Supreme Court New South Wales Medium Neutral Citation: Du Maurier v Wechsler [2012] NSWSC 138 Hearing dates: 15/09/11, 15/11/2011, 16/12/11, 09/02/12 Decision date: 01 March 2011 Jurisdiction: Equity Division Before: Associate Justice Macready Decision: I order the plaintiff to produce to the defendant the advice of Mr Colin Hodgson dated 20 December 2007. Otherwise I refuse to make the directions relating to access to documents sought by the defendant. Catchwords: TRUSTS - application for judicial advice pursuant to s 63 of the Trustee Act 1925 - whether trustee justified in defending proceedings brought by a beneficiary - whether trustee would be entitled to be paid his indemnity costs from the estate - plaintiff in substantive proceedings joined as defendant - access to documents filed by trustee on application for advice Legislation Cited: Evidence Act 1995 Trustee Act 1925 Cases Cited: Australian Pipeline Ltd [2006] NSWSC 1316 Avanes v Marshall [2007] NSWSC 191; (2007) 68 NSWLR 595 Gray v BNY Trust Co of Australia [2009] NSWSC 789 Londonderry's Settlement, re [1965] 1 Ch 918 Macedonian Orthodox Community Church St Petka Incorporated v His Eminence Petar, the Diocesan Bishop of Macedonian Orthodox Diocese of Australia and New Zealand [2008] HCA 42; (2008) 237 CLR 66 Macedonian Orthodox Community Church St Petka Incorporated v His Eminence Petar, the Diocesan Bishop of Macedonian Orthodox Diocese of Australia and New Zealand [2006] NSWCA 160; (2006) 66 NSWLR 112 McDonald v Ellis (2007) 72 NSWLR 605 Schmidt v Rosewood Trust Ltd [2003] 2 AC 709 Schreuder v Murray [No2] [2009] WASCA 145 Silkman v Shakespeare Haney Securities Ltd 2011 NSWSC 148 Category: Procedural and other rulings Parties: Michael Du Maurier (plaintiff) Katie Wechsler (defendant) Representation: Mr L Ellison SC (plaintiff) Mr D Smallbone (defendant) Gadens Lawyers (plaintiff) Hunt & Hunt (defendant) File Number(s): 2011/266500 Judgment 1This is an application for judicial advice under s 63 of the Trustee Act 1925 . The advice sought is set out in paragraph 1 of the summons in these terms: 1. The plaintiff seeks the opinion, advice and direction of the Court in respect of the following questions and relies upon the statement of facts and evidence filed herein: (a) Whether the plaintiff is justified in defending New South Wales Supreme Court proceedings 2011/166639 (Proceedings) in which the plaintiff is the defendant and Katie Wechsler is the plaintiff, which proceedings arise out of the plaintiff's alleged conduct as executor of the estate of the late Mrs Gisella Fiala (the Estate); and (b) Whether, in defence of the Proceedings, the plaintiff is entitled to be paid his indemnity costs from time to time from the Estate. 2. An order that the plaintiff's costs of and associated with this application be paid for by the Estate. 3. Such further or other orders as the Court deems fit. Background 2The applicant in the proceedings is Michael Du Maurier who is the executor and trustee of the will and codicil of the late Mrs Fiala who died on 3 December 1997. Her will of 17 October 1995 and a codicil of 19 November 1997 were admitted to probate on 31 January 2001. A co-executor trustee, Mr Otto Slazenger, renounced probate. Prior to the grant of probate to Mr Du Maurier, an interim grant of special letters of administration pendent lite had earlier been made to him, as there was a contest as to the deceased's capacity in respect of the will. The contested probate proceedings seeking the grant were resolved in favour of Mr Du Maurier and an appeal from that decision was dismissed by the Court of Appeal. 3After specific bequests of jewellery and property and a legacy, the residuary estate was given to the executor trustees on trust as to 60% share for the deceased's daughter, Marika Du Maurier, the wife of Mr Du Maurier, and 40% to her younger daughter, Katie Wechsler. 4On 20 May 2011, Mrs Wechsler commenced proceedings in the Equity Division of this court against Mr Du Maurier, the plaintiff. 5The estate is reasonably substantial and at the time those proceedings commenced there had been distributions pursuant to the residuary gifts of $3,984,847.07 to Marika Du Maurier and $1 million to Katie Wechsler. 6The primary relief sought in the statement of claim is removal of the executor trustee, the appointment of a replacement trustee and a personal claim against the defendant (the present plaintiff executor trustee, Mr Du Maurier) for equitable compensation by reason of breaches of his equitable duties and waste. Mrs Wechsler complains that Mr Du Maurier has wrongly withheld from her, for years, the greater part of her share of the distributable estate, that he is guilty of unwarranted delay and waste in converting residuary estate into cash, and that even when he did convert it into cash, he still withheld the greater part of her share. She further complains that Mr Du Maurier has failed to provide proper accounts. 7Further relief is sought as follows: (a) The relief sought in the statement of claim, prayer 1(h), concerning correction of the memorial headstone at the deceased's grave; (b) The relief sought in prayers 1(k) and (l) concerning the executor's failure to comply with the provisions of the will in respect of the deceased's jewellery; (c) Mrs Wechsler asserts a separate trust by which the deceased held certain Kruger Rands and Swiss Francs on her behalf and that Mr Du Maurier knowingly received, and withheld or converted, this trust property. 