The Presbyterian Church of Victoria Trusts Corporation v Anstee
[2014] VSC 426
•12 September 2014
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
S CI 2013 03222
BETWEEN
| ATTORNEY-GENERAL OF VICTORIA on the relation of THE PRESBYTERIAN CHURCH OF VICTORIA TRUSTS CORPORATION |
| THE PRESBYTERIAN CHURCH OF VICTORIA TRUSTS CORPORATION | Plaintiffs |
| and | |
| DOROTHY RAE ANSTEE, JAMES FREDERICK NUSKE, BRUCE CHARLES EVANS, HELEN ANNE HOLMAN AND PAUL LINDSAY KERSS as Trustees of the Scots’ Church Properties Trust and as Trustees of the Assembly Hall of the Presbyterian Church of Victoria | First to Fifth Defendants |
| and | |
| DOUGLAS SHERMAN in his capacity as representative of the Board of Management of the Scots’ Church Melbourne | Sixth Defendant |
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JUDGE: | SIFRIS J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 22 August 2014 |
DATE OF JUDGMENT: | 12 September 2014 |
CASE MAY BE CITED AS: | The Presbyterian Church of Victoria Trusts Corporation v Anstee & Ors |
MEDIUM NEUTRAL CITATION: | [2014] VSC 426 |
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EVIDENCE – Privilege – Legal professional privilege – Degree to which privilege waived.
EVIDENCE – Privilege – Legal professional privilege – References to legal advice in pleadings – Evidence Act 2008 (Vic) s 122.
EVIDENCE – Privilege – Waiver of privilege.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr M W Shand QC with Ms C G Rome-Sievers | Lewis Holdway |
| For the Defendant | Mr A J Kelly QC with Mr D G Guidolin | Marsh & Maher |
HIS HONOUR:
Introduction and background
The plaintiffs have brought this proceeding against the defendants as trustees of the Scots’ Church Properties Trust (‘the SCPT’), a trust for charitable purposes that benefits both the Scots’ Church and its congregation, and the wider Presbyterian Church of Victoria. The SCPT holds the Scots Church, Collins Street, Melbourne and various neighbouring commercial properties. The plaintiffs allege that the defendants hold the Assembly Hall, also on Collins Street, on a separate trust, although this is disputed.
Under the “sixthly” provision of clause 7 of the SCPT Trust Deed, after the specific deductions prescribed, the net revenue of the commercial properties of the SCPT is to be divided into two parts. One half is for the benefit of the Presbyterian Church of Victoria and is to be applied for home mission and church extension purposes in Victoria and the other half is for the benefit of the Scots’ Church Board of Management and is to be applied for certain prescribed purposes including the maintenance improvement or enlargement of the Church, of any mission halls and premises in connection with the congregation, or any other purpose approved of by the General Assembly of the Presbyterian Church of Victoria.
At paragraph [37] of the statement of claim dated 21 June 2013, the plaintiffs have pleaded the relevant duties of the Trustees of the SCPT, being their duties as trustees of a charitable trust –
(a)strictly to observe and carry out the terms of the Trust,
(b)to apply the property of the Trust only for the purposes of the Trust,
(c)to keep the property of the Trust separate from other property,
(d)to act impartially between the charitable purposes of the Trust and between those purposes and any beneficiary, and
(e)to discharge the duties in respect of accounting and obedience referred to in paragraphs [25]-[30] and [94]-[96] of the statement of claim.
At paragraph [121] of the statement of claim, the plaintiffs having pleaded the relevant facts plead the following breaches of trust –
(a)granting a mortgage over the Assembly Hall, and other securities over the commercial properties to secure borrowings of $5m from Westpac for the redevelopment and refurbishment of the Assembly Hall;[1]
[1]In breach of the trusts in clause 6 of the SCPT Trust Deed (as to the power to mortgage the commercial properties or the Collins Street Scots’ Church site), and clauses 5 and 6 of the Assembly Hall Trust (as to the power to mortgage the Assembly Hall). See Part 8.5 of the statement of claim, in particular at paragraphs [68]-[69].
(b)from ‘1 July 2007 to date’, making unauthorised deductions from the annual moneys distributable under clause 7 of the SCPT Trust Deed, including –
(i)deductions for Assembly Hall expenses, including for its extensive redevelopment and refurbishment, amounts set aside for depreciation, amortisation and impairment in respect of this redevelopment and refurbishment, and other miscellaneous Assembly Hall expenses;[2]
[2]Ibid [72]-[74].
(ii)sundry other deductions including choral scholarship, rent and accommodation costs for the minister and function expenses;[3]
[3]Ibid [75]-[76].
