T.G Bullen Nominees v Bullen

[2024] SASC 95

SUPREME COURT OF SOUTH AUSTRALIA

(Appeal to a Single Judge)

T.G BULLEN NOMINEES v BULLEN & ANOR

[2024] SASC 95

Judgment of the Honourable Justice Bleby  

25 July 2024

PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - DISCOVERY AND INTERROGATORIES - DISCOVERY AND INSPECTION OF DOCUMENTS - PRODUCTION AND INSPECTION OF DOCUMENTS - GROUNDS FOR RESISTING PRODUCTION - IRRELEVANCE

APPEAL AND NEW TRIAL - APPEAL - GENERAL PRINCIPLES - RIGHT OF APPEAL - WHEN APPEAL LIES - ERROR OF LAW - PARTICULAR CASES INVOLVING ERROR OF LAW - FAILURE TO GIVE REASONS FOR DECISION - ADEQUACY OF REASONS

APPEAL AND NEW TRIAL - APPEAL - GENERAL PRINCIPLES - INTERFERENCE WITH JUDGE'S FINDINGS OF FACT - FUNCTIONS OF APPELLATE COURT - IN GENERAL

Appeal before a single judge against orders of an auxiliary master of the Supreme Court.

On 31 August 2023, a master made orders on an Originating Application as well as on an Interlocutory Application filed by the respondents requesting the production of trust documents by the Trustee T.G Bullen Nominees.

The main issues arising on the appeal were whether the master erred in finding that the Originating Application had been resolved by consent, whether the master’s ‘implicit’ finding that the appellant had not complied with s 84B of the Trustee Act 1936 (SA) (‘Trustee Act’) such as to permit an exercise of the Supreme Court’s inherent supervisory jurisdiction was erroneous, and whether the master erred in making orders on an interlocutory application that ‘did not conform’ with the statutory duty imposed by s 84B of the Trustee Act.

Order 1 of the master’s orders, which appeared to have been made on the Originating Application, was in exhaustive terms, requiring production of all Trust records dating back to May 2012. The appellants contended, however, that certain of the documents were subject to claims of privilege and that some documents the matter of dispute were not trust documents at all. They submitted that the making of the order left no room for a trial of all the issues that it wished to raise in respect of certain records.

Order 2 required production of a list of documents in certain categories and if no document existed of a given description, to state ‘Nil held’. Order 3 provided that to the extent that the appellants claimed privilege on any of the documents listed in Order 2, they were to furnish to the Court, with a copy to the respondents, a list specifying each document effectively in the form of a Kadlunga list.

Ultimately, the respondents did not seek to defend Order 1.

Held, granting leave to appeal insofar as necessary, allowing the appeal on Grounds 1 and 4.2 and setting aside Orders 1, 2 and 3:

1.Order 1 had the effect of denying the appellant a trial on whether it was required to produce any documents beyond those which it had already produced.

2.It was first necessary that the remaining issues be defined in the proceeding. That could be done by the respondents amending the Originating Application in light of what had been produced for inspection, confining the issues by affidavit or by filing points of claim that effectively narrowed its scope. It will then be for the appellant to respond, either by way of affidavit or points of defence (as the case may require), in respect of each document or category of document sought on the amended Originating Application.

3. Orders 2 and 3 on the Interlocutory Application pre-empted the trial of whether the documents the subject of those orders, such as may exist, were Trust records at all.

Trustee Act 1936 (SA) s 84B; Trustee Regulations 2011 (SA) r 5; Corporations Act 2001 (Cth); Supreme Court Act 1935 (SA) s 50; Uniform Civil Rules 2020 (SA) rr 86.4, 212.2(1)(a), 213.1(1)(a), referred to.
Rouse & Ors v IOOF Australia Trustees Limited (1999) 73 SASR 484; Adnyamathana Traditional Lands Association & Ors v Rangelea Holdings Pty Ltd [2023] SASC 51; Kadlunga v Electricity Trust of South Australia (1987) 43 SASR 313; Oxer v Astec Paints Pty Ltd (No 2) [2006] SASC 271, considered.

T.G BULLEN NOMINEES v BULLEN & ANOR

[2024] SASC 95

Single Judge Appeal - Civil

1. BLEBY J:  The appellant is Trustee of the Bullen Family Trust (‘the Trust’). The directors of the appellant are Christopher William Bullen (appointed 18 September 2003) and his spouse Robyn Marie Verrall (appointed 18 June 2014). The respondents are the parents of Christopher Bullen. They are primary beneficiaries of the Trust. They were directors of the appellant Trustee until 23 January 2020, when they resigned their offices.

2. On 31 August 2023, an auxiliary master made orders on an Originating Application filed by the respondents, requiring the appellant Trustee to produce documents. The master also made orders on an Interlocutory Application filed by the respondents in the same proceeding, requiring the appellant to furnish to the Court and the respondents a list of documents held by the appellant as Trustee and falling within certain descriptions. The order further required that if any of the documents described did not exist, the list was to state, ‘Nil held’.

3. This is an appeal against those orders. The appellant characterised the issues arising on the Notice of Appeal as being:

   ·whether the master’s decision was interlocutory or final;

   ·whether the master erred in finding that the proceeding had been resolved by consent and, in so doing, had denied the appellant procedural fairness in finally determining the proceeding;

   ·whether the master erred in ‘implicitly’ finding that the appellant had failed to comply with s 84B of the Trustee Act 1936 (SA) (the ‘Trustee Act’) such as to permit an exercise of the inherent supervisory jurisdiction of the Court to make orders for production of prescribed trust records; and

   ·whether the master erred in making orders on an interlocutory application that ‘did not conform’ with the statutory duty imposed by s 84B of the Trustee Act.

4. This is a sufficient description of the issues arising for introductory purposes. However, it is necessary to understand the history that led to the making of the orders of which the appellant now complains.

   Background

5. Section 84B of the Trustee Act provides:

   84B—Records to be kept by trustee

   (1)A trustee shall keep such records relating to his administration of the trust property as may be prescribed.

   Maximum penalty: $500.

   (2)A trustee shall, at the request of—

   (a)     the Public Trustee; or

   (b)     another trustee of the trust; or

   (c)     a beneficiary under the trust,

   produce the records kept by the trustee in pursuance of this section for inspection and permit the Public Trustee, the other trustee or the beneficiary (as the case may be) to examine and make copies of those records.

   Maximum penalty: $500.

6. Regulation 5 of the Trustee Regulations 2011 (SA) (‘the Regulations’) provides:

   5—Records to be kept by trustee

   (1)For the purposes of section 84B of the Act, the records that a trustee must keep relating to administration of the trust property are as follows:

   (a)     each document authorising the trustee to act as trustee;

   (b)     each letter received by the trustee and a copy of each letter sent by the trustee;

   (c)     a copy of each statutory declaration and each affidavit made in the course of the administration of the trust;

   (d)     each deed, agreement or other instrument varying distribution of the trust property or a stamped duplicate of any such deed, agreement or instrument;

   (e)     a copy of all returns made as to any form of duty, charge or tax imposed on the trust by the Commonwealth or any State or Territory of the Commonwealth (including trust income tax returns and personal tax returns for beneficiaries where applicable);

   (f)     all written instructions for the sale or transfer of any trust property or any asset which forms or formed part of the trust property and any independent valuations obtained in relation to those assets;

   (g)     minutes of the proceedings of all meetings relating to administration of the trust at which the trustee was or was entitled to be present;

   (h)     a record of any insurance cover in respect of the assets which form or formed part of the trust property;

   (i)    any report received from an investment adviser and a record of all decisions made in relation to such report;

   (j)     a record of all reviews of investments;

   (k)     other records that would enable the receipt and disposition of trust property to be conveniently and properly audited, including the following:

   (i)a register of securities recording the following information in respect of all securities received and disposed of:

   (A)    the date of receipt or disposition;

   (B)     a description of the securities;

   (C)     the consideration passing for receipt or disposition;

   (D)    brief particulars of the purpose of the transaction;

   (ii)a property register recording the following information in respect of all other property received and disposed of:

   (A)    the date of receipt or disposition;

