Court of Appeal Supreme Court New South Wales

• Medium Neutral Citation: Rinehart v Hancock [2013] NSWCA 326
• Hearing dates: 2 October 2013
• Decision date: 03 October 2013
• Before: Macfarlan JA; Meagher JA

Decision

The application for leave to appeal is dismissed with costs.

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

• Catchwords: ARBITRATION - application for leave to appeal against interlocutory decision dismissing application to stay proceedings and refer them to arbitration - arbitration clause in deed applicable where "disputes under this deed" - whether releases and undertakings in deed foreclosed claims in equity proceedings - whether certain of the claims constituted claims covered by the deed when they had not been communicated prior to the date of the deed - whether outcome of equity proceedings claims "governed or controlled" by the deed
• Cases Cited: Haydon v Lo & Lo [1997] 1 WLR 198; Rinehart v Welker [2012] NSWCA 95
• Category: Principal judgment
• Parties: Ginia Hope Frances Rinehart (First Applicant); Hancock Prospecting Pty Ltd (Second Applicant); Hope Downs Iron Ore Pty Ltd (Third Applicant); John Langley Hancock (First Respondent); Bianca Hope Rinehart (Second Respondent); Hope Rinehart Welker (Third Respondent); Gina Hope Rinehart (Fourth Respondent)
• Representation: Counsel: R G McHugh SC/P W Flynn (First Applicant); D B Studdy SC/C Colquhoun (Second and Third Applicants); C H Withers/N Zerial/A Hochroth (First and Second Respondents); B R McClintock SC (Fourth Respondent); Solicitors: Gadens Lawyers (First Applicant); Corrs Chambers Westgarth (Second and Third Applicants); Yeldham Price O'Brien Lusk (First and Second Respondents); Corrs Chambers Westgarth (Fourth Respondent)
• File Number(s): CA 2013/285046

Decision under appeal

• Jurisdiction: 9111
• Citation: Hancock & Anor v Rinehart & Ors [2013] NSWSC 1352
• Date of Decision: 2013-09-18 00:00:00
• Before: Bergin CJ in Eq
• File Number(s): 2011/285907

Judgment

1 THE COURT: This is an application by three of the defendants in the Court below for leave to appeal against a decision of Bergin CJ in Eq of 18 September 2013 ([2013] NSWSC 1352) refusing to grant a stay of proceedings in the Equity Division and to order that all or part of the proceedings be referred to mediation and arbitration. There is urgency in the determination of the application to this Court as a hearing of the proceedings at first instance has been fixed to commence on 8 October 2013. In these circumstances it is appropriate that brief reasons only be given and that we not repeat the description given in the primary judgment of the relevant facts and circumstances, including the terms of the "Hope Downs Deed" (the "Deed"). The same abbreviations as used in the primary judgment are used in this judgment.

2 Leaving discretionary matters aside, for the applicants to succeed on their application to this Court, they need to demonstrate that at least one of two contentions is correct. The first contention is that the plaintiffs' claims in the Equity proceedings relating to the 2006 Amendments to the Constitution of HPPL are at least reasonably arguably foreclosed by the releases contained in clause 6 of the Deed, with the result that the outcome of those claims is "governed or controlled" by the Deed in the sense referred to in Rinehart v Welker [2012] NSWCA 95 at [125]. The second contention is that the plaintiffs are arguably prevented by the undertaking in clause 7(a) of the Deed from allegedly seeking the appointment of Mr Bruce Carter as an independent trustee of the trust.

The 2006 Amendments

3 The respondents advanced several reasons why the first contention should be rejected, including the proposition, as found by the primary judge, that clause 6 was inapplicable because the plaintiffs' allegations concerning the 2006 Amendments did not constitute "Claims" released by clause 6(a) as they had not been asserted or communicated by any of the plaintiffs to any of the defendants prior to the date of the Deed.

4 The correctness of this proposition depends on the proper construction of the definition of "Claim" in clause 1.1 of the Deed, and in particular the meaning to be given to the word "claim" as used in the expression "any claim, demand, action, suit or proceeding, whether existing or discontinued" in paragraph (a) of that definition. As was observed by Lord Lloyd when delivering the judgment of the Privy Council in Haydon v Lo & Lo [1997] 1 WLR 198 at 204, depending on the context in which it is used, the word "claim" may mean a "claim for something or a right to something".

5 The applicants argue that "claim" is used in the latter sense in paragraph (a) of the definition. On that basis they say that their argument that the claims or assertions made in relation to the 2006 Amendments have been released has reasonable prospects of success and is, for that reason, "sustainable". In the application before this Court none of the parties argued that the primary judge had erred in proceeding upon the basis that an argument answering that description, which was founded upon a provision of the Deed, would give rise to a "dispute under this deed" for the purposes of the relevant arbitration clause (clause 20).