8The present proceedings commenced on 18 August 2011. The initial hearing of the matter on 15 September 2011 was stood over to 15 November 2011. On that day Mrs Wechsler appeared and sought to be joined as a defendant to the proceedings. After hearing argument I ordered that she be joined as a defendant and I ordered that there was not to be any access to affidavits or documents that were to be read or tendered on the application. I also directed Mr Du Maurier to serve whatever affidavits and documents he thought appropriate to make available to Mrs Wechsler for her consideration. I also gave directions for submissions by Mr Du Maurier. 9The matter was back before me on 16 December 2011 when further affidavits were filed and the matter was fixed for further hearing on 9 February 2012. The court was also advised that Mr Du Maurier took the course that he did not wish to serve any of the material that had been read before the Court or was to be read before the Court on Mrs Wechsler. Whether the defendant should be granted access to the documents sought 10In light of Mr Du Maurier's approach Mrs Wechsler sought the following directions when the matter was before me on 9 February 2012: (1)Any statement of facts and evidence to be relied on in support of the application for advice be served upon her; (2)Any confidential opinion of counsel intended to be relied on (or already provided to the Court) be served upon her; and (3)Mr. Du Maurier do by himself or his agents deliver within 7 days to Mrs Wechsler's solicitor, the costs agreements, cost disclosures, memoranda of costs, fees or disbursements, counsel's fee notes, receipts for any payments thereof of such costs, fees or disbursements, and the payment vouchers therefor, (i)showing what fees, costs and disbursements in respect of these proceedings have been paid from the assets of the estate of the late Gizella Fiala or from the trust for Mrs Wechsler, and (ii)showing what fees, costs and disbursements in respect of proceedings no. 2011/166639 have been paid from the assets of the estate of the late Gizella Fiala or from the trust for Mrs Wechsler. 11The three bases advanced for access to the material are as follows: 1. As Mrs Wechsler is absolutely entitled to her share of the estate she has a beneficial property interest in the documents that are trust documents and thus she is entitled to see them; 2. There has been an election or waiver by using the material in the management of the trust; 3. The material, to the extent that it extends beyond personal protection, would be material in which the beneficiary and the trustee had a joint or common interest and, accordingly, should be available to the beneficiary. 12I will deal with each basis advanced for access in turn. Whether Mrs Weschler has a proprietary interest in the trust documents 13On the first matter there is a conflict between first instance decisions in this state following upon the decision of the Privy Council in Schmidt v Rosewood Trust Ltd [2003] 2 AC 709. In Avanes v Marshall [2007] NSWSC 191; (2007) 68 NSWLR 595 Gzell J held that there should be no entitlement, as of right, on the part of a beneficiary to disclosure by the trustee of any document other than the accounts of the trust, thereafter with the leave of the Court to determine what should be disclosed in the exercise of the Court's discretion to balance the competing interests of the parties. His Honour followed the Privy Council in Schmidt v Rosewood Trust Ltd in contrast to the previous authority of Re Londonderry's Settlement [1965] 1 Ch 918 which supported the theory that an absolutely entitled beneficiary had a proprietary interest in trust documents. 14In McDonald v Ellis [2007] NSWSC 1068; (2007) 72 NSWLR 605 his Honour Justice Bryson dealt with the same matter and came to a different view. He held that a beneficiary with a vested interest in trust property has a right of access to the estate accounts and information about the estate assets and that that right flowed from the treatment of the beneficiary's equitable interest as a proprietary interest. He held it is not a matter for the Court's discretionary exercise of its inherent jurisdiction to supervise the administration of trusts. His conclusion at paragraph [46] and [51] was as follows: "In my opinion, judges at first instance in New South Wales should treat the majority judgments in Hartigan Nominees as authoritative. While not all matters susceptible of doubt are settled, the starting point, at which the beneficiary is entitled to see trust documents and have information about trust property, and that entitlement has a proprietary basis, is not open to question. The facts in the present case do not raise even the potential difficulties which might be thought to exist where the entitlement of the beneficiary is contingent or subject to a discretionary decision, or involve a decision of trustees which might raise a conflicting principle... Where there is a judicial discretion, there