Judge rejects Colonial’s professional privilege claim

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This is a class action on behalf of beneficiaries of the Colonial First State FirstChoice Superannuation Trust (Fund), of which the first respondent (Colonial) is and was the trustee. The applicants allege, in substance, that the interest rate that was paid by Colonial’s parent company, Commonwealth Bank of Australia (CBA), on certain term deposits held by the Fund with CBA was lower than that which would have been negotiated had Colonial been dealing with CBA at arms-length.

Colonial claimed legal professional privilege in respect of certain discovered documents. The applicants asserted that any privilege in respect of those documents was a joint privilege held jointly by the trustee and beneficiaries (i.e. the class members), and could not therefore be asserted by the trustee against the beneficiaries. In this judgment Colvin J determined that question (by reference to five sample documents).

An earlier application by the first applicant (Mr Kayler-Thomson) raising the same issue was dismissed (Kayler-Thomson v Colonial First State Investments Ltd (No 2) (2021) 153 ACSR 663; [2021] FCA 854), on the basis that Mr Kayler-Thomson did not personally share a joint privilege in the relevant documents (because he was not a member of the Fund at the time when the documents came into existence), and his role as the representative applicant in the proceeding did not entitle him to claim production of discoverable documents on the basis of a joint privilege that was held by members of the represented class (but not held by him personally). Thus, the present application was brought by the (subsequently added) third applicant instead (Ms Gibson), who was a member of the Fund at the relevant time.

The primary issue between the parties was whether joint privilege existed only in respect of documents which came into existence during the period in which Ms Gibson’s funds were actually invested in the particular investment option concerned (as contended by Colonial), or whether, as Ms Gibson contended, joint privilege existed because the documents concerned the administration of an aspect of the overall Fund in which she had an interest at the time that the documents were brought into existence, and concerned an investment option that would be made available to her as a member of the Fund who could choose the relevant investment option (even if she did not in fact choose that option at any given time).

That contention of Ms Gibson had been rejected in the earlier judgment, but without the issue having been expressly raised for decision. Accordingly, his Honour held (at [46]-[53]) that nothing which had been said in the earlier judgment (which in any event was interlocutory only) operated to preclude Ms Gibson’s application, whether by some form of estoppel or otherwise.

On the substantive question, his Honour upheld (at [54]ff) Ms Gibson’s contention that the joint privilege arose in respect of documents that came into existence when she was a member of the Fund, irrespective of whether she had chosen the particular investment option the subject of the proceeding (and thus the subject of the documents). That was principally on the basis of the terms of the Fund’s trust deed, and the duties of Colonial as trustee, which meant that “each beneficiary has an interest in the due administration of the Fund as a whole” (at [60], underlining added) – that interest was not limited to the particular investment option that each beneficiary had chosen. Accordingly, Colonial’s assertion of privilege against Ms Gibson was rejected.

Kayler-Thomson v Colonial First State Investments Ltd (No 3) [2023] FCA 606

Federal Court of Australia, Colvin J,
 9 June 2023  

Applicants’ Solicitors: Slater & Gordon
Respondents’ Solicitors: Herbert Smith Freehills
Applicants’ Funder: N/A

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