6 Her Honour considered that the language of the definition could only reasonably be understood as using the word "claim" in the sense of a claim for something. For that reason, she concluded that this argument of the applicants had no reasonable prospects of success (Judgment [130], [132]). In our view the primary judge did not err in so concluding.

7 Each of the words in the expression "claim, demand, action, suit or proceeding" describes or involves by one of its meanings the assertion of something or the demand for something as due. Their use in the one expression indicates that they are to be understood in that same overlapping sense. The adjectival phrase "whether existing or discontinued" qualifies each of those words. That description is only capable of applying if each is used in that same overlapping sense. The word "claim" is used in the same sense in paragraph (b) and each of the paragraphs (d) of the definition. The language - "any claim made" - makes clear the sense in which the word is used, namely an assertion or demand made. One does not ordinarily describe a cause of action as "made".

8 The applicants point to the further words of limitation in paragraph (a)(i) of the definition which require that the claim or demand be "with respect to events or matters arising or actions taken prior to the date of this deed". It is said that if "claim" refers to a claim for something, the earlier words of limitation "whether existing or discontinued" make those further words superfluous because if a claim is existing, having been made, the matters or actions with respect to which it is made must have occurred. In our view, reference to a presumption against the use of surplus language provides no assistance because the same observation might equally be made if "claim" means a right or cause of action. For the cause of action to exist the matters or actions out of which it arises must have occurred.

9 More significantly, the terms of the definition do not suggest that the draftsman was so careful and precise that it should be presumed that no surplus language was used. The definition contains a number of words which have the same or similar meanings and specific provisions which cover subject matter dealt with by more general provisions. It also contains a provision which, when read with the opening words of the definition, is grammatically unintelligible (paragraph (c)) and provisions which appear twice (paragraph (b) and the first paragraph (d)). None of this provides a sound foundation for the making of the relevant presumption when addressing the question of construction. If the presumption was made it would not suggest a different answer to that question because the further words of limitation in paragraph (a)(i) may operate to exclude from the defined term a claim concerning a threatened (future) action or proceeding which might not be with respect to any event which has occurred or action taken prior to the date of the Deed.

10 Finally, we should record that the meaning of "claim" in the definition of "Claim" was not in issue in the earlier appeal to this Court. Nor was it the subject of any consideration. In argument the applicants made reference to the observations in the judgment of Bathurst CJ in Rinehart v Welker [2012] NSWCA 95 at [136], [137], [142]. Those observations are, at best, equivocal in relation to the question of construction in issue in this application.

11 We agree with the primary judge's conclusion that the applicants' first contention that the claims in respect of the 2006 Amendments have been released is not sufficiently arguable to give rise to or constitute a dispute under the Deed.

The Clause 7(a) undertaking

12 In our view, the applicants' second contention also fails. As indicated earlier, clause 7 contains undertakings. The clause does not therefore purport to release or bar any claims. Moreover, clause 11, which permits the pleading of certain provisions of the Deed in bar of any claims or proceeding, is expressed to apply only in respect of releases given under the Deed.

13 The applicants contend that the plaintiffs' claims concerning the identity of the trustee of the Trust constitute a breach of the undertaking contained in clause 7(a) not to do anything which could have an adverse impact on the Hancock Group's rights in certain respects. However, even if, by making those claims, the plaintiffs breached that undertaking, those claims would not necessarily fail. That breach of undertaking might be relevant to the Court's consideration of the plaintiffs' claims concerning the trustee but it would not automatically foreclose them. This was the approach, with which we respectfully agree, taken by Bathurst CJ (with the concurrence of Young JA) in Rinehart v Welker [2012] NSWCA 95 to breaches of undertakings contained in the Deed (see the chapeau to [146] and (b) and (c)). Whilst his Honour was dealing with undertakings in other sub-clauses of clause 7 than (a), his reasoning is in our view equally applicable to clause 7(a)

14 The primary judge did not expressly refer to clause 7(a) but did refer to this Court, in its earlier decision, having dealt with breaches of undertakings (Judgment [133]), indicating that her Honour considered the Court's reasoning to be applicable to the undertakings relied on in the present case. As we have indicated, that reasoning stands against the applicants' second contention.

15 In these circumstances, we do not consider it to be reasonably arguable that a finding that the plaintiffs had breached their undertaking in clause 7(a) would necessarily determine the plaintiffs' claims concerning the 2006 Amendments in favour of the defendants.

Orders

16 For these reasons, neither of the applicants' contentions should be accepted. Their application for leave to appeal should accordingly be dismissed with costs. In these circumstances, it is unnecessary to deal with the discretionary considerations relied on by the respondents in opposition to the application for leave to appeal.

**********

Decision last updated: 03 October 2013