allow a cestui que trust to inspect them, but he must also, on demand, give a cestui que trust information and explanations as to the investment of, and dealings with, the trust property:
[3](1987) 11 NSWLR 300 at 315
[4][2003] 3 All ER 76 at 94-95
The submissions of the defendant
As Mahoney JA said in Hartigan Nominees Pty Ltd v Rydge[5] :
. . . if a beneficiary requests it, a trustee is in general obliged to provide documents and information to the beneficiary, at his cost, in relation to the trust property and to provide an accounting in respect of the administration of it. These principles have been long recognised. . .
However, there are limits to the extent of the right.
The defendant seeks to show that the material sought by the plaintiff falls within those limits.
[5](1992) 29 NSWLR 405 at 431-2
Dr Hardingham’s principal submission, forcefully put, was that the plaintiff’s case was confusing and misconceived. In opposing the application of Mr Barber at the commencement of the second day of the hearing to file the further amended originating motion, he said:
The claims have been expressed . . . in such a confusing and misconceived way that the trustee was simply unable to respond, except in relation to certain accounts and an actuarial report. And indeed Mr Newson deposes in his affidavit that the requests are incomprehensible to the trustee and there was absolutely no challenge to that by my learned friend when he cross-examined Mr Newson. As I explained to Your Honour in opening, that’s the gravamen of the defendant’s case. Incomprehensibility and misconception of the roles of the different players in the scheme.
If that were the only reason for the trustee’s opposition to the plaintiff’s claim, it could have been resolved by discussion with the plaintiff to explain to him in what respects his claim was confusing and misconceived, and to ascertain what information he was seeking. Indeed, the letter of 21 June 2002 referred to in [11] above goes to considerable length to explain the plaintiff’s concerns and to ask specific detailed questions and request specific documents. I note the statement in that letter that the trustee “will be aware there are a considerable number of members of the Retained Benefits Section who share Mr Crowe’s concerns”.
Had the trustee directed its attention to answering that letter according to its tenor, rather than ignoring it, and subsequently contesting this proceeding, it might have found the requests there contained to be less confusing and misconceived than the terms of the originating motion apparently proved to be. The application to file the further amended originating motion was made with the intention on the plaintiff’s part of clarifying what was sought [6] . That application was able to be made, as has been said, because of the information gained from Dr Hardingham’s opening, and in cross-examination of the defendant’s witnesses. That information, as well as the matters put forward by Dr Hardingham in support of his submission that the plaintiff’s case was confusing and misconceived, could have been provided to the plaintiff informally at a much earlier stage. It might be inferred from the failure of the defendant to reply to the letters of 21 June and 23 July 2002, the failure to provide at an earlier stage the information which enabled the preparation of the further amended originating motion, the failure to raise informally the claimed confusion and misconception, and the opposition of the defendant to the filing of the further amended originating motion, that the defendant did not wish any confusion or misconception to be resolved before the matter came to hearing. However, that is not a matter on which I need to form a concluded view. The claim of the plaintiff is now defined by the terms of the further amended originating motion, and the items there expressed to be sought by the plaintiff can be dealt with according to their tenor.
[6]See [1] above
Items 2 and 4 of the originating motion
As to the accounting sought in items 2 and 4 of the originating motion, Dr Hardingham submitted that that accounting would have to be provided by the Actuary, consistently with Rules 41 and 41A of the trust deed. In his submission there was nothing in the trust deed, or in the relevant legislation [7] or in any other authority, requiring the Actuary to provide a supplementary accounting of the kind sought, and it was unreasonable to request that he do so.
[7]as to which see [22] and [40] below
However, as Mr Barber submitted, the plaintiff seeks an order against the trustee, not against the Actuary. If a court were to order a private trustee to provide some information to a beneficiary which was required to be prepared by an accountant, the trustee could be expected to comply with that order by instructing an independent accountant to prepare the necessary information. The Actuary of the fund at present is Mr Knapman, who deposes that he is an employee of a firm named Towers Perrin. In evidence he gave his occupation as “consulting actuary”. I see no reason to suppose that he is not available to prepare, for an appropriate fee, material which is proper and appropriate for an actuary to prepare. It is to be remembered that the plaintiff seeks an order that he pay the defendant’s reasonable costs of the provision of the documents which he has requested.
