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NSW Crest

Supreme Court
New South Wales

Medium Neutral Citation:
Welker & Ors v Rinehart [2011] NSWSC 1094
Hearing dates:
9 September 2011
Decision date:
13 September 2011
Jurisdiction:
Equity Division - Duty List
Before:
Brereton J
Decision:

Suppression order made pursuant to (NSW) Court Suppression and Non-publication Orders Act 2010, s 7, upon the ground referred to in s 8(1)(a), and the ground referred to in s 8(1)(e), prohibiting the disclosure, by publication or otherwise, of any information as to the relief claimed, or any pleading, evidence or argument filed, read or given in, the proceedings.

Pursuant to s 9(4), this order does not prohibit disclosure or publication of this judgment, nor of orders made in the proceedings.

Pursuant to s 11, it is specified that this order applies throughout the Commonwealth.

Pursuant to s 12, it is specified that this order operates until the dismissal of the defendant's motion for a stay of the proceedings, and if it is not dismissed until further order of the Court.

Catchwords:
COURTS AND JUDGES - Application for suppression order under (NSW) Court Suppression and Non-publication Orders Act 2010 - order applied for under s 8(1)(a) as necessary to prevent prejudice to administration of justice, and/or s 8(1)(e) as necessary in the public interest for the order and the public interest significantly outweighs public interest in open justice - test prescribed by Act more stringent than former common law test and that previously contained in (NSW) Civil Procedure Act (2005) s 72 - discussion of authorities - open justice principle liable to yield in circumstances where open justice would defeat the administration of justice - plaintiffs and defendant party to a deed requiring confidential alternative dispute resolution procedures to be adopted before institution of court proceedings - current proceedings arguably contrary to deed and arguably an abuse of process - publication of current proceedings will negate purpose of confidentiality provision - suppression order necessary to prevent prejudice to administration of justice and to uphold legal rights of litigants - balancing exercise required - weight accorded to public interest in open justice liable to vary according to nature and stage of proceedings - current proceedings concern family trust - private issues and interests concerned - public interest in vindicating private rights outweighs significantly public interest in open justice - fact proceedings may jeopardise commercial negotiations with third parties not a reason in and of itself to depart from principle of open justice - order to apply throughout the Commonwealth - order made at least until defendant's stay application dealt with.
Legislation Cited:
(NSW) Civil Procedure Act 2005, s71, s 72
(NSW) Court Suppression and Non-publication Orders Act 2010, s 3, s 7, s 8, s 11, s 12,
(CTH) Family Law Act 1975, s 121
Cases Cited:
Ashington Capital Ltd v Noosa Venture 1 Pty Ltd [2010] NSWSC 639
Chappell v TCN Channel 9 Pty Ltd (1988) 14 NSWLR 153
Dance with Mr D Ltd v Dirty Dancing Investments Pty Ltd [2009] NSWSC 332
John Fairfax Publications Pty Ltd and Another v District Court of New South Wales and Others (2004) 61 NSWLR 344
John Fairfax Group Pty Ltd (Receivers and Managers Appointed) and Another v Local Court of New South Wales and Others (1991) 26 NSWLR 131
Global Partners Fund Ltd v Babcock & Brown Ltd (in liq) [2010] NSWCA 196
Raybos Australia Pty Ltd v Jones (1985) 2 NSWLR 47
State of New South Wales and Others v Banabelle Electrical Pty Ltd and Others (2002) 54 NSWLR 503
The Herald & Weekly Times Ltd v The Magistrates' Court of Victoria and Others [1999] VSC 232
W v M [2009] NSWSC 1084
Category:
Principal judgment
Parties:
Welker & ors (plaintiffs)
Rinehart (defendant)
Representation:
Counsel:
Mr A. J. Sullivan QC with Mr E. C. Muston (defendant/applicant)
Mr A. S. Bell SC (plaintiff/respondent)
Mr A. T. S. Dawson (intervening media interests)
Solicitors:
Johnson Winter & Slattery (plaintiff)
Corrs Chambers Westgarth (defendant)
Addissons (intervening media interests)
File Number(s):
2011/00285907

Judgment

1On the afternoon of Monday 5 September 2011, lawyers purporting to act for children of the defendant made application ex parte to the court for relief relating to the affairs of a family trust - of which the plaintiffs are the beneficiaries and the defendant is the trustee - which, as things then appeared, if it was to be effective, had to be granted almost immediately. (I say "purporting", because an issue has since arisen as to whether the plaintiffs' solicitors had instructions from all of the named plaintiffs, although it is not in doubt that they were instructed by some of them). Certain interim relief was granted, and the proceedings were made returnable on 8 September, when directions were made and the defendant foreshadowed an application for a suppression order, which application was heard on 9 September, when an interim suppression order was made pending consideration and delivery of this judgment on the defendant's application for a suppression order and/or a non-publication order in respect of the proceedings.