   (B)     a description of the property;

   (C)     the consideration passing for receipt or disposition;

   (D)    brief particulars of the purpose of the transaction;

   (iii) a register of all investments of income and capital funds (including redemptions and income accretions) recording the following information in respect of each investment:

   (A)    the date of investment;

   (B)     the amount of the funds invested;

   (C)     brief particulars of the investment;

   (iv)a cash receipt book recording the following information in respect of each receipt of trust money:

   (A)    the date and reference number of each receipt;

   (B)     the name of the person from whom the money is received;

   (C)     the trust name or reference to which the transaction relates;

   (D)    brief particulars of the purpose of the receipt;

   (E)     the amount of the receipt;

   (F)     the date the cash receipted is deposited in an ADI account q             (where applicable);

   (v)a cash payments book recording the following information in respect of each payment of trust money:

   (A)    the date of the payment;

   (B)     if the payment was made by cheque—the cheque number;

   (C)     the name of the payee;

   (D)     the trust name or reference to which the transaction relates;

   (E)     brief particulars of the purpose of the payment;

   (F)     the amount of the payment;

   (vi)each ADI statement and passbook issued in relation to trust ADI accounts;

   (vii)trust statements, prepared not less than annually, showing the following for the period from the end of the last period for which a statement was prepared:

   (A)    cash receipts and payments;

   (B)     other property received or transferred;

   (C)     assets and liabilities as at the last day of the statement period.

   (2)Where the trustee administers more than 1 trust, separate records must be kept, in accordance with this regulation, in relation to each trust administered by the trustee.

   (3)All records referred to in this regulation must be retained by the trustee, in a legible written form or so as to be readily convertible into such a form, for at least 5 years after the termination of the trust.

7. On 10 March 2023, the respondents filed an Originating Application, expressed to be made under both s 84B and Regulation 5. The Originating Application sought, relevantly, orders in the following terms:

   1.That pursuant to Section 84B Trustee Act 1936 (SA) and Regulation 5 of the Trustee Regulations 2011 (SA), the Respondent is to produce to the Applicants within 14 days of this order all documents in its possession, power or custody which fall within the following categories of documents in relation to the Bullen Family Trust:

   1.1all documents prescribed by Regulation 5 for the period commencing 17 May 2012 and without limiting the generality of the foregoing;

   (a)all documents in relation to the preparation of the Deed of Substitution prepared by Porcaro Lawyers and bearing the date “2012”; and

   (b)all documents in respect of the transfer by the Respondent of the land comprised in the Certificates of Title Volume 5511 Folio 573, Volume 5482 Folio 696, Volume 5482 Folio 562, Volume 5451 Folio 267 (Farming Land) by the Respondent.

8. The respondents were seeking, by Order 1.1, production of all documents the Trustee was required to keep by under s 84B over the previous 11 years or so. Paragraphs (a) and (b) specified certain documents that, on their case, came within that broad description. Strictly speaking, these paragraphs may have been redundant, but they had the benefit of focusing attention on the respondents’ primary concerns.

9. The descriptions in subparagraphs (a) and (b) introduce the factual background to this matter. As identified above, the respondents were directors of the Trustee until 23 January 2020, as were the current directors, Christopher Bullen and Robyn Verrall. There is a dispute between the respondents and the current directors as to whether the terms of the Trust Deed were substituted in 2012. That dispute informs the specification in paragraph (a).

10. Historically, the assets of the Trust included farming land near Keith in South Australia. In 2016, a water licence for the farming land became registered with Christopher Bullen. Then, by a Memorandum of Transfer dated 7 July 2018 and registered on 30 November 2018, the farming assets were transferred from the Trust to Christopher Bullen.

11. The respondents say that they did not know about the transfer of the farming assets until 2020 and that they did not authorise the transfer to Christopher. They say that they did not authorise the registration of the water licence in their son’s name. They say that they did not attend meetings of the Trustee that were purportedly recorded in minutes signed by them. They do not recall signing the minutes. They say they believe that another person has applied their signatures on those documents electronically or by some other means.

12. In early 2023, correspondence erupted between the solicitor for the Trustee, Ms Tamara King of Kings Commercial, and Mr Rod Jones of Piper Alderman, solicitor for the respondents. In a letter dated 10 February 2023, Mr Jones requested copies of ‘all trust documents prescribed by Regulation 5 of the Trustee Regulations 2011 without further delay’. He also identified his clients’ complaints that the 2012 Deed of Substitution did not bear the signature of the respondent Tom Bullen and that the respondents had no knowledge of the land transfer in 2018.

13. Mr Jones went on to assert a breach of fiduciary duty on the part of Christopher with respect to the land transfer and a breach of trust on account of the Deed of Substitution. It is not necessary to traverse the details of those assertions here. The letter then turned to the purported evidence of the respondents’ knowledge of the land transfers:

    25.You have provided us with several documents which you assert show that our clients Tom and Carolyn Bullen were aware of, and involved in, the transfer of the Land to your client. Those documents are:

    25.1  a document entitled “Minutes of the Meeting of the TG Bullen Nominees Pty Ltd Trust Directors” dated 16 April 2017

    25.2  a document entitled “Minutes of the Meeting of the TG Bullen Nominees Pty Ltd Trust Directors” dated 10 February 2018

    25.3  a document entitled “Legal Counsel Independent advice” dated 23 February 2018; and

    25.4  what appears to be an (incomplete) Australia Post Identity Verification form.

14. Mr Jones relayed his instructions that his clients had never seen these documents and identified circumstances suggesting that his clients could not have signed the documents. In particular, the 16 April 2017 document referred to a ‘sudden meat ban’ notified by China’s quarantine agency. Mr Jones said that the agency did not give notice of that meat ban until three months after the date of the document. He also referred to the fact that the respondents’ signatures on each document were identical, suggesting application of an electronic signature, which his clients did not know how to do.

15. Mr Jones was direct in pointing out that the creation and use of those documents may amount to fraudulent conduct. He invited the directors to provide an explanation for those matters ‘and in doing so to make the original signed versions of those documents available for inspection at your offices’.

16. Ms King responded by letter dated 17 February 2023. Relevantly, she said that the Trustee would advise when copies of the documents ‘outlined in Regulation 5 of the Trustee Regulations 2011 (SA) only will be available’. She advised she expected that the process of collating those documents would take 28 days. As to Mr Jones’s assertions about the transfer documents, Ms King said:

    Your client attended each of the meetings for which we have provided minutes, and physically signed the minutes of those meetings. Those documents prima facie evidence an intention by the Company to distribute the Land to Christopher Bullen, with your clients [sic] consent.

17. This statement crystallised a precise dispute of fact between the parties. Mr Jones, for the respondent, had asserted that it appeared from the copies of the minutes provided that electronic copies of the respondents’ signatures had been attached to the minutes. Ms King asserted that the respondents had physically signed the minutes. She did not suggest that the minutes were not records relating to the Trustee’s administration of the trust property.

18. On 10 March 2023, the respondents filed the Originating Application.

19. On 17 March 2023, Ms King wrote to Mr Jones, saying that her client had collated the documents ‘outlined’ in Regulation 5 of the Trustee Regulations. She advised that the documents would be available for viewing by the respondents on 24 March 2023 from the hours of 9am to 1pm at a specified location. She insisted that it was for the respondents only to view the documents, with the assistance of their legal representative.

20. It appears from the correspondence that ensued on 24 March 2023 that Mr Jones attended for the inspection on that date at 10:57am. Ms King ‘made it clear that I intended to be in the room during your inspection’. Mr Jones did not accept that condition and left. Ms King then asserted in her subsequent letter that ‘we consider your clients have been provided with a reasonable opportunity to review the trust records as per their request’ and invited the respondents to withdraw the Originating Application.

21. On the same date, Mr Jones wrote requesting photocopies of all documents produced for inspection, undertaking to pay the photocopying costs.