Item 5 of the originating motion
As to item 5, relating to the smoothing reserve fund, Dr Hardingham submitted simply that the plaintiff had “reasonable information” on this item, obtained from Mr Newson in response to a question asked of him in re-examination. However, the information in question did not extend to a full accounting of the smoothing reserve fund, and Dr Hardingham made no other specific submission as to why the accounting requested under this head should not be provided.
Items 6 and 7 of the originating motion
The content of these items is effectively the same, and they can be considered together. Dr Hardingham drew the attention of the Court to Regulation 2.40 of the Superannuation Industry (Supervision) Regulations 1994 made under the Superannuation Industry (Supervision) Act 1993. Regulation 2.40(1) provides for certain information to be given on request by a trustee of a superannuation entity to certain defined persons. Regulation 2.40(2) provides that Regulation 2.40 “does not require (or, by implication, authorise) the disclosure of (a) internal working documents of the entity”. He submitted that the documents sought in items 6 and 7 of the originating motion were internal working documents, and that their production was prohibited by Regulation 2.40(2).
However, whether or not the documents sought are internal working documents ( a matter as to which Dr Hardingham had been unable to locate any authority under the relevant legislation, and which I do not find it necessary to determine) the meaning of that provision is clear, and requires no gloss. It is not a prohibition on the disclosure of internal working documents; it is solely a limitation on the effect of that regulation.
He further relied on the evidence of Mr Newson in paragraphs 46 and 47 of his affidavit that the trustee did not have “any documents evidencing the source of the funds which were used to make the Defendant’s 1998 distribution” in terms of what was apparently the text of sub-item 6(c) at the date of swearing the affidavit; or “any documents recording the amount of the Defendant’s 1998 distribution” in terms of what was then apparently the text of what is now sub-item 6(e). The text of the further amended originating motion differs from the text of those items, and it is not clear to me that the statement in the affidavit necessarily applies to those items as they now stand. Accordingly, I do not regard those two paragraphs as relevant to the decision to be made as to sub-items 6(c) and 6(e).
Dr Hardingham’s principal submission in this context relied on the decision of the English Court of Appeal in Re Londonderry’s Settlement[8] to the effect that trustees exercising a discretionary power are not bound to disclose to the beneficiaries their reasons for exercising that power, and accordingly are not bound to disclose agendas, minutes and other documents prepared for their meetings. Harman LJ said [9] that the principle that trustees are not bound to disclose reasons for their decisions:
[8][1965] 1 Ch 918
[9]at 928
rests largely I think on the view that nobody could be called upon to accept a trusteeship involving the exercise of a discretion unless, in the absence of bad faith, he were not liable to have his motives or his reasons called in question either by the beneficiaries or by the court.
His Lordship later [10] referred to the trial judge having:
[10]at 931
felt the strength of the trustees’ submission that it was undesirable to wash family linen in public which would be productive only of family strife and also odium for the trustees and embarrassment in the performance of their duties.
This point was taken up by Danckwerts LJ [11] who said:
It seems to me there must be cases in which documents in the hands of trustees ought not to be disclosed to any of the beneficiaries who desire to see them, and I think the point was a good one which was taken in the affidavit of Lord Nathan, that to disclose such documents might cause infinite trouble in the family, out of all proportion to the benefit which might be received from the inspection of the same. It seems to me that where trustees are given discretionary trusts which involve a decision upon matters between beneficiaries, viewing the merits and other rights to benefit under such a trust, the trusts are given a confidential role and they cannot properly exercise that confidential role if at any moment there is likely to be an investigation for the purpose of seeing whether they have exercised their discretion in the best possible manner.
And Salmon LJ made a similar point [12] saying:
Nothing would be more likely to embitter family feelings and the relationship between the trustees and members of the family, were trustees obliged to state their reasons for the exercise of the powers entrusted to them. It might indeed well be difficult to persuade any persons to act as trustees were a duty to disclose their reasons, with all the embarrassment, arguments and quarrels that might ensue, added to their present not inconsiderable burdens.