2This is not the first occasion of discord in the family, which has immense wealth, no small part of which resides in the trust. In the past, the affairs of the family, including such discord, has attracted considerable publicity in the media. Even the sparse details so far available of this litigation - amounting to little more than that proceedings between the parties are on foot and that the present application is pending in them - have attracted widespread publicity.

3Following previous disharmony between the parties, they entered into confidential arrangements, culminating in a deed made in April 2007 ('the Deed'), which imposed on any of them who had a dispute under the Deed with another party an obligation to notify the other or others and to attempt to resolve their differences by confidential mediation and failing that confidential arbitration, the proceedings of which were to be kept confidential. At least part of the rationale for this appears to have been an appreciation that stability and confidentiality were highly desirable in the context of sensitive commercial negotiations pertaining to the assets and undertakings of the corporate group in which the trust holds shares. It is strongly arguable that the application made to the court on 5 September was in respect of a dispute under the Deed. The defendant proposes to apply for a stay of the proceedings, on the basis that they are an abuse of process, having been commenced without prior compliance with the confidential alternative dispute resolution ('ADR') procedures provided for in the arrangements between the parties.

4The effect of the Deed was to give each of the parties a right to have their disputes resolved by confidential ADR procedures. While they could not wholly exclude the jurisdiction of the courts, so far as such provisions do not operate wholly to exclude the jurisdiction of the courts, they are recognised and given effect. It is at least seriously arguable that to institute litigation in the face of an agreement to follow an ADR procedure may be an abuse of process [ State of New South Wales and Others v Banabelle Electrical Pty Ltd and Others (2002) 54 NSWLR 503, 517; Dance with Mr D Ltd v Dirty Dancing Investments Pty Ltd [2009] NSWSC 332, [52]-[53]; Ashington Capital Ltd v Noosa Venture 1 Pty Ltd [2010] NSWSC 639, [11]], or at least warrant a stay of proceedings [ Global Partners Fund Ltd v Babcock & Brown Ltd (in liq) [2010] NSWCA 196, [40], [67]-[69], [84]-[89]].

5In this case, the purposes of the provisions for confidential mediation and arbitration included avoidance of the public airing of disputes, with the concomitant potential for that to undermine confidence of others dealing with the trust or the parties in their sensitive commercial arrangements. In apparent contravention of those provisions, the ex parte application was made and these proceedings were instituted without prior notification, confidential mediation, or confidential arbitration. While the apparent urgency of the surrounding circumstances may well have seemed at the time to justify that course, it now appears that in fact - unbeknownst to the plaintiffs and those acting for them - the urgency had been removed by a step taken by the defendant which accorded with what the plaintiffs sought to achieve. It appears strongly arguably that, however it may have appeared at the time, the reason for the plaintiffs (or some of them) embarking on the course that they did was mistaken.

6The present application is made under (NSW) Court Suppression and Non-publication Orders Act 2010, s 8(1), which provides that a court may make a suppression order or non-publication order on the grounds that:

(a) the order is necessary to prevent prejudice to the proper administration of justice,

...

(e) it is otherwise necessary in the public interest for the order to be made and that public interest significantly outweighs the public interest in open justice.

7By s 3, a "suppression order" is an order that prohibits or restricts the disclosure of information (by publication or otherwise), and a "non-publication order" is an order that prohibits or restricts the publication of information (but does not otherwise prohibit or restrict the disclosure of information). "Publish" means to disseminate or provide access to the public or a section of the public by any means, including print media, radio or television broadcast, public exhibition or by broadcast or publication on the internet.

8As Mr Dawson, for the media interests, submits, s 8(1)(e) involves the following concepts: first that it is necessary in the public interest for a suppression order to be made; secondly that that public interest outweighs the public interest in open justice (which is, by s 6, a primary objective of the administration of justice); and thirdly, that the imbalance in favour of suppression be significant , that is to say that the mere tilting of the balance "ever so slightly" in favour of suppression would be insufficient to justify the making of an order. And as Mr Dawson also emphasises, John Fairfax Publications Pty Ltd and Another v District Court of New South Wales and Others (2004) 61 NSWLR 344 (at 365-6) illustrates that at common law, where the test was also one of "necessity", a high degree of certainty is required - not satisfied in that case by a finding that publication "could and most probably would" affect the impartiality of jurors.