(iii)deductions for ministers’, stipends in excess of the amount allowed to be deducted under the terms of the Trust Deed;[4]
(iv)deductions for a collegiate charge in excess of the amount allowed to be deducted under the terms of the Trust Deed;[5]
and failing or refusing to acknowledge that they are not authorised to make these deductions, and signalling and intending to continue to make deductions of a like kind from the annual moneys distributable under clause 7;[6]
(c)from ‘1 July 2007 to date’, creating and maintaining a Redevelopment Reserve without the authority to do so under the Trust Deed or otherwise;[7]
(d)failing to account, for the years 2008-2012, and to obey directions of the General Assembly given on 9 October 1999;[8]
(e)failing to pay the second plaintiff commission due under clause 4 of the SCPT Trust Deed;[9] and
(f)failing to bring to account under clause 7 of the SCPT Trust Deed the $5.5 million in lease premium moneys.[10]
[4]Ibid [77]-[79].
[5]Ibid [80]-[82].
[6]Ibid [88].
[7]Noting that the ‘fourthly’ provision of clause 7 confers a limited power to set aside a fund for a different purpose. Ibid [89]-[93].
[8]In breach of clause 8 of the SCPT Trust Deed. Ibid [94]-[102].
[9]Ibid [112]-[115].
[10]Ibid [116]-[120].
In their defence, the defendants deny paragraph 121 of the statement of claim, and at subparagraphs 121(a)-(f) of the defence, cross-refer to the allegations they make in response to each allegation of breach of trust. Included in these cross-references are references in paragraphs 67, 73, 78 and 93(f) to certain legal opinions and advices which the defendants allege to have had regard to and reasonably relied on in acting as they did. Copies of these privileged documents have already been produced to the plaintiffs.
Then at paragraph 121(g) of the defence, the defendants plead a general exoneration defence, alleging that:
at all times the Trustees acted on the advice of their solicitors and counsel, honestly, reasonably and in the best interests of the SCPT and they, and each of them, whether upon general equitable principles or pursuant to s 67 of the Trustee Act 1958 (Vic), ought to be excused for any alleged breach of Trust (which is denied);
Particulars
The Trustees refer to and repeat the matters in paragraphs 65-69, 72-88, 89-93, 94-96, 112-115, and 116-120 above and the particulars thereunder.
The claim for privilege
Although the parties have reached substantial agreement in relation to the plaintiffs’ claim for production and inspection of documents that the defendants’ claims are privileged, there remains a dispute in relation to 30 documents. They are recorded in schedules 1 and 2 attached to the defendants’ submissions. By consent of the parties I have inspected all of the documents (‘Privileged Documents’).
In summary, the plaintiffs contended as follows:
(a)By pleading the exoneration defence in paragraph 121(g) of their defence, part of which expressly relies on some of the legal advice received, the defendants have waived any privilege to all of the documents in question and whether or not specifically referred to. In mounting this defence, the defendants have made multiple assertions about – and put in issue for the determination of the Court – their states of mind and the reasonableness of their conduct at the time of the multiple and repeated alleged breaches of trust. They have thus laid open to scrutiny otherwise confidential and material communications.
(b)The defendants’ conduct in so pleading is inconsistent with the maintenance of the confidence. The inconsistency is informed by the forensic unfairness of allowing this defence to proceed without disclosure of all of the documents.[11]
(c)These documents are material advices to which the defendants had access at the relevant times which may have contributed to the states of mind they each in fact held and to the reasonableness or otherwise of their conduct.
(d)The defendants cannot be selective as to which advices they will disclose and which they will not, given the breadth of this defence and the various assertions made as part of it. The plaintiffs cannot test their assertions, and indeed the Court cannot soundly determine those issues, without disclosure.
[11]Reference was made to DSE (Holdings) Pty Ltd v Intertan Inc and Another [2003] FCA 384; (2003) 127 FCR 499 where Allsop J conducted an extensive review of the jurisprudence as to implied waiver, and wrote an authoritative judgment which is oft-cited. The submission adopts the test as explained by Allsop J (at 519, [58]). This test was cited and applied in concluding that s 122(2) of the Evidence Act 1995 (NSW) applied in Hannaford v The RSPCA, NSW [2013] NSWSC 1708 [150]-[151] (‘Hannaford’).
The defendants contended that the particulars to paragraph 121(g) of the defence deliberately refers to and repeats the matters and particulars in paragraphs 65-69, 72-88, 94-96, 112-115 and 116-120 of the defence, none of which refer to any of the Privileged Documents. The specific legal advice expressly referred to in these paragraphs, as well as any documents associated with those advices which are in the defendants’ power, possession and control, have been made available for inspection.