is room for litigious debate about the exercise of the discretion. There is no certainty on so elementary a matter as whether or not a beneficial owner is entitled to information about property in which the beneficial owner has an equitable interest. In the previous rule, in my interpretation, equity followed the law in treating as proprietary an equitable entitlement to trust property. Treating the equitable interest as proprietary brings with it an entitlement to information, unless there is a conflict with some other principle which equity must recognize, such as the principle protecting the trustee's discretionary considerations. Treating the entitlement to information as an aspect of the Court's discretionary exercise of its supervising power over trusts is a departure from the relatively concrete concept of equitable interests in trust property which has been adopted for some centuries." 15His Honour then referred to Avanes v Marshall , at [52], in these terms: "In Avanes v Marshall (2007) 68 NSWLR 595 at 599 [15], Gzell J after review of authorities, including recent authorities in Australia in which reference has been made to Schmidt, expressed the view that the approach in Schmidt should be adopted by Australian courts. I respectfully do not agree. It might be that the approach of Schmidt is appropriate where the interest of the beneficiary is no higher than those of the potential objects of a discretionary trust, although opinion in New South Wales is otherwise. However that may be, in the present case where the plaintiff's right is already vested in interest, it would be a departure from clearly established opinion in New South Wales not to treat the claim to information as based on a proprietary interest, or to withhold enforcement of it except so as to enforce some competing entitlement, such as that of the trustees considered in Re Londonderry's Settlement, which required such departure." 16The different views received some attention, although not definitively, in a decision of the West Australian Court of Appeal in Schreuder v Murray (No2) [2009] WASCA 145. In that case one of the grounds of appeal was that the trial judge had erred in law in his determination that the respondent had an entitlement to inspect the documents that are otherwise privilege as a result of legal professional privilege as a beneficiary under a trust, upon the basis that such documentation constituted trust documents irrespective of the fact that they were otherwise privileged. 17Buss JA set out the analysis necessary in respect of the question in these terms: "[92] In my opinion, it is critical, in examining the merits of ground 2, to distinguish between: (a) legal proceedings by a beneficiary against the trustee where the cause of action is based on the trustee's alleged breach of duty in failing to provide the beneficiary with access to "trust documents" or information; and (b) legal proceedings by a beneficiary against the trustee on other causes of action (that is, causes of action which are not based on the trustee's alleged breach of duty in failing to provide the beneficiary with access to "trust documents" or information) and, in the course of the proceedings, the beneficiary makes an interlocutory application against the trustee for discovery and inspection of "trust documents" which are relevant to the pleaded causes of action and in respect of which legal professional privilege exists as against strangers to the trust. [93] In the first category of legal proceedings, it will be necessary to identify and apply the legal principles which govern the duty (if any) of the particular trustee to provide "trust documents" or information to any of the beneficiaries or possible beneficiaries. Two different approaches are discernible from the case law in relation to the right (if any) of a beneficiary to inspect "trust documents" or receive information: see Rouseat [88]. One approach is based on the observations of Lord Wrenbury in O'Rourkeat 626, as explained by Gummow J in Re Simersallat FCR 588; ALR 379 and by Dawson and Toohey JJ in Breenat CLR 89; ALR 271; ALD 491: see [72]-[75] above. The other approach is based on a trustee's fiduciary duty to keep the beneficiaries informed and to render accounts: see Hartigan Nominees at 421-2 per Kirby P, dissenting, at 438-47 per Sheller JA. Traditionally, there has been a distinction between strict trusts on the one hand and discretionary trusts on the other in relation to access to "trust documents" or information. In Schmidt, however, the Privy Council held that a beneficiary's right to inspect "trust documents" or receive information in the possession of the trustee was merely a procedural right for the court to make an order in its discretion as part of its supervisory jurisdiction in relation to trusts. The decision in Schmidt was followed by Gzell J in Avanes. However, in McDonald and in Schaverien v Jones [2007] NSWSC 1429, Bryson AJ declined to follow Schmidt and Avanes: see, generally, K Jacobs, J D Heydon and M Leeming, Jacobs' Law of Trusts in Australia, 7th ed, LexisNexis Butterworths, New South Wales, 2006, at [1716]. The current state of the non-statutory law on this issue is attended by some uncertainty. It is