9Indeed in my view, the test under s 8(1)(e) is, if anything, a more stringent one than that formerly provided by (NSW) Civil Procedure Act 2005 , s 72:

72. Court may prohibit disclosure of information

The court may, by order, prohibit the publication or disclosure of any information tending to reveal the identity of:

(a) any party to proceedings, or

(b) any witness in proceedings,

if it is of the opinion that it is necessary to do so to secure the proper administration of justice in the proceedings.

10In applying that legislation, the Court's approach was that the common law tradition of open justice - to which the statutory derogation operated as an exception - warranted a strict and narrow construction of the statutes [cf W v M [2009] NSWSC 1084]. As Kirby P (as he then was) said, in Raybos Australia Pty Ltd v Jones (1985) 2 NSWLR 47 (at 55):

Many cases report the scrutiny by courts of statutory provisions designed to derogate from the open administration of justice. Running through these decisions is a common theme. It is that, by our tradition, the open administration of justice is the rule. Statutory derogation from openness is the exception. In defence of the rule, such statutes will usually be strictly and narrowly construed. Unless the derogation is specifically provided for, courts are loathe to expand the field of secret justice.

11But even at common law, and under Civil Procedure Act s 72, the open justice principle yielded in circumstances where open justice would defeat the attainment of justice. One well-established illustration was in blackmail and extortion cases [ John Fairfax Publications v District Court, 357; John Fairfax Group Pty Ltd (Receivers and Managers Appointed) and Another v Local Court of New South Wales and Others (1991) 26 NSWLR 131, 141, 159-160 (Mahoney JA)]. In the latter case, Kirby P said (at 141):

The common justification for these special exceptions is a reminder that the open administration of justice serves the interests of society and is not an absolute end in itself. If the very openness of court proceedings would destroy the attainment of justice in the particular case (as by vindicating the activities of the blackmailer) or discourage its attainment in cases generally (as by frightening off blackmail victims or informers) or would derogate from even more urgent considerations of public interest (as by endangering national security) the rule of openness must be modified to meet the exigencies of the particular case.

12And in The Herald & Weekly Times Ltd v The Magistrates' Court of Victoria and Others [1999] VSC 232 , Beach J, citing that passage, explained (at [39]):

The reason a person can be blackmailed successfully is usually because he or she has committed some indiscretion which would bring him or her into public odium were such indiscretion revealed. Without a guarantee of anonymity such a person may well endure the blackmail in silence. It is with a view to encouraging such people to come forward and reveal the blackmail that their anonymity is guaranteed.

13Another example is to be found in the defamation case Chappell v TCN Channel 9 Pty Ltd (1988) 14 NSWLR 153, in which - although the proceedings as a whole and the general nature of the imputations were not suppressed - the detail of the imputations was. As Hunt J said (at 156):

To reproduce in this publicly delivered judgment the sleazy gutter
journalism by which those articles are characterised would invite its republication in reports of the court proceedings in the more widely read and heard media, and thus gratify Miss Hickey's wish (which is clearly apparent from everything which she has done so far) to inflict the greatest possible harm upon the plaintiff. It is best that only a neutral description be given of both the Truth newspaper articles and the proposed segment in the television programme: David Syme & Co Ltd v General-Motors Holden's Ltd [1984] 2 NSWLR 294 at 300-301, 308. The court was closed when a video of the proposed segment was shown, in order to prevent its contents being reported as part of the proceedings before me. To have permitted such a report to be published would obviously have defeated the whole purpose of the plaintiff's application: Supreme Court Act 1970, s 80(b); Scott v Scott [1913] AC 417 at 437-438, 446; see also Mirror Newspapers Ltd v Waller (1985) 1 NSWLR 1 at 11-14.

14While there is, as the legislation emphasises, a powerful public interest in open justice, there is an even greater public interest in the attainment of justice. And so the ends of the attainment of justice prevail, where they must, over open justice. If open justice would practically defeat the purpose for which proceedings are brought, or result in the practical circumvention of the relief being sought, the public interest in upholding the rights of litigants will usually prevail over the public interest in open justice.