22. Ms King responded on 30 March 2023, refusing that request on its terms. That refusal was laboured, and included the assertion:

    ·there is no requirement for our client to simply copy and provide trust documents as you now seek. The act provides an ability for your clients to copy specific documents during their inspection, or in this case request copies (which did not occur); …

23. Section 84B of the Trustee Act is not in the terms asserted by Ms King. Moreover, Ms King’s assertion that Mr Jones had not requested copies at the appointment was not to the point. He had subsequently requested copies by letter. Ms King then made a proposal, consequent on her refusal of Mr Jones’s request, in highly prescriptive and restricted terms:

    1.that your client identify, with specificity, the categories of documents which they are seeking through the process of inspection. Those categories should be clearly limited by subject matter and time.

    2.we will then take instructions on whether copies of those categories of documents only can be provided.

    3.to be clear, provision of copies of documents within the requested categories would on [sic] the basis that your client would agree to discontinue the Application.

1. Mr Jones responded by letter on 6 April 2023. The effect of his response was to say that:

   ·Ms King’s clients had not provided the copies as requested;

   ·the tenor of Ms King’s letter suggested that her clients did not understand the extent of their obligation to produce trust records. He explained the effect of the authorities was that the Trustee was ‘required to furnish full trust records fully, not reluctantly or subject to particular conditions or limitations designed to impede or confuse the beneficiaries’;

   ·the Trustee had no right to impose conditions on them fulfilling its obligations as Trustee;

   ·Ms King and her client insisting on remaining in the room to watch him inspect the documents in a small service office with no apparent photocopying facilities was inappropriate.

2. Mr Jones then requested that Ms King confirm that:

   7.1    your client will make all trust records available for our inspection, without the imposition of inappropriate restrictions (such restrictions obviously including your client and yourself insisting on remaining in the room whilst we do so); and

   7.2    that upon our identifying which documents our clients wish to be copied, you will, as previously stated, provide us with copies of those documents at our clients’ cost (or alternatively, if your client is concerned about costs, we suggest you bring the documents to our office and we will arrange copying ourselves).

   8.If that is not agreed, then you must provide us with copies of all of the trust documents.

3. Ms King responded on 10 April 2023. On this appeal, it is best to let Ms King’s words speak for themselves:

   Our client does not misunderstand that it has an obligation to produce trust records, and provide your client an opportunity to inspect and make copies. It has done so. What our client is not obliged to do is to submit to an oppressive process to accommodate your decision not to engage in an inspection of the documents produced to you on 24 March 2023 at all, and without any proper basis. As you will recall, you arrived two hours late to the inspection and left 3 minutes after your arrival. We can only infer that you did not intend to undertake a proper inspection.

   We note that your letter misrepresents the position put by us on 30 March 2023, which is that your client has been provided the opportunity to inspect the trust records as sought by its originating application filed on 10 March 2023. It has obtained its relief, and the proceedings ought to be discontinued on that basis. We reserve our clients [sic] rights in respect of costs if they are not.

   Our letter (despite the unreasonableness of your position) nonetheless sought to propose a further practical and commercial resolution by offering to provide copies of specific categories of documents (within reason) being something to which your client is not otherwise entitled. Without derogating from the fact that your client has obtained its relief (and the proceeding should be discontinued on that basis alone) this proposal provides your clients with a further opportunity to obtain specific categories of documents.

   Regrettably, your client has not sought to take any reasonable or practical approach, and simply asserted that it wants copies of everything. That is despite your client having no entitlement to copies at large, you not taking any time to actually inspect the documents when provided the opportunity to provide any sensible or practical limitation to its overly broad request. We have already informed you in our letter dated 30 March 2023 about the significant scope of documents and process required to copy those documents.

   Your letter, sent 13 days after the inspection, seeks, for the first time, to assert that the opportunity provided to inspect the trust records was somehow inadequate because the writer wished to remain in the room. There is no basis for that contention in fact or at law. It is unclear how that approach (which was not uncommon in relation to inspection of discovery, for example) could be characterised as ‘inappropriate’ or ‘intimidating’. You will recall that you called the writer outside the office in what the writer believes was an attempt at intimidation and bullying when it was put to you that the writer would remain in the room with our client’s documents.

   A large amount of time and money has already been consumed by both parties, and to date we are unsure as to what your concern is, not have you made any attempt to narrow the scope of what records you are concerned about. Both Ms Carolyn and Tom Bullen have had the opportunity to inspect these records over the last 20 years and have not done this.

   In the circumstances, we repeat the proposal made in our letter dated 30 March 2023.

4. This repeated proposal included the conditions that copies would only be made if the proceedings were discontinued and that the respondents were required to specify categories. It is difficult to understand this insistence in the face of the Trustee’s statutory obligation, especially where Mr Jones had offered to facilitate copying of the entire set of records at his clients’ expense. It is also difficult to understand Ms King’s statement that ‘we are unsure of what your concern is’. Mr Jones’s letter of 10 February 2023 had made it clear that his clients were concerned that the 2012 Deed of Substitution did not bear the signature of the respondent Tom Bullen and that the documents listed in paragraph 25 of that letter had been fraudulently created.

5. Correspondence continued in a similarly unproductive vein. In any event, arrangements were made for a further inspection on 28 April 2023. Mr Samuel Morphett, a solicitor employed by Piper Alderman, attended. The respondents filed an affidavit of Mr Morphett dated 5 May 2023.

6. Mr Morphett’s evidence was that on 28 April 2023, he attended at the offices of the Australian Institute of Company Directors to inspect the documents. He was given four hours to inspect the documents made available, which comprised around 27 lever arch folders. He did not have time to review every folder in detail but reviewed most of them. He reviewed all folders that purported to contain records covering the periods of the transactions of concern. His evidence was that the folders contained Trust records that were randomly intermingled with personal records of Mr Bullen, Ms Verrall and a business entity named ‘Bully’s Beef’. This made it difficult to know which were Trust records and which were not. Some of the folders contained few Trust records.

7. Mr Morphett’s evidence was then as follows:

   9.In my review of the folders, I was not able to find any company minutes or resolutions recording resolutions or decisions made by the Respondent as trustee, other than statutory minutes for the annual financials prepared by the accountants for the Trust.

   10.I asked Ms King if she or her client could direct me to where the company’s register of trustee resolutions was kept. Ms King responded that her client’s “obligation is just to allow you to inspect the documents” and that the resolutions were “somewhere in the folders”. I asked Ms King to confirm that there was no separate folder of resolutions. I then told Ms King I had not been able to find any resolutions in the relevant time period folders. She did not lend any assistance on the topic.

   11.I then asked Ms King if she could direct me specifically to three documents purporting to be resolutions of which she had previously provided copies to us (by email). I gave Ms King the dates of those resolutions, which were:

   11.1  a document entitled “Minutes of the Meeting of the TG Bullen Nominees Pty Ltd Trust Directors” dated 16 April 2017;

   11.2  a document entitled “Minutes of the Meeting of the TG Bullen Nominees Pty Ltd Trust Directors” dated 10 February 2018; and

   11.3  a document entitled “Legal Counsel Independent Advice” dated 23 February 2018.

   12.Ms King said that she had already provided those documents. I agreed we had received copies of them, but I told Ms King that we wished to inspect the originals of those documents. Ms King did not provide a substantive response. I later asked Ms King again if she had located those documents. In response, Ms King told me that her client “has no obligation to provide originals”.

8. Mr Morphett prepared a summary of specific records which he was unable to locate and which, if they existed, he considered fell within the categories of records required to be kept by a trustee pursuant to s 84B of the Trustee Act and Regulation 5 of the Trustee Regulations. He exhibited that summary to his affidavit and marked it ‘SAM-1’. It reads as follows:

   Summary of Trust documents not located during inspection

   1.In relation to the Deed of Substitution (2012) prepared by Porcaro Lawyers:

   1.1    any accompanying resolutions of the trustee;

   1.2    any invoices for work undertaken by Porcaro Lawyers;

   1.3    any letters or advice received by the trustee;

   1.4    any minutes of meeting of directors dated 5 June 2012.