unnecessary, in the present case, to express an opinion on these issues (including whether the approach of the Privy Council in Schmidt represents the law of Australia) because the pending Supreme Court proceedings by Mrs Murray against the appellant are not proceedings where the cause of action is based on the appellant's alleged breach of duty in failing to provide Mrs Murray with access to "trust documents" or information. I note, for completeness, the intervention of statute in Western Australia. By s 94 of the Trustees Act 1962 (WA), the court can call on trustees to substantiate and uphold their conduct. [94] In the second category of legal proceedings, it will be necessary, in determining the interlocutory application, to identify and apply the relevant legal principles from the case law and academic writings discussed or referred to at [64]-[65] and [76]-[86] above. In my opinion, the relevant principles, in the context of a trustee and a beneficiary who has a vested interest in the trust fund, include, relevantly, the following: (a) Legal advice privilege will exist in relation to information and documents that would reveal confidential communications between a trustee client and his or her lawyer made for the dominant purpose of giving or receiving legal advice, whether or not litigation is subsisting or within the reasonable contemplation of the trustee client. (b) Litigation privilege will exist where litigation is subsisting or within the reasonable contemplation of the trustee client, and applies to confidential communications passing between a lawyer and his or her trustee client or between the lawyer and third parties, and confidential information or documents brought into existence, for the dominant purpose of preparing for the litigation. (c) The legal advice privilege or litigation privilege referred to in paras (a) and (b) above 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. (d) There will be a joint privilege if: (i) the confidential communications, information or documents relate to legal services in connection with the management or administration of the trust; and (ii) 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. (e) The joint interest of the trustee will derive from his or her duties to the beneficiaries or in respect of the trust fund, and the joint interest of the beneficiary will derive from his or her vested interest in the trust fund, in combination with the nature and character of the relevant communications, information or documents. (f) The beneficiary will not be entitled to a joint privilege with the trustee if the confidential communications, information or documents relate to legal services obtained for the benefit of the trustee personally (for example, if the trustee seeks legal advice as to his or her personal rights or liabilities in connection with an alleged breach of trust or threatened legal proceedings against him or her personally). It is unnecessary to consider the position of a beneficiary who has a contingent interest or a mere expectancy in relation to the trust fund. At all material times, Mrs Murray has had a vested interest in the residuary estate." 18I will return to the question of joint privilege shortly. 19It will be noted that the relevant documentation in Schreuder related to legal advice obtained for the purposes of the administration of the residuary estate and not for the benefit of the appellant personally. 20The facts in Schreuder also varied in an important respect from the facts of this case, namely that although it was initially suggested by counsel for the trustee that some of the documents had come into existence in contemplation of litigation by the objector, ultimately the claim of privilege was put on the basis that any legal advice obtained by the appellant, as trustee, in relation to the administration of the estate, was privileged as against the objector. The Western Australian Court of Appeal rejected his claim for privilege in relation to legal advice obtained by the trustee for the purposes of the administration of the residuary estate, and not for the benefit of the trustee personally. 21In Silkman v Shakespeare Haney Securities Ltd [2011] NSWSC 148 his Honour Hammerschlag J referred to the different approaches that have been taken in relation to a beneficiary's right, if any, to trust documents. At paragraphs [27] and [28] his Honour concluded his approach to the difficulty in these terms: " Absent clear appellate guidance, I propose to follow the Schmidt approach. A consideration of the authorities reveals that the Londonderry approach has jurisprudential difficulties which the Schmidt approach does not have, including: a.ascribing a workable and principled definition of the term "trust documents"; b.divining the nature of the beneficiary's so-called proprietary interest in such documents. In Hartigan Nominees v Rydge at [444] Sheller JA articulated this difficulty by describing this "trail" as unhelpful if not false; c.that on the Londonderry approach a discretionary beneficiary who has no lesser interest in the due administration of the trust (but who has no proprietary interest in the assets) should, illogically, be denied disclosure; d. that authorities which have taken the Londonderry approach have limited the beneficiary's right to disclosure by reference to the interests of third parties in maintaining confidentiality. It is difficult to reconcile this limitation with the principle for which Londonderry stands; and e. reconciling a beneficiary's entitlement to documents such as a settlor's statement of intention or a constituent trust deed (which undoubtedly a beneficiary should properly have) with the fact that these instruments are themselves not assets or appurtenant to assets of the trust. It follows that the plaintiff's claim to inspect documents as of right, fails." 