15The defendant wishes to have the parties' dispute resolved in accordance with the Deed, under confidential ADR procedures. She has, at least strongly arguably, a legal right to that effect. To permit these proceedings to continue in public, at least pending resolution of that question, would deprive the defendant of the benefit of the agreement to use a confidential ADR process, and would deprive the stay application of much of its utility. It is significant that she had no opportunity to invoke the ADR procedures prior to the initiation of the proceedings, and it is not apparent why her right to insist on such procedures, including their confidentiality, should be trumped by the plaintiffs' decision to commence the proceedings in the court, moreso when that decision appears to have been founded on a mistaken view of the factual position.

16I am satisfied, to a high degree of certainty, that publication of the current proceedings will negate the purpose of the confidentiality provisions in the Deed, circumvent the rights of the defendant to have such disputes resolved to the extent possible by confidential mediation and arbitration, and defeat the very purpose of her stay application. I am therefore satisfied that the order is necessary to prevent prejudice to the proper administration of justice, satisfying s 8(1)(a). For the same reasons, I am satisfied that the public interest in upholding the legal rights of litigants requires that a suppression order be made, satisfying the first limb of s 8(1)(e).

17The conclusion that the public interest in upholding the legal rights of litigants requires that a suppression order be made is not of itself enough to authorise a suppression or non-publication order - it is next necessary to weigh that interest against the public interest in open justice. While the Court is commanded, by s 6, to take into account that a primary objective of the administration of justice is to safeguard the public interest in open justice, t he weight to be given to the public interest is liable to vary, depending on the nature and stage of, and issues in, the proceedings. Without seeking to be prescriptive, it will often be relevant to consider whether the proceedings are criminal (in which typically the interest in open justice will be greater) or civil; whether they involve questions of public or private law; and whether they involve disputes that impact on the public or only the parties. In this context, it is to be noted that while Australian law gives emphasis to the principle of open justice, it does so less emphatically in certain types of relatively private disputes, and its application is not always consistent. For example, (CTH) Family Law Act 1975, s 121, prohibits the publication of an account of proceedings under that Act that identifies a party, an associate or a witness; this is so notwithstanding that such proceedings are conducted in open court. (NSW) Civil Procedure Act 2005, s 71, recognises that certain types of proceedings (for example, those pertaining to minors) may be conducted in closed court, as they often are, although some judges, like myself, take the view that sufficient protection is afforded by prohibiting publication of identifying information, consistent with the approach under the Family Law Act. Protective proceedings are also typically conducted in closed court. Even in criminal proceedings, publication is prohibited if it might identify the victim of a child sexual assault, which often results in the identity of the perpetrator not being publishable. These practices reflect an acceptance that the public interest in open justice may attract less weight where private issues and interests are concerned. That is not to say that open justice does not remain, as s 6 stipulates, a primary objective of the administration of justice. But in such cases, in the balancing exercise required by s 8(1)(e), it may be somewhat less weighty.

18In the present case, to the extent that there remains a dispute at all, this is and always was a family dispute, about interests in and governance of a family trust. The outcome is of practical interest only to the parties and their privies. No questions of public significance or importance appear to arise. This is not a case in which the public interest in open justice is at its apogee; far from it. In my judgment, it is significantly outweighed by the public interest in vindicating the private rights of the parties, in this case to invoke a confidential ADR procedure to resolve their disputes.

19It is true that the fact, existence and pendency of the proceedings and the identity of some of the parties to them, have already been the subject of publication, so that not only would little be served by suppression of those matters, but there would be a significant risk of inadvertent contravention by those who may have heard or read of the proceedings to date. But the relief claimed in the proceedings, and the evidentiary material filed, read or given in them, has not so far been published, and under the Deed would be treated as confidential; consistently with the rights and obligations of the parties under the Deed, that position should be preserved at least pending determination of the defendant's stay application. The Act does not specifically authorise suppression orders in respect of judgments or orders, although in many cases judgments would, at least in part, be covered by "information about evidence" in s 7(b). I am inclined to think that, in the context of what is already in the public domain, less harm would be done by publication of the judgment than by its suppression, but counsel may wish to argue to the contrary.

20The defendant further contended that knowledge of the pendency of the present application and the relief sought in it may of itself jeopardise sensitive and confidential commercial negotiations in connection with major infrastructure projects. I would not have found, on this basis alone, that it was necessary in the public interest to make a suppression or non-publication order. While there is a possibility that knowledge of the pendency of the proceedings might have some impact on dealings with third parties, in my view the evidence does not reach the requisite level of certainty in that respect for an application of this kind, and in any event the fact that the pendency of litigation might have an impact on a party's dealings or relationships with third parties is not an established or sufficient basis for departing from the principle of open justice. However, the concern that public litigation might have that effect illustrates the rationale underlying, at least in part, the confidentiality provisions in the Deed.

