Supreme Court New South Wales

• Medium Neutral Citation: Welker v Rinehart (No 11) [2012] NSWSC 1341
• Hearing dates: 12 September 2012
• Decision date: 12 September 2012
• Jurisdiction: Equity Division
• Before: Brereton J

Decision

Leave to file notice of motion claiming an order for mediation refused; notice to produce set aside.

• Catchwords: PRACTICE & PROCEDURE - leave to file notice of motion claiming an order for mediation - where parties had prepared for hearing on substantive issues - where mediation not likely to be beneficial; PRACTICE & PROCEDURE - notice to produce - where plaintiff has disclosed to journalist that he has advice of senior counsel - whether privilege waived by deploying summary of legal advice in public - whether document sought relevant
• Category: Interlocutory applications
• Parties: Hope Rinehart Welker (First plaintiff); John Langley Hancock (Second plaintiff); Bianca Hope Rinehart (Third plaintiff); Gina Hope Rinehart (First Defendant); Ginia Hope Frances Rinehart (Second defendant)
• Representation: Counsel: Dr A Bell SC w Mr DFC Thomas (Plaintiffs); Mr D G Russell QC w M L Roberton & Mr C Bova (First defendant); Mr F Kunc SC w Mr W Flynn (Second defendant); Solicitors: Johnson Winter & Slattery (Plaintiffs); Corrs Chambers Westgarth (First defendant); Gadens (Second defendant)
• File Number(s): 2011/285907

Judgment (ex tempore)

Application for leave to file notice of motion

1 HIS HONOUR: The second defendant seeks leave to file a notice of motion, returnable instanter, claiming an order referring the proceedings to compulsory mediation. This is opposed by the plaintiffs.

2 The proceedings are set down for hearing today, and have been set down for some time, to deal with a number of matters, including the plaintiffs' application for leave to amend their statement of claim, and the defendants' application for summary dismissal of the proceedings [see Welker v Rinehart (No 10) [2012] NSWSC 1330].

3 The parties have prepared for a hearing today, and have exchanged comprehensive submissions addressed to a hearing today. The court has set aside time to hear the matter today. Nothing has emerged that would suggest that a mediation at this stage of proceedings would have high prospects. The court is conscious that sometimes, even when reference to a mediation is opposed, a compulsory mediation can produce a beneficial outcome, but there is little to indicate that that is likely in this case at this stage.

4 The second defendant invokes the provision of documents by the first defendant late yesterday, said to be in answer to the claim for production of documents, as indicative of some prospect of consensus. The plaintiffs have not yet had an opportunity to examine whether what is produced fully meets that description or not.

5 In my opinion, effectively to postpone the present hearing for the sake of a mediation, said to arise or be triggered by events that took place as late as yesterday, would be an inappropriate use of the court's time, and an inappropriate approach to case management.

6 I refuse leave to file the motion. It can be filed in the Registry in the ordinary course, if it is desired to pursue it.

Notice to produce

7 The notice to produce seeks, effectively, a single document and related documents in the context of interlocutory applications. Supreme Court Practice Note - SC Eq 11, does not apply to those circumstances. It is not an attempt to obtain discovery, as it is in aid of an interlocutory process.

8 It is implicit in the communications between Mr Hancock and Ellen Camp, as subsequently published in the Sydney Morning Herald, that the plaintiffs are in possession of senior counsel's advice, to the effect that there was never any risk of them becoming bankrupt on account of Capital Gains Tax ("CGT") triggered by the vesting of the trust, as had been alleged by the first defendant in the 3 September 2011 letter.

9 A party cannot deploy in public a summary of the effect of its legal advice in that way and hope to sustain a subsequent claim that that advice remains privileged. In my view, privilege has been waived in respect of such senior counsel's advice to the effect that there was no risk of their becoming bankrupt on account of the triggering of a CGT liability. That is not to say that the waiver extends to other aspects of any such advice, although it would extend to any aspects necessary to understand that part of it.

10 However, in my view, assuming, as I do for present purposes, that the advice was to that effect, I do not consider it relevant to the applications presently before the court. So far as paragraph [59JJ] of the proposed amended pleading is concerned, it has to be viewed in the context of what precedes and follows it. It is pleaded in the alternative to [59J], which is plainly concerned with the first defendant's state of mind, and it is in context clearly enough intended to attribute to her a different state of mind. As Dr Bell accepted, the words "was aware" in [59JJ] could perhaps better be read or framed as "believed", but that, in my view, was its intent. It has to be seen in the context of a pleading that is intended to establish grounds for showing that the 2012 amendment deed was executed for an improper or inappropriate purpose.

11 Even if the plaintiffs are in possession of senior counsel's advice to the effect that I have assumed, that would not be a basis for precluding them from pleading paragraph [59JJ]. So far as paragraph [78B], and the claim for relief in prayer 6B(ii), are concerned, it is noteworthy that neither the allegation nor the claim is to the effect that CGT liability in fact arose by reason of the deed's execution. It is expressed as including "any Capital Gains Tax liability arising". In other words, it is, in a sense, contingent or alternative, rather than an express allegation that such a liability arose.

12 A party is entitled to plead, and to claim relief, in that way, in case its primary position turns out to be incorrect. In my view, there is no inconsistency between the plaintiffs having a belief that no CGT liability arose, and an allegation that the first defendant is liable to compensate them for any such liability as might have arisen, if it did.

13 For that reason, the document, production of which is sought, could not inform the court's exercise of discretion on the application for leave to amend or for summary dismissal, and is irrelevant.

14 I order that the notice to produce be set aside.

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Decision last updated: 23 January 2013