   2.     In relation to minutes of meeting and company resolutions for the trustee:

   2.1    any original or copy documents purporting to be minutes or resolutions (aside from statutory resolutions for annual financial statements prepared by the trustee’s accountants)

   2.2    in particular, originals and copies of:

   (a)a document entitled “Minutes of the Meeting of the TG Bullen Nominees Pty Ltd Trust Directors” dated 16 April 2017;

   (b)a document entitled “Minutes of the Meeting of the TG Bullen Nominees Pty Ltd Trust Directors” dated 10 February 2018

   (c)a document entitled “Legal Counsel Independent Advice” dated 23 February 2018; and

   (d)an Australia Post Identity Verification form purporting to be signed by Carolyn Bullen.

   3.     In relation to legal advices or legal correspondence obtained by the trustee:

   3.1    generally all legal advices or correspondence obtained since 2012;

   3.2    any original and copy documents recording a meeting with a solicitor Mr Richard Armour on 20 February 2018; and

   3.3    any documents recording a meeting with Ms Jacqui Pawelski of Smart Conveyancing on 30 February 2018 or subsequent correspondence with Mr [sic] Pawelski;

   3.4    invoices and other documents recording payments made in respect of legal and conveyancing advice sought or received by the trustee.

   4.In relation to the transfer of land documents (in the period March 2018 – November 2018)

   4.1    all correspondence with Jacqui Pawelski of Smart Conveyancers;

   4.2    a copy of land transfer documents, including transfer T13001627 registered on 30 November 2018;

   4.3    original and copy Client Authorisation Forms executed by or on behalf of the trustee;

   4.4    original and copy Verification of Identity Forms and other documents;

   4.5    Invoices received and paid by the trustee;

   4.6    original and copy Confirmation of Registration Notices and related conveyancing documents.

   5.     Other documents:

   5.1    original and copy conveyancing documents or bank documents concerning the granting and registration of Mortgage 12518260 to ANZ on 28 April 2016

   5.2    original and copy statutory declarations (or affidavits) made by the trustee or its officers in the course of the administration of the Trust affairs.

9. I will refer to these documents collectively as ‘the SAM-1 documents’.

10. Ms King filed an affidavit dated 8 May 2023 in response to Mr Morphett’s affidavit. She expressly affirmed this affidavit of her own knowledge. Ms King’s affidavit disputes a number of matters of minor detail. It then contains the following paragraph:

    7.I refer to paragraph 6 of the Affidavit. Mr Samuel Antony Morphett and Ms Nicole Harford arrived at 9:10am and left at 12:50pm. Regarding the statement “we did not have time to review every folder in detail”, and “I reviewed most of them”, to date 8 hours of time has been made available to the Applicant to inspect these documents. All trust documents have been made available to the Applicant at all times.

11. Putting to one side the argumentative nature of this paragraph, Ms King’s statement as to the time made available appears to be referring, without qualification, to the aborted first attempt at inspection at which Mr Jones attended. Secondly, Ms King did not dispute Mr Morphett’s account that Ms King had said that the Trustee was not required to produce original documents. Finally, Ms King’s assertion that all Trust documents have been made available at all times was made purportedly of Ms King’s own knowledge.

12. It may be that what Ms King meant by this was that in her assessment, her client was not required to produce any of the SAM-1 documents. If so, her statement was poorly expressed. That this was what she intended to convey in the affidavit is supported by the following paragraph, where she said:

    8.I refer to paragraph 7, 8, 9 and 11 of the Affidavit. Not all documents that have been noted in the Exhibit marked “SAM-1”, are trust documents. By way of example, resolutions of the company are not trust documents. Any legal advice obtained by the trustee is privileged information.

13. On 10 May 2023, Judge Dart ordered that the Trustee was to write to the respondents about the request for the SAM-1 documents. Relevantly for present purposes, on 23 May 2023 Ms King wrote as follows:

    In response to the requests in SAM-1, we note as follows:

    1.The documents requested in 1.1, 1.4, 2.1, 2.2(a), 2.2(b) relate to meetings of the trustee, not the trust. They are not trust records within the meaning of s 5 of the Trustee Regulations 2011 (SA) (Regulations), and fall outside of your client’s originating application filed on 10 March 2023.

    2.As to the documents requested in 1.3, 3.1-3.3 and 4.1 your clients’ entitlement is only to letters. Advice and records of meetings are not trust records within the meaning of s 5 of the Regulations. Further, to the extent that letters have been created for the dominant purpose of providing legal advice, they will be privileged.

    3.As to the documents requested in 2.2(c), 2.2(d), 4.4 and 5.1 these categories do not appear to fit within any of the categories outlined in s 5 of the Regulations. You have not provided any detailed basis for this request.

    4.As to the documents requested in 1.2, 3.4, 4.2, 4.3, 4.5, 4.6 and 5.2, these documents (to the extent they exist) were available during your inspection on both 24 March and 27 April 2023. We do not accept that your clients have the right to interrogate our client as to the existence or otherwise of the documents.

14. Mr Jones wrote to Ms King on 31 May 2023, disputing Ms King’s response in detail. It is not necessary to detail that response here. Ms King wrote back to Mr Jones on 6 June 2023. It is not necessary to detail that response either, except to note two matters.

15. First, Ms King wrote:

    We understand that you do concede that your clients are not entitled to Company records described in paragraph 1 of our letter, and that you intend to make a further application with respect to that documentation. Prior to doing so, we invite you to identify the basis for the request in case the matter can be resolved without the need for further proceeding.

16. It may be that the words ‘do concede’ should have read ‘do not concede’. Mr Jones had made no such concession.

17. The documents within paragraph 1 of Ms King’s earlier letter included the minutes of the meeting of the Trust Directors of 16 April 2017 and 10 February 2018. On any view, this response was inconsistent with the position previously taken by the Trustee. The Trustee had already provided copies of those minutes, purportedly pursuant to its obligation under s 84B, and had refused to provide the originals, on the basis that it had no obligation to do so. Now, however, Ms King was denying their amenability to production on the basis that they were not Trust documents at all. That begs the question of why the Trustee was prepared to provide copies.

18. The question of the existence of originals of these documents, signed by the respondents, is a focus of the respondents’ concern of fraud.

19. Secondly, Ms King asserted, in her letter, that:

    Our client has provided you with two separate inspections and has met their obligations pursuant to s 84B of the Trustee Act 1936 (SA) and Regulation 5 of the Regulations. Having undertaken those inspections, it is for your client to identify whether they consider there is any relevant deficiency. For the reasons outlined in our letter dated 23 May 2023, no such deficiency exists.

20. The position, then, was that Ms King on behalf of the Trustee was asserting that the Trustee had fully complied with its obligation to produce Trust records. In making that assertion she had adopted a manifestly inconsistent position with respect to the minutes of meetings of the directors of the Trustee. Her original assertion that originals were not required to be produced remained unexplained but seems to have been overtaken by the assertion that they were not Trust records at all. Otherwise, Ms King adopted a composite position that many of the SAM-1 documents were not Trust records within the meaning of the legislation, and that some may not exist in any event. Overlapping this was a blanket claim of privilege in respect of any legal advice, whether Trust records or not.

21. On 21 June 2023, the respondents filed an Interlocutory Application (FDN 18) seeking orders as follows:

    1.Within 7 days the Respondent [appellant] furnish to the Court with a copy to the Applicants [respondents] a list of documents held by the Respondent as trustee of the Bullen Family Trust that fall within the following descriptions (to the extent that they exist and if they do exist to state, “Nil Held”):

    1.1    In relation to the Deed of Substitution (2012) prepared by Porcaro Lawyers a list of:

    (a)resolutions of the trustee;

    (b)invoices for work undertaken by Porcaro Lawyers;

    (c)letters or advice received by the trustee;

    (d)minutes of meeting of directors dated 5 June 2012.

    1.2    In relation to minutes of meeting and company resolutions for the trustee a list of:

    (a)original or copy documents purporting to be minutes or resolutions (aside from statutory resolutions for annual financial statements prepared by the trustee’s accountants)

    (b)in particular, a list of originals and copies of:

    (1)a document entitled “Minutes of the Meeting of the TG Bullen Nominees Pty Ltd Trust Directors” dated 16 April 2017;

    (2)a document entitled “Minutes of the Meeting of the TG Bullen Nominees Pty Ltd Trust Directors” dated 10 February 2018;

    (3)a document entitled “Legal Counsel Independent advice” dated 23 February 2018; and

    (4)an Australia Post Verification of Identity form purporting to be signed by Carolyn Bullen.

