Supreme Court New South Wales

• Medium Neutral Citation: Welker & Ors v Rinehart & Anor (No 4) [2011] NSWSC 1636
• Hearing dates: Thursday, 22 December 2011
• Decision date: 22 December 2011
• Jurisdiction: Equity Division - Duty List
• Before: Brereton J

Decision

Motion filed by media interests dismissed with costs.

Motion filed by Hancock Prospecting Pty Limited dismissed with costs.

• Catchwords: COURTS AND JUDGES - Application by media interests to discharge and vary extant interim suppression order - order presently in place expressed to operate until further order of the Court or the Court of Appeal - subsequent appellate proceedings instituted - appellate proceedings dealt with separate suppression orders made by Judge of Appeal - no application for leave to appeal against original suppression order - undesirable that order be self-executing - need for order to be consistent with basis on which order originally made - application refused.; PRACTICE AND PROCEDURE - Stay of proceedings - parties agree to refer disputes arising under deed to confidential mediation and arbitration - threshold questions raised as to standing of applicant and whether proceedings an abuse of process - application dealt with on merits without deciding threshold questions - issue whether proceedings are a 'dispute' under the deed referable to confidential mediation and arbitration - whether proceedings a 'claim' precluded by deed - 'claim' refers to proceedings existing or discontinued at date of deed - whether proceedings involve breach of deed by seeking removal of trustee and replacement with non-Hancock family member - plaintiffs seek no such thing - references in deed to proceedings and discontinued proceedings relate to proceedings existing or discontinued at time of entrance into deed - proceedings said to result in Hancock Prospecting not being owned or controlled by Hancock group members - conformable with this provision that trustee be replaced by Hancock family member - proceedings said to involve contravention of disparagement provisions - even if proceedings involve disparagement not a proper basis for stay - contention that making public of deed a breach of deed -public policy reasons why such argument should be rejected - not a dispute 'under this deed' - application dismissed.
• Legislation Cited: (NSW) Civil Procedure Act, s 67; (NSW) Court Suppression and Non-Publication Orders Act, 2010
• Cases Cited: Rinehart v Welker [2011] NSWCA 345; Rinehart v Welker [2011] NSWCA 403; Rinehart v Welker [2011] NSWCA 425; Welker v Rinehart (No 2) [2011] NSWSC 1238
• Category: Procedural and other rulings
• 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); Australian Broadcasting Corporation, Fairfax Media Publications Pty Ltd, Nationwide News Pty Ltd (applicants); Hancock Prospecting Pty Ltd (applicant)
• Representation: Counsel: Dr A S Bell SC with Mr DFC Thomas (plaintiffs); Mr B A Coles QC with Mr S Robertson (first defendant); Mr P W Flynn (second defendant); Mr A T S Dawson (Australian Broadcasting Corporation, Fairfax Media Publications Pty Ltd, Nationwide News Pty Ltd); Mr D Studdy SC with Mr C Colquhoun (Hancock Prospecting Pty Ltd); Solicitors: Johnson Winter & Slattery (plaintiffs); Corrs Chambers Westgarth (first defendant); Gadens Lawyers (second defendant); Addisons (Australian Broadcasting Corporation, Fairfax Media Publications Pty Ltd, Nationwide News Pty Ltd); Corrs Chambers Westgarth (Hancock Prospecting Pty Ltd)
• File Number(s): 2011/285907

Judgment (ex tempore)

1 HIS HONOUR: Before the Court today are three notices of motion. The applicants on the first motion are various media interests, including the Australian Broadcasting Corporation, Fairfax Media Publications Pty Ltd and Nationwide News Pty Ltd, who make application in relation to a suppression and non-publication order made in these proceedings. They have standing to do so as 'news media organisations' under (NSW) Court Suppression and Non-Publication Orders Act, 2010, s 9(2). The moving party on the second notice of motion is Hancock Prosepcting Pty Limited ('HPPL'). HPPL is not presently party to the proceedings, but is party to deeds the subject of the proceedings and contends that the proceedings engage its interests; it seeks dismissal or stay of the substantive proceedings pending confidential alternate dispute resolution procedures. The first defendant is the applicant on the third motion and seeks an order that issues raised by certain paragraphs of the statement of claim be determined as separate questions, and time for filing a defence extended in the meantime. However, the third The motion was ultimately disposed of by consent of the plaintiffs, who agreed that the identified paragraphs of the statement of claim should be struck out. In this judgment I will deal first with the media interests' application, before turning to HPPL's application.