22Hammerschlag J pointed out at [23] that he had not been drawn to any appellate authority in Australia which has squarely considered whether the Londonderry approach or the Schmidt approach should now be followed. His attention was not drawn to Schreuder. In Gray v BNY Trust Co of Australia [2009] NSWSC 789 Bergin CJ in Eq discussed the two approaches without indicating which one was to be preferred. Therefore it appears that the question as to whether a beneficiary has a proprietary right in trust documents is undecided. Whether the documents sought are "trust documents" 23In Re Londonderry's Settlement [1965] 1 Ch 918 at 935 Danckwerts LJ commented on the difficulty in defining "trust documents": "...it is quite a simple matter to make general observations on the right of beneficiaries to inspection of trust documents, but it does not carry one any further until one knows what is meant by 'trust documents'. For instance, one of the definitions of trust documents which was suggested seems to me quite hopeless. It was suggested that trust documents included everything in the trustees' hands as such. That will cover practically everything that reaches the trustees in their official capacity, from advertisements for pink pills to blackmailing letters from people who think they have a grudge against the trustees. That does not solve our problem in the least." 24At 938 Salmon LJ said: "There is another possible approach to the present case. The category of trust documents has never been comprehensively defined. Nor could it be - certainly not by me. Trust documents do, however, have these characteristics in common: (l) They are documents in the possession of the trustees as trustees; (2) they contain information about the trust which the beneficiaries are entitled to know; (3) the beneficiaries have a proprietary interest in the documents and, accordingly, are entitled to see them. If any parts of a document contain information which the beneficiaries are not entitled to know, I doubt whether such parts can truly be said to be integral parts of a trust document. Accordingly, any part of a document that lacked the second characteristic to which I have referred would automatically be excluded from the document in its character as a trust document." 25This reasoning was said to be helpful in Re Fairburn 1967 VR 633 at 639 but has been criticised as circular reasoning in Jacobs Law of Trusts in Australia 7 th Ed [1716]. 26In my view the evidence put forward by Mr Du Maurier in the present application by way of affidavit, rather than a statement of facts, would not fall within the description of a trust document, bearing in mind that the material was prepared for him in relation to his personal application to the Court for advice in respect of the proceedings commenced against him. 27The special, private nature of s 63 advice must also be borne in mind when determining whether the affidavits should be disclosed to Mrs Weschler. This was discussed in Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar, the Diocesan Bishop of Macedonian Orthodox Diocese of Australia and New Zealand [2006] NSWCA 160; (2006) 66 NSWLR 112. The case was an appeal against a decision by Young CJ in Equity related to an application for judicial advice eventually determined by Palmer J. Young CJ in Equity determined that material relied upon at the application should be supplied to the objectors served with the notice of summons, even though they were not a party. His Honour granted access to material which would not be confidential and which would not contain privileged information, including the parts of a legal opinion of counsel which was not, in his view, privileged. 28In paragraph [20] the Court of Appeal said the following: "Young CJ in Eq then correctly quoted that part of the judgment in which Lightman J explained the justification for the protection afforded to a trustee by an order made on such an application, namely, "that the beneficiaries are given the opportunity to make representations to the court". In this regard, it must be borne in mind that the English procedure is different from that in New South Wales. In England, the beneficiaries are made parties. In New South Wales, the Court may direct that the beneficiaries be given notice. However, even in the English system, there is nothing in Alsop Wilkinson [ v Neary & Ors [1996] 1 WLR 1220] that suggests that the joined beneficiaries in the judicial advice application are entitled to all material before the Court. The case stands for no such proposition. Rather, it accepts, albeit impliedly, that beneficiaries may not