    1.3    In relation to legal advices or legal correspondence obtained by the trustee a list of:

    (a)legal advices or correspondence obtained by the Respondent since 2012;

    (b)original and copy documents recording a meeting with a solicitor Mr Richard Armour on 20 February 2018; and

    (c)documents recording a meeting with Ms Jacqui Pawelski of Smart Conveyancing on 30 February 2018 or subsequent correspondence with Mr [sic] Pawelski;

    (d)invoices and other documents recording payments made in respect of legal and conveyancing advice sought or received by the trustee.

    1.4    In relation to transfer of land documents (in the period March 2018 – November 2018) a list of

    (a)all correspondence with Jacqui Pawelski of Smart Conveyancers;

    (b)land transfer documents, including transfer T13001627 registered on 30 November 2018;

    (c)original and copy Client Authorisation Forms executed by or on behalf of the trustee;

    (d)original and copy Verification of Identity Forms;

    (e)invoices received and paid by the trustee;

    (f)original and copy Confirmation of Registration Notices and related conveyancing documents.

    1.5    A list of:

    (a)original and copy conveyancing documents or bank documents concerning the granting and registration of Mortgage 12518260 to ANZ on 28 April 2016;

    (b)original and copy statutory declarations (or affidavits) made by the trustee or its officers in the course of the administration of the Trust affairs.

    2.To the extent the Respondents claim privilege to any of the documents listed in paragraphs 1.1 to 1.5 above, within 7 days the Respondent furnish to the Court with a copy to the Applicants a list specifying each of those documents by reference to its:

    2.1    date;

    2.2    author;

    2.3    recipient; and

    2.4    the basis of the privilege claimed.

    3.Costs

1. It can be seen that with some minor changes in wording, the documents in the list sought by FDN 18 reflected the SAM-1 documents.

   The hearing and determination of FDN 18

2. The master heard argument on the Interlocutory Application FDN 18 on 12 July 2023. On 31 August 2023 she made orders in favour of the respondents on both the Originating Application and the Interlocutory Application. Before turning to her reasons for making the orders, it is necessary to make some observations about the position taken by the Trustee on the Interlocutory Application.

3. Counsel for the Trustee described the Trustee’s position in the following terms:

   The simple proposition which we put is firstly, really it comes down to this; there’s no power in the Act for a list of documents to be filed and to the extent your Honour has that power under the rules, what is the purpose that’s going to be served by providing a list of documents to the court.

4. One issue raised, then, was whether there was power to order a list. The Trustee further contended that there was no utility in ordering such a list, as the only relevant exercise on the Originating Application was to determine, by reference to the SAM-1 document categories, whether those documents were Trust records or not.

5. The Trustee went further, however, and submitted that some documents were not disclosable for reasons of confidentiality. Counsel submitted that:

   explanations of the trustee’s decisions and why the trustee has made a decision, particularly a discretionary trust, are often documents which are not disclosable, and not required to be disclosed, and that’s a clear distinction which is drawn on the authorities…

6. This was a reference to the decision of Doyle CJ in Rouse & Ors v IOOF Australia Trustees Limited,[1] where his Honour said:[2]

   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.

   [1] (1999) 73 SASR 484.

   [2]     Rouse & Ors v IOOF Australia Trustees Limited (1999) 73 SASR 484 at [99]-[103].

7. Counsel at the hearing before the master went on to submit that the Trustee’s position was that meetings of the corporate Trustee, where they are making decisions about the Trust, ‘fit within that category and they don’t fit within the categories within s.5 of the regulation’.

8. Counsel did accept, however, that the point was ‘somewhat moot’, in that the respondents were former directors of the company and must necessarily have known of its workings at the relevant point in time. He also made the submission that ‘your Honour can see that they’ve signed these documents’. That submission did not acknowledge the respondents’ assertion that the documents were forged.

9. Counsel also accepted that the respondents could request the minutes pursuant to the Corporations Act 2001. The following exchange then occurred:

   HER HONOUR:   Why be difficult and not just provide it?

   COUNSEL:        Well, it’s not been requested through that mechanism.

   HER HONOUR:   Why? They’ve made a request through this mechanism, so why put them to the task of having to go through the Corporation Act?

   COUNSEL:Well, as far as those particular documents, we’re not going to cavil over whether they can see the originals but there is a number of –

   HER HONOUR:   But you have.

   COUNSEL:But there is a number of other issues in their requests that we do take issue with, the fact that they fall within this. The other thing we take issue with is simply we have provided the opportunity to them to look at these documents and all that we get is for them to constantly push and try to seek access through a court process when we’d already agreed to do so.

10. This exchange is revealing. On its face, it appears that counsel conceded that the respondents were entitled to inspect and copy the originals of the 2017 and 2018 minutes, in respect of which Ms King had previously offered inconsistent justifications for refusing access. Having regard to the conduct of the appeal proceedings before me, it appears that the Trustee has still not provided the originals of those minutes to the respondents. I also note that the Trustee is presently in no way impeded from doing so by the existence of these proceedings unless, contrary to the import of counsel’s apparent concession before the master, it maintains that it has no obligation to provide the originals for inspection. I return to this below.

11. As to the last submission in this exchange, that the Trustee had ‘already agreed’ to provide the respondent the opportunity to look at the documents, such that the court process was somehow a matter for criticism, several observations may be made. The Trustee had acknowledged the existence of its obligation under s 84B but had refused (until, possibly, counsel made the apparent concession on his feet) to provide the originals of the minutes. Moreover, counsel’s statement did not acknowledge that the Trustee’s ‘agreement’ extended only to the contents of the 27 folders and not to the very records now the subject of dispute, to the extent that they existed. Neither did counsel acknowledge the history of the earlier, inappropriate conditions of access stipulated in Ms King’s correspondence.

12. In expressing his client’s ‘perplexity’ as to the need for the proceedings, counsel then submitted that the respondents had ‘raised an issue with a transaction which they signed off on, and were present at meetings for’. That submission failed to acknowledge that this contention was part of the very subject matter of the dispute provoking the application.

13. Independently of the question of power to order a list, counsel also submitted before the master:

    In my submission, it simply won’t assist a determination by this court to have a list of documents filed. It’s simply a matter of deciding whether the categories which are being sought fit within s.5 of the regulations. It’s that simple, and it doesn’t require that there be then a significant number of documents provided through a list of documents in order to make that determination. That’s simply, in my submission, over-complicating the process and putting the prejudicial burden on my client, which is unnecessary.

14. The question of power aside, then, the Trustee’s position was that an order for a list of documents was unnecessary and prejudicial. Its position was that a trial could be conducted by an examination of category descriptors, whether or not the Trustee had conceded the existence of documents within a given described category, and regardless of the content of the documents.

15. Counsel further described the process of being required to provide a list of documents according to categories created by the respondents as one ‘that turns the normal process in these matters completely on its head’. He submitted that it cannot be the case that the Trustee is simply required to fill a void created by categories set out by the respondents. As he put it:

    If you say ‘Well, I don’t know if these documents exist, therefore you need to give me a list of any documents that might fit within that category so we can determine it’, it puts an enormous burden on any respondent, particularly in a situation where that’s not normally required in a process for determining an originating application.

16. As an abstract proposition, devoid of context, this submission carries a degree of force. However, at this point in the recitation of the history of the matter, I observe that the SAM-1 documents list was not prepared in the abstract. It was the product of an informed approach that the respondents, through the agency of Mr Morphett, took in the face of the documents with which they were provided for inspection. That does not mean that the list will, in the final event, prove to match with everything in the Trustee’s possession. However it was not premised on the respondents simply saying, ‘I don’t know if these documents exist’.