[11]at 935
[12]at 937
It should be noted that each member of the court also emphasised that different considerations would apply on an application for discovery in an action where a claim was brought [13] of lack of good faith on the part of the trustee. As Mr Barber pointed out, if the plaintiff were to bring an action alleging misconduct on the part of the trustee, he would obtain, on discovery, all the documents which he now seeks. But without the documents, he is not in a position to bring such an action, and it is not suggested that he necessarily proposes to do so.
[13]see at 934, 936 and 938
The question arises as to whether Re Londonderry’s Settlement is applicable to superannuation schemes, given the extracts appearing above which indicate the basis of the decision, and which clearly have little relevance to the administration of such schemes. The case was applied to a superannuation scheme by the Full Court of the Supreme Court of Queensland in Tierney v King[14] , where the appellant sought a declaration that he was entitled to obtain, from the trustees of a superannuation scheme of which he was a member, copies of actuarial reports relating to the scheme. The court found that trustees, acting in good faith, were not bound to disclose information which might bear upon or affect the reasons for the exercise by them of a discretionary power. The court also took into account a provision in the trust deed to the effect that the trustees were to observe strict secrecy with regard to the affairs of the trust although this was not to prevent the publication of “information to all participants generally whenever thought fit by the trustees”. Evidence was given of the contents of the actuarial reports and as to the confidential nature of those contents, and it was said that they formed the basis upon which the trustees exercised their discretion as to various matters. There were also issues as to costs and as to possible union conflicts, neither of which is relevant in the present case. The question of whether the principle in Re Londonderry’s Settlement was relevant to the operations of a superannuation scheme does not appear to have been raised.
[14][1983] 2 Qd R 580
Dr Hardingham relied on that decision and also on the judgment of Rattee J in the Chancery Division in Wilson v Law Debenture Trust Corp plc[15] , where the point was specifically considered. His Honour [16] rejected an argument that in the absence of some express provision in the scheme to the contrary, a trustee of a superannuation scheme was bound to give reasons for the exercise of discretions conferred upon the trustee by the relevant trust instrument. The submission was that it would be unreasonable for the members of the scheme, who had bought their interests, not to be able to see that the trustee had exercised its discretion wrongly. However, His Honour said that the nature of the interest which the members had bought had to be determined according to well-established principles of trust law. He also relied on the decision of Megarry V-C in Cowan v Scargill[17] as authority for the proposition that in general the principles applicable to private trusts as a matter of trust law applied equally to superannuation schemes.
[15][1995] 2 All ER 337
[16]at 347
[17][1985] Ch 270 at 292
I note that in Cowan v Scargill the proposition that different principles apply to pension fund trusts from those which apply to other trusts was put to the court by an unrepresented trade union official, and the context in which that proposition was considered appears to have related specifically to the applicability to a superannuation scheme of the overriding principle that trustees should exercise their powers in the best interests of the beneficiaries. Nevertheless, the statement by the Vice-Chancellor is clear and unequivocal.
Both counsel referred me to the judgments of the New South Wales Court of Appeal in Hartigan Nominees v Rydge[18]. As to Tierney v King, Sheller JA there said [19] :
With respect I doubt whether actuarial reports obtained by trustees are documents which evidence the reasons why trustees have made their decisions any more than are trust accounts or opinions from counsel or indeed any other material obtained by trustees to assist them in administering the trust. What is restricted is, I think, access to documents which are of a class which would or might reveal the reasoning process of the trustees. However, the importance of the Queensland case is that it acknowledges, in my opinion correctly, that a settlor can effectively impose conditions of confidentiality on trustees.
I was not directed to any condition of confidentiality in the trust deed with which I am concerned.
