Farrell, Scott William & Anor (who as infants sue by their next friend Sittampalam, Leanne Margaret) v Rothmans Superannuation Pty Ltd & Anor

[1998] FCA 1618

FEDERAL COURT OF AUSTRALIA

PRACTICE & PROCEDURE – discovery and inspection – documents containing sensitive material imparted in confidence – grounds for limiting inspection to legal representatives.

Federal Court Rules, O 15 rr 1, 3, 11, 14, 15

Karger v Paul [1984] VR 161 referred to
D v NSPCC [1978] AC 171 referred to
Nestle Australia Ltd v Federal Commissioner of Taxation (1986) 67 ALR 128 referred to
Australian Broadcasting Commission v Parish (1980) 29 ALR 228 referred to
Mackay Sugar Co-operative Association Ltd v CSR Limited (1996) 137 ALR 183 referred to
Adelaide Steamship Co Ltd v Spalvins (1998) 152 ALR 418 applied

Harman v Secretary of State for the Home Department [1983] 1 AC 280 referred to

SCOTT WILLIAM FARRELL & ANOR (who as infants sue by their next friend

LEANNE MARGARET SITTAMPALAM) v ROTHMANS SUPERANNUATION PTY LTD (ACN 065 001 514) & ANOR

WEINBERG J
MELBOURNE

2 DECEMBER 1998

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VG 400  of   1998

BETWEEN:

SCOTT WILLIAM FARRELL
FIRST APPLICANT

GAVIN WAYNE FARRELL
SECOND APPLICANT

(who as infants sue by their next friend
LEANNE MARGARET SITTAMPALAM)

AND:

ROTHMANS SUPERANNUATION PTY LTD
(ACN 065 001 514)
(who is sued in its capacity as Trustee for
RHL Australia Superannuation Fund)
FIRST RESPONDENT

SHERRIE WILLIS
SECOND RESPONDENT

JUDGE:

WEINBERG J

DATE OF ORDER:

2 DECEMBER 1998

WHERE MADE:

MELBOURNE

THE COURT ORDERS THAT:

1. The first and second respondents produce for inspection by the applicants’ next friend, Leanne Margaret Sittampalam, certain documents discovered by them.

2. There be no order as to costs.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VG 400 of 1998

BETWEEN:

SCOTT WILLIAM FARRELL
FIRST APPLICANT

GAVIN WAYNE FARRELL
SECOND APPLICANT

(who as infants sue by their next friend
LEANNE MARGARET SITTAMPALAM)

AND:

ROTHMANS SUPERANNUATION PTY LTD
(ACN 065 001 514)
(who is sued in its capacity as Trustee for
RHL Australia Superannuation Fund)
FIRST RESPONDENT

SHERRIE WILLIS
SECOND RESPONDENT

JUDGE:	WEINBERG J
DATE:	2 DECEMBER 1998
PLACE:	MELBOURNE

REASONS FOR JUDGMENT

There is before the Court an interlocutory application in which orders are sought requiring the first and second respondents to produce for inspection certain documents which have been discovered by them.  The application arises out of a proceeding whereby the applicants, who are the children of the deceased, Mr Wayne Farrell, challenge the decision of the first respondent, the trustee of the deceased’s superannuation fund, to grant to the second respondent the sum of $125,000 from that fund.  The total death benefit payable under the superannuation policy was approximately $631,300.  It follows that the balance of approximately $506,300, has been set aside for the benefit of the applicants. 

In the principal proceeding, the applicants contend that the second respondent was not, as at 3 July 1997, the date of the deceased’s death, his dependant.  The author of a number of the documents which the applicants seek to have produced for inspection by their mother was the second respondent.  They are addressed to the first respondent.  They have been seen by the legal representatives who act for the applicants.  The respondents permitted that to occur, but upon the condition that access to them be restricted to those legal representatives.  Counsel for the applicants, having seen the documents, contends that it is in the interests of justice that they be shown to the next friend so that instructions may be obtained from her as to certain matters which are contained within them, and which are said to be highly relevant to the applicants’ claim.

The respondents submit that the documents should not be shown to the next friend for several distinct reasons.  They say that, having regard to the issues between the parties, the documents cannot assist the applicants’ case.  The respondents rely upon certain observations in the decision of McGarvie J in Karger v Paul [1984] VR 161 in which his Honour characterised the general equitable and supervisory jurisdiction of a court over trustees involved in the administration of wills and estates in narrow terms. McGarvie J observed at 165:

“It is an established general principle that unless trustees choose to give reasons for the exercise of a discretion, their exercise of the discretion can not be examined or reviewed by a court so long as they act in good faith and without an ulterior purpose.”

The only basis upon which it has been suggested that the Federal Court, rather than the Supreme Court of Victoria, has jurisdiction over this matter, is pursuant to the provisions of the cross-vesting legislation .

Mr Santamaria, who appeared for the first respondent, submitted that the applicants’ pleadings were based upon the erroneous assumption that the existence of some error of whatever kind on the part of the trustee would be sufficient to justify setting aside the disposition which the trustee proposed to make.  He submitted that the material contained in the documents was not capable of demonstrating a lack of good faith, or the existence of an ulterior purpose, on the part of the trustee.  Accordingly, though the documents had been made available to the applicants’ legal representatives, almost as an act of goodwill, they should not be provided to the next friend.