17. The Master noted the respondents’ ‘concerns’ about whether all Regulation 5 Trust records had been produced, notwithstanding the Trustee’s assertion that it had made its own good faith enquiries and had provided all Trust records in compliance with the Act and Regulations. She found that the respondents’ concerns were ‘well-founded’.[3] With respect to the minutes of the meetings of 16 April 2017 and 10 February 2018, she said:[4]

    The [appellant] has taken the position that any company minutes of resolution of the corporate trustee are not Trust records. For example, two of the documents listed in FDN 18 are described as:

    ·Minutes of the Meeting of TG Bullen Nominees Pty Ltd Trust Directors dated 16 April 2017.

    ·Minutes of meeting of the TG Bullen Nominees Pty Ltd Trust Directors dated 10 February 2018.

    The [appellant] has formed the view that those Trust records do not fall within the scope of Regulation 5. I do not agree with that assessment. Both of those Trust records would appear to fall squarely within Regulation 5(1)(g) which states:

    (g)     minutes of the proceedings of all meeting relating to administration of the trust at which the trustee was or entitled to be present.

    [3] Reasons, 31 August 2023 at [13].

    [4]     Reasons, 31 August 2023 at [14]-[15].

18. The master then turned to the respondent Carolyn Bullen’s evidence that she had no recollection of attending certain purported meetings or signing the documents, and Ms Bullen’s belief that her signature had been applied by some other person. She noted the request to inspect the originals. She continued:[5]

    Counsel for the [respondents] submitted that the [appellant] has refused to provide the original Trust records on the basis that it says that a copy has already been provided and Regulation 5 does not compel the Trustee to produce an original trust record. Regardless of whether the trust record is a photocopy or an original – if it is a trust record which falls within the scope of Regulation 5 – it is then a trust record which must be produced for inspection. For the avoidance of doubt, if a trust record has been photocopied, both the original of the trust record and the photocopy of the trust record would need to be produced for inspection in compliance with the Regulation.

    [5] Reasons, 31 August 2023 at [16].

19. The master then observed that the appellant had ‘attempted to place an onus upon the respondents to explain or justify the basis of their requests for particular Trust records’.[6] This appears to have been a reference to, at least, numbered paragraph 3 in Ms King’s letter of 23 May 2023. The Master considered that this position was not supported, quoting Jacob’s Law of Trusts in Australia:[7]

    The traditional law was that in the case of strict as distinct from discretionary trusts, where beneficiaries have vested or contingent interests, beneficiaries have a prima facie right – a right subject to exceptions – at reasonable times to inspect any property forming part of the trust estate in which they are beneficially interested, including trust documents used by trustees in the administration of the trust.

    [6] Reasons, 31 August 2023 at [17].

    [7]     JD Heydon and MJ Leeming, Jacob’s Law of Trusts in Australia (8^th ed, 2016) at [17-14].

20. The master then turned to the blanket claim of legal professional privilege. She accepted that in some circumstances it may be appropriate to claim privilege, but referred to the following statement of Kourakis CJ in Adnyamathana Traditional Lands Association & Ors v Rangelea Holdings Pty Ltd:[8]

    In Rouse v IOOF Australia Trustees Limited, in the context of an application seeking trust documents ancillary to appoint an inspector, Doyle CJ noted that the rights of beneficiaries at general law to inspect trust documents are not unqualified and that there are circumstances in which a limited discretion to refuse inspection may arise, on such grounds of confidentiality and/or privilege. However, Doyle CJ emphasised that the discretion to withhold trust documents from inspection by a beneficiary must always be limited by the trustee’s general duty of disclosure.

    (Footnotes omitted)

    [8] [2023] SASC 51 at [137].

21. The master found that it was appropriate to make the orders sought in FDN 18 as part of the Court’s supervisory jurisdiction, to ensure that the Court’s process was not thwarted.

22. The Master also considered, however, that it was appropriate to make orders on the Originating Application. She said:[9]

    Therefore, even though the Originating Application has been resolved by consent, it is appropriate to make the orders as sought in the Originating Application and then, to ensure compliance with that order, an interlocutory order should be made akin to a Kadlunga[10] list. This then permits the Court and the [respondents] to ensure that the [appellant] has, in fact, produced all such Trust records.

    [9] Reasons, 31 August 2023 at [20].

    [10]   Kadlunga v Electricity Trust of South Australia (1987) 43 SASR 313.

23. The master then made an order on the Originating Application in terms of Order 1, set out above, and orders on the Interlocutory Application in the terms sought in FDN 18. This extended to an order (Order 3) that to the extent that the appellants claimed privilege on any of the documents listed in Order 2, they were to furnish to the Court, with a copy to the respondents, a list specifying each document effectively in the form of a Kadlunga list.

24. It is to be recalled that the orders on the Originating Application included an order that the appellant produce:

    All documents prescribed by Regulation 5 for the period commencing 17 May 2012…

25. The appellant’s appeal is against all three orders in their entirety.

    The appeal

    Whether the master’s decision was interlocutory or final

26. The Notice of Appeal expressed the appeal to be brought as of right under s 50 of the Supreme Court Act1935 (SA) and r 212.3(1)(a) of the Uniform Civil Rules 2020 (SA), on the basis that the judgment under appeal was a final decision. On that basis, the appeal would be heard by the Court of Appeal or a single judge if the Court of Appeal so directs. The Notice of Appeal alternatively expressed the appeal to be by way of leave under s 50 and rr 212.2(1)(a) and 213.1(1)(a), to be heard by a single judge on the basis that the subject of the appeal is an interlocutory decision. Orders 2 and 3 of the master’s orders were made on the Interlocutory Application, FDN 18.

27. When the matter was called over in the Court of Appeal, the appeal was remitted to a single judge insofar as was necessary to do so.

28. The diffidence expressed in the Notice of Appeal is understandable. Order 1 was made on the Originating Application; indeed, it gave all of the substantive relief sought on that application. The immediate question that arises is the utility that Orders 2 and 3 could then have had. That question is better explored in consideration of the substantive issues raised on the appeal. Insofar as leave is required to appeal against those orders, that can be explored together with the question of utility.

    Whether the master erred in finding that the proceeding had been resolved by consent and, in so doing, deny the appellant procedural fairness in finally determining the proceeding

29. This complaint takes issue with the master’s statement, quoted above, to the effect that even though the Originating Application had been ‘resolved by consent’, it was appropriate to make the orders as sought on that application. The master then made the orders sought on FDN 18 ‘to ensure compliance’ with that order. Then, notwithstanding that orders were made on the Originating Application, the matter was listed for a directions hearing.

30. The appellant contested the statement that the Originating Application had been resolved by consent. Its position was that it had not been. Indeed, the hearing before the master was only, on its understanding, on the Interlocutory Application. The appellant complained on appeal that there should have been a trial of the Originating Application. That the master made the orders as sought must mean that she had effectively found that the Trustee had failed to produce records for inspection.

1. The underlying difficulty, in the appellant’s submission, is that Order 1, made in the exhaustive terms that it was, leaves no room for a trial on the obligation to produce for inspection, claims of privilege or the Trustee’s discretion to withhold privileged materials from production. The final order has been made and the Trustee has not been heard on those questions.

2. Further, the appellant’s position is that a large number of documents have been made available for inspection and copying, including documents within the list of SAM-1 documents.

3. The appellant submitted that it appeared that the master’s discussion about the originals of the minutes that have not been produced, of which she was critical on the basis that they fell with Regulation 5(1)(g), caused her to make the broad orders on the Originating Application. This, in the appellant’s submission, denied it a trial of all the issues that it wished to raise in respect of certain records.

4. There is force to this submission. The hearing was ostensibly on the Interlocutory Application to provide a list of documents. What, then, was the reason for the final order?

5. The respondents suggested an explanation which I am inclined to accept. While I cannot see that that was correct to say that the Originating Application had been resolved by consent, this appears, as the respondents submitted, to be a reference to the existence of a demand for Trust documents and consequent production of Trust documents for inspection. That is to say, the appellant did not dispute its obligation to produce Trust documents and purported to have done so. The remaining dispute lay only in whether it had actually complied with that obligation.

6. Indeed, it is to be recalled that Ms King had insisted in correspondence that her client had complied with its obligations and demanded that the Originating Application be discontinued.