[18](1992) 29 NSWLR 405
[19]at 446
Sheller JA said in Hartigan [20] of Re Londonderry’s Settlement:
[20]at 445
I think material upon which reasons were or might have been based cannot generally be withheld, unless it reveals the reasons themselves or the reasoning process. In Jacobs’ Law of Trusts in Australia, 5th ed (1986) par 1716 at 393, referring to the Londonderry’s Settlement case the learned authors say:
. . . Nevertheless, this case is clear authority that beneficiaries have no right to see documents private to the trustees which may evidence the reasons why the trustees have made their decisions.
This statement, in my opinion, accurately describes the nature of documents access to which by beneficiaries is denied.
. . .
Moreover I do not think that the class of documents to which beneficiaries are denied access should be extended beyond those the non-disclosure of which is necessary to preserve the trustees’ right not to disclose their reasons for exercising discretionary powers and their reasoning processes.
In Hartigan [21], Kirby P regarded Tierney v King as “unsatisfactory for a number of reasons”, including the failure of the court to consider whether Re Londonderry’s Settlement should be followed, and the fact that an actuary’s report “would certainly appear to fall within the class of trust documents to which a beneficiary would normally be provided access”. He found it likely that the requirement of strict secrecy in the trust deed, not relevant in the case before me here, was the key to understanding the decision, and he set out at length his reasons for deciding that Re Londonderry’s Settlement should not be followed in this country. Mahoney JA considered that the case should be followed, but found the issue before the court to turn on whether or not the beneficiary had a proprietary interest in the document sought.
[21]at 414
In Attorney-General v Breckler[22] six judges of the High Court quoted an extract from Wilkinson v Clerical Administrative and Related Employees Superannuation Pty Ltd[23] in which Northrop J, at first instance, relied on Re Londonderry’s Settlement as authority for a proposition, not directly relevant to the present case, but in the context of a superannuation scheme. Their Honours noted that the accuracy of that passage had not been disputed before them. Dr Hardingham, if I understood him correctly, relied on that passage from the judgment of their Honours as implying an acceptance of the validity of Re Londonderry’s Settlement in Australia and its applicability to superannuation schemes. However, it does not appear that the matter was given any serious consideration by the court.
[22](1999) 197 CLR 83 at 99
[23](1998) 79 FCR 469 at 480
Mr Barber referred me to a number of authorities which support the proposition that Re Londonderry’s Settlement should not be applied to a superannuation scheme. Lord Browne-Wilkinson, in a paper published in February 1992 by the Leo Cussen Institute, recommends that members of superannuation schemes “should be supplied with full audited accounts every year and be entitled to all trust information on demand” and regards Re Londonderry’s Settlement as wholly inappropriate to superannuation schemes. Batt JA in Telstra Super Pty Ltd v Flegeltaub[24] refers to that paper in the course of noting that “a decision of a superannuation fund trustee . . . is different in kind from, and arises in a context different from that of, the exercise of a discretion by a trustee of a trust for bounty or charity”.
[24](2000) 2 VR 276 at 286
Bryson J of the Supreme Court of New South Wales said in Dillon v Burns Philp Finance Ltd [25] :
The parties’ relationship [being that of a member of a superannuation scheme and the trustee of the scheme] is quite different to the relationship between beneficiaries (or discretionary beneficiaries) and trustees who are administering a trust instrument which expresses the bounty of a settlor. . . .
Superannuation rights are not granted out of grace or bounty and members contribute their own money. . . .
In my view the whole approach of the Court to reviewing a purported formation of an opinion must be coloured by this contractual context. The Court is not in any sense arrogating or assuming to exercise part of the authority which a settlor chose to depute to a trustee of his own appointment at the instance of a beneficiary who did not join in the appointment of the trustee and has no interest save what the settlor chose to give him. Far from it, the Court is asked to enforce contractual obligations made between the parties to the employment relationship.
[25]unreported; decided on 20 July 1988; at 15-16
I note also the remarks of the same judge in Vidovic v Email Superannuation Pty Ltd [26], adopted by Gallop J of the Supreme Court of the Australian Capital Territory in Minehan v AGL Employees Superannuation Pty Ltd[27] and of Hoffman LJ in McDonald v Horn[28].