be made privy to all material before the Court. Thus to the extent that any assistance can be drawn from Alsop Wilkinson, it is the opposite of that found by his Honour. Persons given notice under s 63(4) are not entitled necessarily to all of the material placed before the Court by the trustee. This is the more so in the case where those persons are parties to the substantive litigation. For the reason given by Lightman J to which reference has been already made, it would be inappropriate to reveal to the parties to the substantive litigation the matters necessary to be put before the judge hearing the judicial advice application relating to, for example, the strength and weaknesses of the trustee's case and the course to be taken in it." (emphasis added) 29The Court went on to consider his Honour's consideration and directions as to whether or not parts of an opinion, which no doubt was privileged, should have been disclosed. The Court also dealt with the production of the opinion in the proceedings and said that as a matter of principle, legal professional privilege cannot be abrogated and decided that was not the case (see paragraph [35].) 30The Court then considered the question of whether there had been a waiver under s 122 of the Evidence Act 1995. The Court's decision on this aspect was given in paragraph [53] in these terms: "In our opinion, the claimant did not waive privilege when the legal opinion was placed before the Court as an annexure to the statement. It is a usual practice in proceedings of this type for a Court to be assisted by a legal opinion. Indeed, the Court would, in many instances, be at a serious disadvantage if it did not have that assistance. However, in circumstances where the judicial advice proceedings remain essentially non-adversarial, notwithstanding that there is a contradictor, it would be contrary to principle to find an implied waiver in the claimant's conduct in placing the matter before the Court. This is the more so in the circumstances in which the material was placed before the Court here." 31Thereafter the Court had the following to say: "[56] As has been recognised in the English authorities, as well as in both the Re Permanent Trustee Australia decisions, the Court is assisted by having the views of those persons who are likely to be affected by the judicial advice. For those persons to be able to make a meaningful contribution to the Court's determination of the s 63 application, it is appropriate that they have as much material as possible and be entitled to make legal submissions to the court. However, the essential non-adversarial nature of the application is not, thereby, transformed into an adversarial one. It might be, however, that the Court would indicate material to which it suggests the persons given notice under s 63(4) should have access to: see, for example, Re Eaton, Decd, where Wilberforce J invited the trustee to make material available, indicated that he thought much of the material upon which the trustee relied could be made available, but did not otherwise direct the trustee to provide material to the beneficiaries. [57] A like approach could be taken in judicial advice proceedings brought under s 63. Thus, the Court could invite the claimant to make material available to persons to whom notice had been given under s 63(4), but, it seems to us that there is nothing in the practice of the English Courts upon which Young CJ in Eq relied to indicate that the Court could compel the trustee to give information or documents to that persons. The Court could, however, indicate to a trustee that unless it was prepared to make certain material available then the advice that the Court was able to give might be qualified or limited because it would not have the assistance it might have been afforded had the affected persons had access to more material than the trustee was prepared to provide. [58] Our view in this regard is reinforced by the practice, entrenched in the English decisions, to exclude persons from the hearing when matters relating to the contested proceedings (in this case the Main Proceedings) are being considered. But, whether or not a judge hearing such an application is entitled to be more prescriptive than we have indicated, that does not entitle persons served under s 63(4) to privileged material, and the judge cannot compel disclosure [59] Nor in our opinion, does the approach adopted in United States Surgical Corporation v Hospital Products International Pty Ltd [1982] 2 NSWLR 766,that was adopted by Young J in Re Permanent Trustee Australia, apply to privileged material. It would be contrary to principle if that were the case, save to the extent that a trustee otherwise consented." (emphasis added) 32These are general propositions which apply to judicial advice proceedings and are particularly relevant to the question of whether I should direct the supply of some of the evidence given in support of the application. Election or waiver 33On the second point the thrust of the submissions appear to be the following: "88. The present s. 63 proceedings are not for the private or personal benefit of the trustee. Their purpose is for the guidance of the trustee as trustee for the benefit of the trust. In that respect, it should be noticed also that the Summons seeks an order that the costs of the present application be paid out of the assets of the estate. Moreover, he seeks advice that his expenses of the main proceeding may be paid along the way, and prior to any ultimate determination in those proceedings of whether he should be deprived of indemnity for those costs. 