2 In a judgment I gave on 7 October 2011 [ Welker v Rinehart (No 2) [2011] NSWSC 1238], I dismissed the motions filed by the first and second defendants seeking stays of the proceedings, one consequence of which was that a suppression order I had previously made under (NSW) Court Suppression and Non-Publication Orders Act, 2010 would therefore expire. However, I was satisfied that an interim suppression order should be made, pending the determination of any application for leave to appeal from my decision, to prevent prejudice to the proper administration of justice. I then said (at [54]):

... I am satisfied that an interim suppression order pending the determination of the application for leave to appeal from the foregoing orders is necessary, to prevent prejudice to the proper administration of justice. If such an order is not made, an arguable appeal - as I find the application for leave to appeal is - would be rendered nugatory and the right to confidentiality under the Deed which the defendants seek to vindicate by their application for leave to appeal would be defeated before it could be heard in the Court of Appeal...

3 I contrasted the position of a case in which a primary judge doubted that there was an arguable case of error, in which case a short stay might be afforded to enable a stay application to be agitated fully in the Court of Appeal, with the case in which it was reasonably clear that there was an arguable appeal, where the primary judge should endeavour, so far as practicable, to relieve the Court of Appeal of having to determine a stay application. In that respect I said (at [57]):

... That does not preclude the ability of the Court of Appeal to do so, nor does it preclude the parties from returning to the primary judge for a variation of the order.

4 Accordingly, I made an order - which was relevantly expressed to operate "until the determination of [the application for leave to appeal] or further order of this Court or of the Court of Appeal."

5 As had been anticipated, the defendants applied to the Court of Appeal for a suppression order in connection with the application for leave to appeal. Tobias AJA made such an order on 31 October 2011, substantially to the same effect as the order I had made [see Rinehart v Welker [2011] NSWCA 345]. The plaintiffs applied for a review of his Honour's order and, on 19 December 2011, the Court of Appeal upheld the review application and set aside the order of Tobias AJA [see Rinehart v Welker [2011] NSWCA 403]. Yesterday, Beazley JA stayed the operation of that order in aid of a foreshadowed application for special leave to appeal to the High Court [see Rinehart v Welker [2011] NSWCA 425].

6 By motion filed in court today the media interests relevantly seek the following orders:

2. Order 5 made by his Honour Justice Brereton on 14 October 2011 pursuant to the Court Suppression and Non-publication Orders Act 2010 (NSW) be discharged.

3. Order 2 of these orders be stayed until the expiry of any stay granted by the Court of Appeal or the High Court of Australia of the Court of Appeal's Order 1 made on 19 December 2011.

7 The effect of those orders, if made, would be that the suppression order made by me would be discharged upon the expiry of the stay granted yesterday by Beazley JA.

8 As I endeavoured to explain (in paragraph [57] of the 7 October 2011 judgment), the suppression order made by me was in the nature of a stay pending appeal. While appellate courts encourage primary judges to deal with such applications in the first instance, and while the primary judge retains control over the stay, subject to any supervision of it by the Court of Appeal, there is much to be said for the view that once the decision has been made, in the absence of a material change of circumstances, any review of the stay should be a matter for the Court of Appeal.

9 The question in this application is essentially whether I should accept that the Court of Appeal's decision is necessarily inconsistent with my decision to grant a stay or make an order in the nature of a stay pending appeal, and vacate my decision; or whether it is preferable that that judgment be left to the Court of Appeal. The closest the Court of Appeal judgment comes to directly addressing the ground of my decision is in paragraph [53] of the joint judgment of the Bathurst CJ and McColl JA, which is as follows:

Tobias AJA also erred in our opinion in concluding that the failure to make a suppression order would render the proceedings nugatory. Disclosure of the information the subject of the suppression order will not "cause an entire destruction of the whole matter in dispute": Hogan v Hinch (at [21]). The trustee, if successful in obtaining a stay, will have the benefits of the substance of the allegations and matters concerning the trust being considered in a private arbitration rather than a public forum. This would seem to us to be the primary purpose of the arbitration/mediation provisions in the Deed. Such advantages remain irrespective of the fact that the allegations made against her have been publicly disclosed.

10 I accept that in that passage their Honours appear to have accepted that the jeopardy to the right sought to be vindicated in the appeal occasioned by publication in the meantime was insufficient to justify a suppression order. On the other hand, there are indications in the Court of Appeal's judgment that the Court was conscious that my order remained on foot and was not the subject of an appeal. Thus Young JA said (at [125]-[126]).

I should note here that both Mr Walker and Dr Bell emphasised in submissions that this Court is only dealing with a very narrow issue and that is whether the non-publication order made by Tobias AJA based on s 8(1)(a) of the Act should be upheld. The Court is not to be concerned with whether the order could have been supported even partially under the inherent power nor whether an injunction, if sought, would have been granted, or with breach of contract. These submissions must be accepted.

For similar reasons the Court is not concerned that the non-publication order made by Brereton J against which there is no appeal, [which] may cover the same territory as the order of Tobias AJA with the exception of new material created in the Court of Appeal.