Accordingly, the pleading in paragraph 121(g) of the defence is not inconsistent with the maintenance of the confidentiality in the Privileged Documents.
The law
Relevantly, s 122 of the Evidence Act 2008 (Vic) (‘the Act’) provides:
(1)This Division does not prevent the adducing of evidence given with the consent of the client or party concerned.
(2)Subject to subsection (5), this Division does not prevent the adducing of evidence if the client or party concerned has acted in a way that is inconsistent with the client or party objecting to the adducing of the evidence because it would result in a disclosure of a kind referred to in section 118, 119 or 120.
(3) Without limiting subsection (2), a client or party is taken to have so acted if –
(a)the client or party knowingly and voluntarily disclosed the substance of the evidence to another person; or
(b)the substance of the evidence has been disclosed with the express or implied consent of the client or party.
(4) …
(5) …
It is common ground that by reason of ss 4 and 131A of the Act, s 122 of the Act applies to this question, arising at this interlocutory stage.[12]
[12]See Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Ltd [2013] HCA 46; (2013) 250 CLR 303 [32] (‘Expense Reduction’) quoted and also applied in Hannaford [20]. For a Victorian illustration see the decision of Digby J in QUBE Logistics (Vic) Pty Ltd v Wimmera Container Line Pty Ltd [2013] VSC 695.
In Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Ltd[13] the High Court made it clear that whilst the circumstances in which privilege may be lost under s 122 of the Evidence Act are not identical to the corresponding common law principles[14], the common law principles as to implied waiver laid down by the High Court in 1999 in Mann v Carnell[15] - in particular as to consideration of fairness – ’apply with equal force to the statutory question posed by s 122(2) of the Evidence Act.’[16]
[13][2013] HCA 46; (2013) 303 ALR 199 [31]-[32]; quoted with approval in Hannaford [2013] NSWSC 1708 [20].
[14]As was recognised in Mann v Carnell [1999] HCA 66; 201 CLR 1 (‘Mann v Carnell’).
[15]Ibid at [29].
[16]Expense Reduction [31]-[32].
The statutory question posed by s 122(2) of the Act is: whether the client or party “has acted in a way that is inconsistent with the client or party objecting to the production of a document”.[17]
[17]Ibid [32].
What was established by the High Court in Mann v Carnell[18] and repeatedly applied by the Courts on this issue, including in applying the s 122(2) test,[19] is that whilst the key principle is inconsistency and the analysis does not involve ’some overriding principle of fairness operating at large’, it is considerations of fairness which inform the court’s assessment of the inconsistency between the act of a party and the maintenance of confidentiality.[20]
[18]Mann v Carnell [29].
[19]See for example Expense Reduction, above n 16-17 and Hannaford above n 13.
[20]DSE (Holdings) Pty Ltd v Intertan Inc [2003] FCA 384; (2003) 127 FCR 499 [14]. In Chaina v Presbyterian Church (NSW) Prompter Trust (No. 9) [2013] NSWSC 212 [9], Davies J observed on this issue that the Victorian Court of Appeal still saw a ‘place for fairness in some cases; Secretary of Departments of Justice v Osland [2007] VSCA 96 at [19]’.
In the joint reasons in Osland v Secretary of Department of Justice,[21] Gleeson CJ, Gummow, Heydon and Kiefel JJ confirmed that the judgment as to whether there is inconsistency (between the conduct of the privilege-holder and the confidentiality which the privilege is intended to protect) ‘is to be made in the context and circumstance of the case, and in the light of any considerations of fairness arising from that context or those circumstances’[22]. Questions of waiver are matters of fact and degree.[23]
[21][2008] HCA 37; (2008) 234 CLR 275 (‘Osland’).
[22]Ibid 297 [45].
[23]Ibid 297 [49].
Have the defendants waived privilege?
Although the matter is not free from difficulty, I do not consider that in the particular circumstances of this case, the defendants have waived privilege in relation to the documents referred to.
It is obvious that the defendants cannot maintain the confidentiality of those documents that they specifically refer to as providing the basis on which they acted. They have not sought to do so. To do so would be to act inconsistently. The documents in respect of which privilege is claimed are different. They are specifically not relied on by the defendants and to maintain confidentiality would not be to act inconsistently. Further having read the Privileged Documents I do not consider that it would be unfair to maintain such confidentiality in the circumstances and at this stage.
The plea of exoneration does add some complexity to the matter but does not in my view alter the position. The facts and documents underpinning the claim are particular and specific and do not embrace the Privileged Documents. The case is not a general review of the conduct of the Trustees. It is directed to specific and identified breaches. The pleadings and issues are specific.
Accordingly, I do not propose to order production and inspection of the Privileged Documents.
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