89. Thus, if the trustee elects to put material before the Court in order to obtain advice for the benefit of the trust, he will be electing to waive any claim that that material (including any confidential advice) is merely for his personal benefit and not for the benefit of the trust. In that situation, Mrs. Wechsler being a vested beneficiary and these proceedings being for her benefit, she is entitled to and should be given unrestricted access to all of the material that has been or will be put to the Court for consideration in these proceedings. 90. The case is not like Macedonian Orthodox Community Church St Petka Inc. v. His Eminence Petar, the Diocesan Bishop of the Macedonian Orthodox Church of Australia and New Zealand (2006) 66 NSWLR 112, in which it was held that considerations of natural justice do not operate on a s. 63 application to effect an issue waiver. The present situation does not depend on issue waiver or procedural fairness to an adverse party, but rather on Mrs. Wechsler's rights as a beneficiary with a vested interest in the trust property. The election that here operates is not an issue waiver election, but rather an election to use the documents for the benefit of a trust in which Mrs Wechsler has a vested interest. 91. In the Macedonian Church case no such interest existed, as the trust there was a charitable purpose trust. 92. One may say that the election is either or both of (a) an election to prepare or acquire the relevant documents as property of the trust; or (b) if or to the extent that the documents were otherwise the personal property of Mr Du Maurier, and if or to the extent that advice was obtained for his personal benefit, an election to use them in order to obtain advice for the benefit of the trust, thus constituting a waiver of privilege, and giving to those interested in the trust, namely to Mrs Wechsler, a right to see that advice and those documents in order to understand the judicial advice which is being sought for her benefit." 34There are two answers to these submissions. One is that plainly the documents and their use in proceedings do not make them being used for the benefit of the trust and thus material concerning the management of the trust. In addition the majority decision in Macedonian , to which I have referred, would indicate that there is no waiver in respect of the documents. 35The Court of Appeal in Macedonian made it clear that, subject to any waiver, the legal opinion in that matter was privileged in its entirety (at [29]). It was not open for Young CJ in Eq to grant access to parts of counsel's advice, once privilege had been established. 36The Court of Appeal also commented that the party resisting production had sought to protect the material from disclosure by having it marked as confidential when it was relied upon at the hearing at first instance. Similarly in this case Mr Du Maurier has clarified, in each document containing potentially privileged material, that privilege is not waived. 37Although it is true that I cannot, on this application, determine whether or not Mr Du Maurier is liable in the principal proceedings, I may be assisted by receiving submissions and, indeed, any evidence put forward by Mrs Wechsler on the question of whether the trustee is justified in defending the proceedings. As would be expected the Court has evidence before it of the circumstances in which Mr Du Maurier suggests that he is justified in defending the proceedings. 38I do not think that I should make a direction as to the supply of affidavits because of the comments of the Court of Appeal to which I have referred. However, It seems to me that the evidence presently before the Court from Mr Du Maurier would in many respects not be controversial. The supply of the evidence, with the exception of any privileged material, would enable Mrs Wechsler to make meaningful submissions which may assist the Court in deciding whether to give the appropriate advice to the trustee, Mr Du Maurier. 39I have already followed this course and Mr Du Maurier has declined to supply any of the material to Mrs Wechsler. In these circumstances I will not make any further direction for the supply of material to Mrs Wechsler. I note that Mr Du Maurier should appreciate that this decision which is still maintained in the further conduct of this case will be a matter which will be the subject of a submission by Mrs Wechsler that his refusal is a strong discretionary reason for refusing relief. 40I turn to the question of legally privileged material produced for the purpose of this application which Mrs Wechsler correctly surmises is within the material placed before the Court. 