21The Act provides, by s 11, for a suppression order to specify where it applies, which is not limited to New South Wales and may be anywhere in the Commonwealth, if the court is satisfied that having it apply outside New South Wales is necessary for achieving the purpose for which it is made. The major commercial activities in which the trust is interested are conducted in another state. I am satisfied that the purpose of the order would be liable to be defeated if it were not made applicable throughout the Commonwealth.

22The Act further provides, by s 12, for a suppression order to specify the period for which it will operate, which may be specified by reference to a fixed or ascertainable period or by reference to the occurrence of a specified future event, but is to be no longer than is reasonably necessary to achieve the purpose for which it is made. In my view, the purpose of the order being to uphold the rights of the parties to confidentiality in respect of their dispute and its resolution, the appropriate period is at the very least unless and until the defendant's stay application is dismissed. If it is not dismissed and the proceedings are stayed, then it may be that the order should persist until the earlier of the vesting date of the trust, or the death of the defendant, but that question can be reviewed, if necessary, upon determination of the stay motion.

Order

23Accordingly, I am satisfied that the grounds for a suppression order referred to in s 8(1)(a) and s 8(1)(e) are established. That conclusion relieves me of the need to consider the defendant's alternative claim for privilege in respect of a letter annexed to the affidavit read on the ex parte application. I will afford counsel an opportunity to be heard as to the precise form of the order, but subject to those submissions, I propose to make orders to the following effect.

24Upon the undertaking of Paul McCann, solicitor, to pay the appropriate filing fees, grant leave to the defendant to file a motion claiming a stay of the proceedings in the form of annexure 'H' to the affidavit of Paul McCann sworn 9 September 2011. Direct that the motion be returnable on 21 September 2011 at 09:30am before me. Abridge time for service of the motion to 16 September 2011.

25Pursuant to (NSW) Court Suppression and Non-publication Orders Act 2010, s 7, and upon the ground referred to in s 8(1)(a) that the order is necessary to prevent prejudice to the proper administration of justice, and the ground referred to in s 8(1)(e) that it is otherwise necessary in the public interest for the order to be made and that public interest significantly outweighs the public interest in open justice, I make a suppression order prohibiting the disclosure, by publication or otherwise, of any information as to the relief claimed, or any pleading, evidence or argument filed, read or given in, the proceedings. Pursuant to s 9(4), this order does not prohibit disclosure or publication of this judgment, nor of orders made in the proceedings. Pursuant to s 11, it is specified that this order applies throughout the Commonwealth. Pursuant to s 12, it is specified that this order operates until the dismissal of the defendant's motion for a stay of the proceedings, and if it is not dismissed until further order of the Court.

Counsel addressed

26So far as the orders to be made on the suppression application are concerned, in expressing the above reasons I have taken some care to minimise the detail, particularly as to the contents of the April 2007 deed, to only one provision of which reference has been made, and the nature of the underlying dispute, which has been described only in the broadest terms. While on one view none of the underlying matters ought to be in the public domain if the confidentiality agreement had been adhered to, the fact is that some of them are. I remain of the view that publication of this judgment will put into the public domain very little, if anything, more than is already there.

27Against that, there is considerable force in the argument that there is a significant public interest in at least understanding why a suppression order has been made. Accordingly, I will make the orders set out in paragraphs 24 and 25 of the judgment.

28I vacate the appointment before the Duty Judge on Wednesday 21 September at 10:00am. I adjourn the proceedings generally to Wednesday 21 September at 9.30am before me, on which occasion it is intended that there be heard the defendant's application for a stay, the plaintiff's application for leave to amend and the defendant's application for a transfer order.

29I direct that by close of business on 14 September 2011 the defendant serve on the plaintiffs notice of the grounds upon which she relies for a stay and for a transfer order. I direct that the parties lodge with my Associate by close of business on 15 September an agreed minute of directions covering exchange of evidence and skeleton arguments in preparation for the hearing on 21 September, and failing agreement their respective draft minutes of directions for that purpose.

30For the benefit of those who might otherwise be interested in reporting the proceedings, I will make clear that a suppression order has been made prohibiting the disclosure, by publication or otherwise, of any information as to the relief claimed, or any pleading, evidence, or argument filed, read or given in the proceedings. This does not prohibit disclosure or publication of this judgment, or orders made in the proceedings.

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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: 15 September 2011