7. A further difficulty with this final order is that it appears that the master contemplated continued supervision of the Trustee’s obligation, to ensure that it complied with Order 1. That was to be effected by requiring, in the first instance, production of the list ordered on FDN 18. I apprehend that the master proposed to hear further argument on whether certain documents had been provided already, whether certain documents existed at all and claims of privilege. However, such a proposed course would indicate that Order 1, which in its breadth requires production to the respondents of all Trust records for the period commencing 17 May and following, regardless of claims of privilege, etc., was premature.

8. Ultimately, the respondents did not seek to defend Order 1. They had not sought that it be made on the Interlocutory Application; this order was made on the master’s own initiative. The respondents’ concern is the production of the list as sought on FDN 18, so that they can focus upon those documents that they say should or would likely exist, but which have not been produced.

9. I allow the appeal on Ground 1.2 and set aside Order 1. I accept that the appellant has not had a trial capable of supporting Order 1.

10. Having said that, at one point in the argument I inquired of senior counsel for the appellant whether I could make orders requiring production of the originals of the minutes of 16 April 2017 and 10 February 2018. Senior counsel did not dispute that the obligation to produce extended to originals, but in submitting that this issue had to go to trial, offered a third justification for refusing to provide the originals:

    … the minutes – for example, April 2017 minute … is more like a family discussion about succession planning. There is no formal resolutions about trust property. There’s indications about things that might occur. So, strictly speaking it’s not a trust record …

11. This is a very different justification from the contention before the master that these were company documents, rather than Trust documents.

12. The matter was not pursued in argument before me, and I accept that the order for production was in any event premature. I simply note that the Trustee has now recorded three different justifications for its refusal to produce the originals of the minutes, in circumstances where it has long since provided copies. However, the status of the originals of the minutes was not an issue raised for determination on the appeal. To the extent that the Trustee continues to refuse to produce the originals (and I note that it has never said that the originals do not exist or are no longer in its possession, even when it appeared to accept that they were Trust records), their amenability to production must go to trial.

    Whether the master erred in ‘implicitly’ finding that the appellant had failed to comply with s 84B of the Trustee Act such as to permit an exercise of the inherent supervisory jurisdiction of the Court to make orders for production of prescribed trust records

13. This issue can be dealt with shortly. The master did not ‘implicitly’ find that the Trustee had failed in its obligation to produce the originals of the minutes of 16 April 2017 and 10 February 2018. She found the Trustee was required to produce those originals. However, for the reasons set out above, this appears to have been the springboard for Order 1 in its full breadth. I have already found that Order 1 cannot stand and, as I have noted, the respondents did not ultimately seek to defend that order.

14. There is no need to determine whether there was an implicit finding as to whether the Trustee had otherwise failed to comply with its obligations under s 84B of the Trustee Act.

    Whether the master erred in making orders on an interlocutory application that ‘did not conform’ with the statutory duty imposed by s 84B of the Trustee Act

15. The appellant’s essential complaint here is that the master had no power to order production of the list as framed in Orders 2 and 3. The first basis of complaint was that the master having found that the Originating Application had been ‘resolved by consent’ and having made Order 1, it was illogical to make orders in the terms sought by FDN 18 as a mechanism ‘to ensure that the [appellant] has, in fact, produced all such Trust records’.[11]

    [11] Reasons, 31 August 2023 at [20].

16. While the order for a Kadlunga-style list (Order 3) was expressed to be in aid of ensuring compliance with Order 1, the order for production of a list of the SAM-1 documents (Order 2) was given a broader justification. Having addressed the issue of the originals of the minutes, the master turned, briefly, to the discretion of the Trustee to claim privilege. She referred to Kourakis CJ’s comments in Adnyamathana Traditional Lands Association & Ors v Rangelea Holdings Pty Ltd[12] on the subject of the Trustee’s general duty of disclosure and the limited discretion to refuse inspection. It was by reference to that consideration that the master concluded, that:[13]

    For the above reasons, it is appropriate for the Court to make the orders sought in the interlocutory application (FDN 18) as part of the Court’s overarching supervisory jurisdiction. This is to ensure that the Court’s processes is not thwarted.

    [12] [2023] SASC 51 at [137].

    [13] Reasons, 31 August 2023 at [19].

17. It was only after drawing that conclusion that the master turned to Order 1. In any event, I have determined to set Order 1 aside. The question remains whether the Court had power to make Orders 2 and 3 on the Interlocutory Application at all and, if it did, whether such orders were ‘appropriate’.

18. In Adnyamathana Traditional Lands Association & Ors v Rangelea Holdings Pty Ltd,[14] Kourakis CJ observed:[15]

    Section 84B(2) of the Trustee Act renders it an offence not to produce and allow inspection of the prescribed records. It does not expressly empower the Court to order access to those records. The failure may, of course, constitute strong grounds to exercise other of the powers which are conferred on the Court. Additionally, the exercise of this Court’s inherent general law jurisdiction to supervise trusts and order production of trust records must conform to the statutory duty imposed by s 84B of the Trustee Act.

    [14] [2023] SASC 51.

    [15]   Adnyamathana Traditional Lands Association & Ors v Rangelea Holdings Pty Ltd [2023] SASC 51 at [124].

19. His Honour reviewed in some detail the cases that considered the jurisdiction of this Court to order access to trust records.[16] That jurisdiction was not in contest on this appeal. His Honour concluded:[17]

    The entitlement accorded by the general law to trust account records is reinforced by the obligation conferred by s 84B of the Trustee Act such that in the absence of exceptional countervailing considerations an order will generally be made on the application of a beneficiary granting access to records prescribed for the purposes of that section.

    [16]   See Adnyamathana Traditional Lands Association & Ors v Rangelea Holdings Pty Ltd [2023] SASC 51 at [127]-[146].

    [17]   Adnyamathana Traditional Lands Association & Ors v Rangelea Holdings Pty Ltd [2023] SASC 51 at [146].

20. The appellant submitted that the requirement that the inherent jurisdiction of the Court to supervise trusts must conform to the statutory duty in s 84B meant that there was no power to order production of a list of documents, require a trustee to answer interrogatories about those documents or to produce those documents for inspection for ruling on claims of privilege. There is no such obligation in the Act or Regulations.

21. The appellant further submitted that to make an order in the terms of FDN 18 would be to risk classifying documents as trust records when they are not, and to give the beneficiaries ‘too great a right to examine the activities of trustees outside of the proper ambit of the Act and the Regulations’. It then submitted:

    The interlocutory process of discovery whereby parties file lists of documents is inapt for an originating proceeding seeking production and inspection of prescribed trust records. The function of interrogatories supplement discovery in seeking the admission of facts but interrogation does not feature as part of the statutory duty.

22. The reference to interrogation here was to that component of the order requiring the Trustee to state ‘Nil held’ where documents in the described category did not exist.

23. The appellant then submitted that as the inherent jurisdiction had to conform with the statutory duty, it incorporated no power to order the production of lists of documents or interrogatories. It submitted that Chapter 8 of the Uniform Civil Rules made no such provision. Neither did the Interlocutory Application identify any power.

24. The appellant also indicated that it had not identified any authority in the context of a proceeding for production of trust records where there had been a final order for production of trust records, coupled with an interlocutory order for discovery and interrogatories.

25. This last observation can be put to one side. Given that Order 1 is to be set aside, the question is whether the Court has power to order a list of documents and so-called ‘interrogatories’ at all. The essential argument of the appellant is that orders of this kind cannot form part of the inherent jurisdiction as to make them would pre-empt the actual jurisdiction to order production. As senior counsel for the appellant put it:

    There would need to be submissions put and determinations made, including factual findings as to whether the categories sought – and let’s just assume hypothetically it is in line with SAM-1 – it would still need to be dealt with in the usual way because otherwise if the order stays as it is, it pre-empts the arguments we would put at trial.

26. The appellant submitted that orders in these terms would be to give relief akin to discovery in the action, where the only relief sought is that in the terms of Order 1. The pre-emptive nature of such orders was illustrated, in its submission, by the position it has taken with respect to certain documents not being trust documents. As all issues remained ‘in play’, and the Trustee’s position being that it had complied with its obligation by production of the 27 folders, the appellant submitted:

    In theory, if you applied the order literally it would be nil held.