41These proceedings are not ones within the first class referred to in Schreuder but fall within the second class. Absent joint privilege the majority in Schreuder suggest that the existence of either legal advice privilege or litigation privilege is an answer to the claim of absolute entitlement to see a trust document. This means that it is not necessary to resolve the conflicting state of authorities on the point. 42The joint privilege point depends of course on whether the documents can be characterised as being subject to joint privilege. 43The advice put before the court on this application as to the prospects of a successful defence of the equity proceedings can correctly be classified as being for the benefit of the trustee personally. It is not the subject of joint privilege. Thus that advice should not be disclosed. 44The documents called for in the second call made on 9 February 2012 do not have any time constraint or other limitation. It merely refers to any confidential opinion of counsel intended to be relied upon. In the affidavit material before the Court there is one occasion where such advice was given before the commencement of the main proceedings. 45That advice was given to the trustee on 20 December 2007 when plainly there was a threat sometime earlier that year to commence proceedings against the plaintiff. Litigation privilege would be available but the question of Joint privilege arrises. 46Buss JA in Schreuder discussed the concept of joint privilege, as set out above. In particular his Honour noted that to claim joint privilege it would have to be shown that the document related "to legal services in connection with the management or administration of the trust" and that the trustee and the beneficiary have a joint interest in the subject matter of the document. In respect to this advice it clearly was in relation to legal services in connection with the management or administration of the trust as it concerned a proposal to distribute a particular estate property to Mrs Weschler. 47Given that it concerns a distribution to Mrs Weschler both the trustee and the beneficiary have a joint interest in the subject matter of the advice and the advice should be disclosed. 48I turn to the claim for the third class of documents, namely, costs documents in these and the principal proceedings. It was suggested that these were relevant to the proprietary entitlement to the benefit of any legal advice on other documents for which the estate has paid. 49I note that I was not asked to determine this question first and then depending on the results of production move on to deal with the first two calls with the benefit of that material. Therefore there does not seem to be a purpose for the call. 50In Gray Bergin CJ in Eq considered an application by a plaintiff for production by the defendant of privileged material, namely full disclosure of legal fees charged in previous litigation. The plaintiff submitted that if they could show that the defendant had charged the expense of its legal advice or legal services to the estate, access to the documents should be granted. Her Honour rejected that claim on a very limited basis and said that: "The fact that an order was made that the plaintiff pay the defendant's costs coupled with an order of its entitlement to indemnification, does not in my view convert the privileged advice received by the defendant to defend itself into an advice for the benefit of the plaintiff and thus a trust document to which the plaintiff is entitled to access." 51Her Honour had referred to the caselaw for and against the proposition that if the defendant in that case did charge the expense of its legal advice to the estate access should be granted. She made no decision on that question but determined the matter on the limited basis I have set out above. 52In any event the matter does not arise on the advice in the claim against the trustee as I have found for Mrs Weschler on other grounds. In respect of the advice in the present proceedings I note that Bergin J did not refer to Schreuder no doubt because the decision in that case was given only a few days before she handed down her decision in Gray. In my view it is appropriate to determine the matter on the basis articulated in Schreuder at [94f]. The fact that the advice may have been paid for by the trust is but one factor in determining whether documents are trust documents. In this regard I note the comments in South Australia v Barrett (1995) 64 SASR 73 of Olsen J at 78 and Mullighan J at 83-84. Even if estate funds were wrongly used to pay for the advice the nature of the advice is such that it is not a trust document as it is for the personal benefit of the trustee. 53I decline to make the directions sought in respect of costs documents. Conclusion 54In the context of the special nature of an application for advice pursuant to s 63 and the privilege raised by the plaintiff in relation the advice by counsel, I decline to make the directions relating to access to documents sought by the defendant except in respect of the advice of Mr Colin Hodgson dated 20 December 2007. Order 55I order the plaintiff to produce to the defendant the advice of Mr Colin Hodgson dated 20 December 2007. Otherwise I refuse to make the directions relating to access to documents sought by the defendant. ********* * DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 20 March 2012