[26]unreported; decided on 3 March 1995; at 11-12
[27](1998) 134 ACTR 1 at 10
[28][1995] 1 All ER 961 at 972-3
Nevertheless, having considered the authorities, I would have some difficulty in finding that Re Londonderry’s Settlement was not to be followed in this country, or that it did not apply, however inappropriately, to a superannuation scheme. It seems to me that the matter is governed at present by the decision of the majority in Hartigan v Rydge, and I would, with respect, adopt the passage from the judgment of Sheller JA which is cited in [30] above. I note that in Schmidt v Rosewood Trust Ltd[29], the Privy Council expressed “general agreement with the approach adopted in the judgments of Kirby P and Sheller JA” in that case.
[29][2003] 3 All ER 76 at 92
If the matter is considered on that basis, the question then arises as to whether the disclosure of any of the materials sought under items 6 and 7 would disclose documents private to the trustee which might evidence the reasons why the trustee has made a decision. Leaving sub-items 6(g) and 7(g) to one side for the moment, and considering the remaining sub-items of items 6 and 7, I note that Dr Hardingham emphasised throughout his submissions that there was no decision by the trustee to increase the CBW to $712 per week, and no exercise of discretion by the trustee in that regard. The increase, he pointed out, was effected by the operation of Rule 41A [30] , without the need for any decision to be made by the trustee. That being so, it can be assumed that any material supplied under items 6 and 7 would not disclose the reasons for any decision of the trustee, and accordingly the provision of that material is not prohibited by Re Londonderry’s Settlement. There is, in any case, no evidence that any of the material sought contains or reveals the reasons for any decision of the trustee.
[30]see [10] above
Items 6(g) and 7(g) of the originating motion
The position is the same in connection with the production of the actuarial reports and advice which are sought under sub-items 6(g) and 7(g). Referring again to Hartigan v Rydge, I note the view of Kirby P [31], that an actuary’s report would appear to fall within the class of trust documents to which a beneficiary would normally be provided access, and the doubt of Sheller JA [32], as to whether actuarial reports obtained by trustees are documents which evidence the reasons why the trustees have made their decisions.
[31]see [32] above
[32]see [30] above
In the context of the actuarial reports and advice, Dr Hardingham referred to section 1017C(5) of the Corporations Act 2001. That section, combined with Regulation 7.9.45 of the Corporations Regulations provides that the trustee of a superannuation fund must provide to certain defined persons the most recent actuarial report on the fund. Dr Hardingham submitted that if the common law permitted the production to a beneficiary of the earlier actuarial reports, “this statutory provision would be rendered a nonsense”. However, those provisions do not either expressly or impliedly prohibit the production of earlier actuarial reports. And, assuming, on the basis of the views of Kirby P and Sheller JA set out in the proceeding paragraph, that the plaintiff is entitled at common law to the earlier actuarial reports, the submission of Dr Hardingham overlooks the principle that legislation is presumed not to alter the common law [33] .
[33]see the discussion in Pearce and Geddes: Statutory Interpretation in Australia, fourth edition at 141-2
Dr Hardingham’s principal submission in relation to the actuarial reports was that the trustee did not wish to be in a position where it might be called upon to provide a copy of any actuarial report to any of the 12,500 members of the fund at any time, and accordingly the reports sought by the plaintiff should not be produced to him.
I note the words of Lockhart J in the Federal Court in Byron Environment Centre Incorporated v Arakwal People [34]:
If it be said that this is too broad an analysis and that the floodgates will open, then I must say that over the past 18 years on the Bench of this Court I have never seen the floodgates open in any matter, despite dire predictions to the contrary.
[34](1997) 78 FCR 1 at 19
Should the floodgates open, and large numbers of requests for actuarial reports be made to the trustee, it would no doubt be possible for the reports to be made available by electronic means, with minimum inconvenience. No submission was made as to confidentiality, or as to the material in the reports otherwise not being appropriate for production by the trustees to a member of the fund. Nor could there be, given the legislative provisions referred to in [40] above.
Conclusion
For the reasons given, orders will be made in accordance with the orders sought in the further amended originating motion. Counsel may wish to make submissions as to the form of the orders and as to costs.
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