In the recent decision of Allen v The Queensland Local Government Superannuation Board [2015] QDC 237 the Plaintiff sought disclosure of legal advice provided to the Defendant by its solicitors, King & Co, which the Defendant relied upon in declining the Plaintiff’s claim for a Total and Permanent Disablement (TPD) benefit under the trust deed (the Deed) of the Defendant’s superannuation scheme (the Scheme). 

BACKGROUND

The Plaintiff issued proceedings in the District Court seeking a declaration that the decisions of the Defendant refusing payment of the TPD benefit were void and of no effect; a declaration that the Plaintiff was entitled to a TPD benefit under the Deed and an order that she be paid the same; alternatively damages; or alternatively an order that the Defendant give reasons for its declinature.

The Plaintiff alleged that the reasons given by the Defendant for its declinature of her claim were not sound and that the Defendant had various duties in making its decision, in particular, to exercise any discretion in good faith and with real and genuine consideration.  It was alleged that in declining the claim, the Defendant breached these duties.  The Defendant’s position was that Plaintiff was not at any material time incapacitated to such an extent as to render her unlikely ever to work in any gainful occupation for which she was, or may become, reasonably qualified by way of education, training or experience, and that it reasonably formed an opinion that the Plaintiff was not entitled to the claimed TPD benefit.

During the course of disclosure, the Defendant disclosed a “complaint log”(Complaint Log) which stated (emphasis added):

“On 26 June 2013 the Defendant received a letter from Maurice Blackburn requesting a review of the decision; denied TPD claim.  Further, on 30 July 2013 the matter was referred to King & Co for legal opinion on whether the Board needed to re-examine the claim, given to her previous denials, and the reference to the Tribunal.  On 16 October 2013 the Board received legal advice from King & Co, the Board needs to reconsider the claim based/given new evidence supplied

 

The Defendant also disclosed a document titled “The Queensland Local Government Superannuation Board Incapacity Claim Submission for Consideration by the Board”(Submission) which stated (emphasis added):

“…On 30 July 2013, the matter was referred to King & Co for legal opinion to determine if the Board is obligated to re-examine the claim given the passage of time since the claim was first lodged and the two previous assessments of the claimant being declined.  And in their response to the Board dated 16 October 2013 King & Co confirmed that the Board is required to reconsider the claim based on that fact that new medical evidence was supplied.”

THE ISSUES

The Plaintiff’s solicitors thereafter requested a copy of the legal advice referred to in the Complaint Log and Submission, alleging that it was not protected by legal professional privilege. The Plaintiff’s solicitors alleged the advice was relevant as it was in issue whether the Defendant had failed to take into account all relevant considerations and had taken into account irrelevant considerations. King & Co argued the advice was irrelevant and refused the request for disclosure.

On the hearing of the Plaintiff’s application, there were two issues requiring determination by the Court:

  • Whether the advice was relevant; and
  • Whether privilege had been waived in the advice as a result of the disclosure of the Complaint Log and the Submission.

THE FINDINGS

The Court found that notwithstanding the advice was not actually before the Board of the Defendant when it made its decision, the advice was used in the preparation of the Submission (which was before the Board) and the Board relied heavily upon the same, adopting the recommendations therein.  The Court also found that the Board requested the advice and that the advice was addressed to the Board.  In those circumstances, the Court found that reliance on the advice was relevant to the conclusion ultimately reached by the Defendant. The advice was therefore relevant in deciding whether the decision was made in good faith with real and genuine consideration and in accordance with the purpose for which the discretion was conferred.

With respect to the waiver of privilege in the advice, it was accepted as common ground that the advice attracted legal professional privilege.  The Defendant submitted that there had been no waiver of privilege and that the disclosure of those parts of the document referring to the advice was a mistake that should not be taken advantage of by the Plaintiff. 

In ordering the disclosure of the advice, His Honour Justice Smith traversed numerous cases dealing with the waiver of privilege, ultimately concluding that privilege had been waived on the basis:

  • the approach taken by the Board in reaching its decision was very relevant to the conclusion to be reached by the Court;
  • the Submission was a disclosable document as it went to the heart of the decision to decline the claim;
  • the reasons and the approach taken by the Defendant should be “open to scrutiny” having regard to the issues to be considered in the action as outlined inFinch v Telstra Super Pty Ltd (2010) 242 CLR 254;
  • the state of mind of the Board was a very relevant matter and the advice went to that state of mind; 
  • the advice was either directly or indirectly put in issue in the proceedings; and
  • In the above circumstances the principals of fairness and consistency dictated that privilege had been waived.

IMPLICATIONS

The implications of this decision appear to be twofold:

  • If legal advice is obtained by insurers and trustees alike in determining such claims, they should be mindful of potential future litigation and the possibility that such advice will be subject to applications such as that in Allen. Discretion in the recording, and use of, such advice might avoid such an outcome; and
  • Solicitors acting for insurers and trustees should be particularly careful throughout the disclosure process so as to avoid inadvertent disclosure of not only actual advices, but references to such advices, so that privilege in the advice is not waived.