27. The Trustee’s submission was that the appropriate course would, rather, be for the respondents to amend their Originating Application to seek production of the SAM-1 documents, and a trial could be had on the existence of and amenability of those documents to production.

28. I accept that the respondents, by filing and prosecuting FDN 18, have attempted to find a way through what they perceive to be obstruction and obfuscation by the Trustee. That perception is understandable. The Trustee has provided inconsistent justifications for refusing to produce certain documents. Its assertion that it is not required to produce originals is manifestly incorrect. The documents that the Trustee did produce were intermingled with documents personal to the directors or otherwise unrelated to the Trust. The Trustee has also attempted to place unlawful restrictions on the ability of the respondents to inspect and copy Trust records.

29. The list of SAM-1 documents is the respondents’ attempt to isolate, broadly, what they think should exist but have not had disclosed to them. That non‑disclosure has been met variously with claims that some of the documents may not exist, that some are company documents rather than trust records (then before me that those same documents are records of a ‘family discussion and succession planning’), and with a blanket claim of legal professional privilege over all legal advice.

30. However, the Interlocutory Application carries its own difficulties. First, the Originating Application, which it is to be recalled was filed on 10 March 2023, and which sought production of all documents in the broadest of terms, was overtaken by the events surrounding Mr Morphett’s inspection on 28 April 2023. Whatever criticisms may be made of the Trustee’s conduct on and around that and on previous occasions, documents were produced for inspection. Mr Morphett’s efforts resulted in the creation of the SAM-1 documents list. On the evidence presently before the Court, those documents, to the extent they exist, are the focus of the respondents’ concerns. However, the respondents have not amended the Originating Application or otherwise defined the issues for final determination.

31. A further difficulty lies in what the appellant has described as the obligation that Orders 2 and 3 place on it to pre-empt the orders of the Court. In order to comply with those orders, the appellant necessarily has to take a position as to what is and what is not a Trust record. That is, of course, a fundamental obligation of the appellant. However, to produce a list of Trust documents pursuant to an order, where what is a Trust record remains in dispute, does not advance the dispute (on the assumed basis that the dispute centres on the SAM-1 documents). For example, assuming that the Trustee maintains its position that the originals of the minutes of 16 April 2017 and 10 February 2018 are not Trust records, Order 2 would require it to state, in respect of those documents, ‘Nil held’. That would not advance the proceedings. Alternatively, if the intention of Order 2 is that the appellant must list those documents, an order in those terms would prejudge the issue.

32. Having said that, I do not accept that the Court has no power in any circumstance to order the provision of a list of documents or, where it would facilitate claims of privilege or the appropriateness of the Trustee’s exercise of a discretion to claim privilege, a Kadlunga list. While it is true that the Trustee’s substantive obligation is prescribed by s 84B of the Trustee Act, and that section imposes no obligation to produce a list of documents, to suggest that this section defines the limits of the Court’s power is misconceived.

33. I accept Kourakis CJ’s statement that the Court’s inherent power to supervise trusts and order production of trust records must conform to the statutory duty imposed by s 84B.[18] However, s 84B does not confer a power to order production of records any more than it does to provide a list of documents. Rather, the Court has an inherent general law jurisdiction to supervise trusts and order production of trust records. Its ability to supervise a Trustee’s obligations and to ensure that it has complied with its obligations under s 84B may be assisted, in certain circumstances, by ordering a list of documents.

    [18]   Adnyamathana Traditional Lands Association & Ors v Rangelea Holdings Pty Ltd [2023] SASC 51 at [124].

34. Further, UCR r 86.4, which falls within Chapter 8 of the Uniform Civil Rules, makes provision for such orders on an Originating Application. The only question is whether, in a given case, such an order should be made in service of the Court’s inherent supervisory jurisdiction. I reject the appellant’s submission that no such power exists just because the Trustee Act imposes no corresponding obligation.

35. Thus, for example, situations will arise where a trustee is in possession of legal advice and exercises its discretion to claim privilege over that advice, even as against a primary beneficiary. It will likely be necessary for the trustee to identify the advice with a sufficient description to enable the Court to assess the claim of privilege and whether it is consistent with the trustee’s obligations to the beneficiaries as a whole to assert the privilege against certain beneficiaries. Recalling the statement of Doyle CJ in Rouse & Ors v IOOF Australia Limited:[19]

    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. 

    (Emphasis added)

    [19] (1999) 73 SASR 484 at 101.

36. It is difficult to see that the Court could determine a dispute over whether a trustee has such an entitlement in a particular case if the argument were to proceed on no more than an abstract claim of privilege over unidentified and undescribed legal advice. The Trustee here has not identified the legal advice in its possession with any precision, nor why it is in the interests of the beneficiaries as a whole for it to assert privilege over legal advice against the respondents, who were directors of the Trustee for most, if not all, of the relevant period.

37. That said, what I am describing is the application of an orthodox process of discovery in service of defined issues, in furtherance of determination of an Originating Application. Whether such a process would be necessary depends on the issues. By contrast, the orders sought on FDN 18, while having a forensic basis in the form of Mr Morphett’s affidavit, are not made in the service of defined issues in the proceeding. As I have already noted, the Originating Application remains unamended, notwithstanding that numerous Trust records have been produced.

38. In circumstances where a dispute remains over whether certain records are Trust records at all, the orders made on FDN 18 cannot, in my view, advance the proceeding. It is first necessary that the remaining issues be defined in the proceeding. That could be done by the respondents amending the Originating Application in light of what has been produced for inspection, confining the issues by affidavit or by filing points of claim that effectively narrow its scope. It will then be for the appellant to respond, either by way of affidavit or points of defence (as the case may require), in respect of each document or category of document sought on the amended Originating Application. Given the history of this matter, the appropriate process for defining the issues may need to be directed by the Court at first instance.

1. Ms King’s affidavit of 8 May 2023, which deals only in generalities (such as asserting blanket privilege over all legal advice), is inadequate to that task. However, the Trustee has not yet had to respond to an application, in terms, to produce the SAM-1 documents. The Trustee has simply responded that it has produced everything it is obliged to produce, given the terms of the unamended Originating Application.

2. Once the issues are joined in a manner determined by the Court, it may then be appropriate to order, pursuant to r 86.4, provision of a list of documents held by the Trustee containing legal advice. It may also be appropriate to order the Trustee to produce a Kadlunga list in respect of those documents. These steps may enable assessment of any claim of privilege and the consistency of any such claim with the Trustee’s obligations to the beneficiaries as a whole.[20] A list might also be appropriate if there is some other category of document in respect of which the Trustee clarifies is a Trust document but claims to be immune from production. However, a mere wholesale order for discovery of the SAM-1 documents would likely run into the same difficulty of pre-emption that lies with Orders 2 and 3.

   [20]   See for example, Oxer v Astec Paints Pty Ltd (No 2) [2006] SASC 271 at [21] (Master Lunn).

3. Notwithstanding the patently unsatisfactory approach taken by the Trustee to its obligations in correspondence, in my view Orders 2 and 3 on FDN 18 pre‑empt the trial of whether the SAM-1 documents, such as may exist, are Trust records at all. They either effectively assume that the described documents are Trust documents or will necessarily result in the Trustee returning a response ‘Nil held’. A response in those terms would be consistent with the position the Trustee has hitherto taken. While aspects of that position are questionable, such as the Trustee’s evolving and inconsistent position with respect to the original minutes of 16 April 2017 and 10 February 2018, the Trustee must be allowed a trial on the issues it raises.

4. It was necessary for the issues on the Originating Application to be defined following Mr Morphett’s inspection, and a trial conducted on those defined issues. The merits of the position the Trustee has taken cannot be finally determined here.

5. It follows that in my view, in making Orders 2 and 3 on FDN 18, the master erred.

   Conclusion

6. I grant leave to appeal insofar as is necessary. I allow the appeal on Grounds 1 and 4.2. I set aside the master’s order of 31 August 2023.