Mr Santamaria submitted further that the material contained in the documents had been imparted in confidence, and was highly sensitive in nature.  He sought to invoke a claim to public interest immunity, drawing an analogy with cases in which the identity of informers had been withheld in the public interest -  for example D v NSPCC [1978] AC 171. He referred also to Nestle Australia Ltd v Federal Commissioner of Taxation (1986) 67 ALR 128. He submitted that it would not be in the public interest to require documents such as these to be produced for inspection because, as a class, claimants in relation to superannuation policies should be free to disclose to trustees all matters relevant to the exercise of their discretion, openly and with candour. Mr Santamaria referred to O 15 rr 1, 3, 11, 14 and 15 of the Federal Court Rules as conferring upon the Court all necessary powers to refuse production to the next friend notwithstanding the fact that the documents had been discovered.  He relied also upon the rule of  practice whereby courts occasionally restrict access to discovered documents to the legal representatives of the parties, based upon the needs of commercial secrecy – see generally Australian Broadcasting Commission v Parish (1980) 29 ALR 228; and Mackay Sugar Co-operative Association Ltd v CSR Limited (1996) 137 ALR 183.

During the course of argument, Mr Santamaria conceded that his claim for public interest immunity was not assisted by s 130 of the Evidence Act 1995 (Cth) (“the Act”). He accepted that the reasoning of the Full Court of the Federal Court in Adelaide Steamship Co Ltd v Spalvins (1998) 152 ALR 418 rendered the provisions of the Act applicable to his claim for public interest immunity, though raised in interlocutory proceedings. He submitted, however, that the Act was not a code which displaced the various discretions available to the Court, including those contained within the Federal Court Rules.  That is a submission which I am disposed to accept, though it is not determinative of the issue before me.  Finally, he invited me to examine the documents for myself in order to determine whether or not it was in the public interest that they be produced for inspection.  Ms Davies, for the second respondent, joined in that application.  So also did Mr Newton for the applicants.  I have, therefore, inspected the documents for myself.  I have taken into account their contents in arriving at my decision in this matter.

Mr Newton submitted that the documents contained material which was highly relevant to the claims made by the applicants in the principal proceeding.  He submitted that it was essential that instructions be obtained from their mother as to some of the matters set out therein.  These included, in particular, the deceased’s affinity for alcohol.  They included also her instructions as to whether certain events described by the second respondent had in fact occurred, as she asserted.

Mr Newton submitted that even if Mr Santamaria were correct in contending that the principles laid down by McGarvie J in Karger v Paul (supra) governed the task to be performed by the Court in reviewing the trustee’s exercise of discretion, that did not render the documents irrelevant.  He submitted that even under the narrowest formulation of the role to be played by the Court it must at least be open to challenge the exercise of the trustee’s discretion upon the ground of what is generally described as “Wednesbury unreasonableness”.  He submitted also that the material contained in the documents might be relevant to the issue whether the exercise of the trustee’s discretion was vitiated by fraud or misrepresentation on the part of the second respondent.  Finally, Mr Newton submitted that no claim for public interest immunity had been made out.  He submitted that there was no basis for refusing to permit the next friend to inspect the documents, sensitive though they may be, and embarrassing as it may be to the second respondent to have their contents disclosed to her.

Notwithstanding Mr Santamaria’s able submissions, the respondents’ contention that these documents should not be produced to the next friend must, in my opinion, fail.  They are plainly relevant to the applicants’ claims in the principal proceeding.  This is so irrespective of how difficult it may ultimately be for the applicants to make good their case if they are required to show something akin to “Wednesbury unreasonableness” in order to vitiate the exercise of the trustee’s discretion.  The fact that they may be required to discharge a heavy burden is no basis for denying to the applicants such assistance as these documents may afford to the presentation of their case.

It is always a difficulty that information which is confidential in nature, and perhaps highly sensitive, may find its way into the public domain during the course of litigation.  However, absent any valid claim for privilege – and no privilege of any kind is asserted here – or any valid claim for public interest immunity – and these documents do not, in my opinion, come close to justifying such a claim – documents which are disclosed should, ordinarily, be produced for inspection, upon request. 

The second respondent is to some degree protected against improper dissemination of the contents of these documents by the operation of the principle in Harman v Secretary of State for the Home Department [1983] 1 AC 280. The applicants, who are very young, are not likely to be made aware of what they contain. There is no need for that to occur. It is really only their mother who will see them. I propose to order that they be produced to her for her inspection. In all the circumstances, including the fact that the first respondent has conducted itself with conspicuous propriety in raising matters of legitimate concern, there should be no order as to costs.

I certify that this and the preceding four (4) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Weinberg

Associate:

Dated:            11 December 1998

Counsel for the Applicant:	Mr S Newton
Solicitor for the Applicant:	Wighton and McDonald
Counsel for the First Respondent:	Mr P Santamaria
Solicitor for the First Respondent:	Clayton Utz
Solicitors for the Second Respondent	Hall and Wilcox
Date of Hearing:	2 December 1998
Date of Judgment:	2 December 1998