What did the Federal Court say when it recently considered joint legal professional privilege?

In Kayler-Thomson v Colonial First State Investments Limited (No 2),[1] the Federal Court considered the issue of joint legal professional privilege and confirmed that it can only be waived by the actions of all holders of the privilege.

Background

Mr Keith Kayler-Thomson (Mr Kayler-Thomson) was an applicant in representative proceedings brought against Colonial First State Investments Limited (Colonial) and other parties, including the Commonwealth Bank of Australia.

The claims made against Colonial concerned its conduct as the trustee of two superannuation Funds (Funds), being the Colonial First State FirstChoice Superannuation Trust (FirstChoice Fund) and the Commonwealth Essential Super Fund (Essential Fund).

Colonial provided discovery of documents in the proceeding but claimed that legal professional privilege applied to a large number of the discovered documents. It resisted the inspection of those documents by the solicitors acting for Mr Kayler-Thomson.

Mr Kayler-Thomson argued that based on the information available, many of the documents appeared to concern the management or the administration of the Funds. He claimed that his status as a beneficiary of the Funds, and the status of the beneficiaries of other group members in the representative proceedings, resulted in any privilege to those documents being a joint privilege. He applied for orders that Colonial produce those documents for inspection.

There was no issue between the parties as to the validity of the claim for privilege. The issues concerned the application of the relevant principles concerning joint privilege that may exist as between a trustee and beneficiary. Whilst the existence of such a joint privilege is well established, issues arose in the present case as to the extent of the privilege and its application to the privileged documents discovered by Colonial. A further issue concerned the extent to which a representative applicant might obtain access to documents on the basis of a claim to joint privilege, by members of the represented class that do not include the representative applicant.

Legal professional privilege belongs to those who join together to seek legal advice. The relevant principles concerning joint legal professional privilege between a trustee and beneficiary were summarised by Justice Buss (Justice McLure agreeing) in Schreuder v Murray (No 2).[2] His Honour stated that “legal advice privilege or litigation privilege…may not be invoked by the trustee client against a beneficiary of the trust if the trustee and the beneficiary have a joint privilege in relation to the confidential communications, information or documents in question“.[3] His Honour went on to say that “there will be joint privilege if:

1. the confidential communications, information or documents relate to legal services in connection with the management or administration of the trust; and
2. the trustee (in his or her capacity as trustee) and the beneficiary (in his or her capacity as a beneficiary, and either alone or as a member of a class of beneficiaries) have a joint interest in the subject matter of those confidential communications, information or documents when they occur or come into existence“.[4]

Accordingly, in order for Mr Kayler-Thomson to succeed on the application, he had to demonstrate that he had an interest in the management and administration of the Funds at the time the documents came into existence.

Colonial bore the evidentiary onus as it was the party asserting the claim to privilege.[5] Colonial was required to show that not only were the documents privileged, but that they were privileged from production to Mr Kayler-Thomson.

The Court held that:

1. There was no joint privilege held by Mr Kayler-Thomson in respect of legal advice obtained by Colonial in the management and administration of the Funds on behalf of other persons in the representative proceedings. The Court considered there may have been a joint privilege between some of the beneficiaries, but not others, including Mr Kayler-Thomson. Two difficulties confronted Mr Kayler-Thomson. First, it is a well-established principle that a joint privilege can only be waived by the actions of all holders of the privilege. Secondly, Colonial had a common law right against all persons who were not joint holders of privilege to refuse to produce the documents. The provisions of Part IVA of the Federal Court of Australia Act 1976 (Cth) concerned with representative proceedings contain no express provision altering the common law right to legal professional privilege.
2. There was no joint privilege held by Mr Kayler-Thomson in his personal capacity in respect of the legal advice obtained by Colonial as the documents in question were brought into existence before he invested in the ‘Deposit Options’.

Accordingly, Mr Kayler-Thomson was not entitled to the documents in question and the application was dismissed.

Key takeaway

Joint privilege arises where more than one party seeks advice, or advice is sought by a party acting in a capacity where the party has a duty or obligation to disclose to others the content of the advice. It can only be waived by the actions of all holders of the privilege. Mr Kayler-Thomson had no personal right to joint privilege. The disputed documents were not required to be delivered up for inspection.

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Authored by:

Scott Couper, Partner
Sandra Camilleri, Senior Associate

[1] [2021] FCA 854.

[2] [2009] WASCA 145; (2009) 41 WAR 169.

[3] [2009] WASCA 145; (2009) 41 WAR 169 at [94(c)].

[4] [2009] WASCA 145; (2009) 41 WAR 169 at [94(c)].

[5] Hancock v Rinehart [2016] NSWSC 12 at [5].