11 The fact remains that my order contemplated that it could be brought to an end not only by revocation or further order at first instance, but also by further order of the Court of Appeal. No application for leave to appeal from the interim suppression order nor any application of an interlocutory nature to bring it to an end, has been made to the Court of Appeal. The situation is now complicated by the stay granted by Beazley JA and the pendency of an application for special leave to the High Court of Australia.

12 In those circumstances, it seems to me highly desirable that, rather than making an order which may have a self executing effect some time in mid-January, the control of this order be consistent with the basis on which it was originally made. If an application is to be made for a discharge of this order, that can be made pursuant to the order, which provided for its termination on further order of the Court of Appeal.

13 I therefore do not think it appropriate that I should make the orders sought in the media interests' motion.

14 I dismiss the motion with costs.

Hancock Prospecting Pty Limited

15 By notice of motion filed on 15 November 2011 and amended today, Hancock Prospecting Pty Limited ('HPPL') seeks an order pursuant to (NSW) Civil Procedure Act , s 67, or alternatively in the inherent jurisdiction of the Court, staying the substantive proceedings until the determination of notices of dispute given by HPPL on 11 and 27 November 2011.

16 Although the plaintiffs have raised a number of threshold objections to the motion, I have come to the conclusion that I can deal with it on the merits, without having to consider in detail those threshold objections. But I shall record that the threshold objections relate, in substance, to the circumstances (1) that HPPL is beneficially owned, as to in excess of 75 per cent of the shareholding by the first defendant, the balance being held by the trust which is the subject matter of the principal dispute, and legally wholly by the first defendant, who is also its executive chair; (2) that HPPL had previously filed a motion to like effect on 18 October 2011 which was, by consent, dismissed; and (3) that it was on notice of or actually knew of the matters in issue in the proceedings and could and should, if minded to, have made any application for a stay concurrently with the applications brought by the other defendants which I determined on 7 October 2011.

17 Nonetheless, as I have said, I shall turn, relatively briefly, to the merits of the application. I am prepared to accept, for present purposes, that HPPL would have standing, if not to apply for a stay in the present proceedings, then to bring separate proceedings for an injunction restraining the plaintiffs from bringing or further prosecuting the proceedings, if it could establish one or more of three propositions. The first such proposition would be that the proceedings were doomed to fail, which would include establishing that any claim in them had been released. But as no relief is sought against HPPL in the substantive proceedings, this would not be relevant for present purposes. The second would be that the proceedings were brought in breach of a contractual provision to the benefit of which HPPL was entitled - for example, if there were a promise not to bring proceedings of the type that the principal proceedings are, which HPPL was entitled to enforce. There are some aspects of this second basis in HPPL's present application. The third , and it is related to the second, is that there was a promise that the subject matter of the proceedings would be submitted to an alternative dispute resolution procedure rather than prosecuted in a court. This is an important aspect of the application.

18 I am also prepared to accept, for present purposes, that the relevant contractual dealings evince a sufficient intent to ensure the confidentiality of some types of disputes that might impinge on HPPL's interests that HPPL would have standing in separate proceedings, if not by way of a stay application in the present proceedings, to seek relief of the nature sought.

19 Essentially, HPPL contends that a number of issues that it has raised by the notices of dispute give rise to disputes under the Hope Downs Deed, which the parties agreed must be submitted to confidential mediation and, failing that, arbitration.

20 Although HPPL has argued, or has submitted, that a liberal approach should be taken to the construction of the phrase 'under this deed', I see no basis, particularly in the present circumstances, for departing from the construction I gave to that phrase in the judgment of 7 October 2011; namely, a dispute which derives from or depends on the deed, or involves enforcing or invoking some right created by the deed.

21 I shall deal seriatim with the fourteen grounds that have been advanced in HPPL's submissions, noting that Mr Studdy SC, who appeared for HPPL, has commendably and courteously limited oral argument to those grounds which raised new matters not dealt with in my previous judgment, but also recording that, in doing so, he made clear that, for the purposes of any appellate proceedings, all grounds were formally pressed. I shall therefore at least formally, deal, with all of them.

22 The first ground was that, as the relief sought by the plaintiffs in the proceedings included the removal of the first defendant as trustee of the trust, this was a claim, within the definition in clause 1.1(ii) of the Hope Downs Deed, which had been released. This contention was advanced on the basis that clause 1.1(a)(ii) of the definition of 'claim' was to be construed as being concerned with two matters: first, any attempt to remove or vary the first defendant as trustee; and, secondly, the removal or variation of any subsequent Hancock family group member as trustee and her replacement with a person or entity who is not a family group member.

23 While this construction derives a little support from the use of "Trustee" in the first part of the clause, and elsewhere "trustee", when read as a whole it seems to me that the clause is simply incapable of that meaning. It refers to any attempt to remove or vary the "Trustee", or any subsequent Hancock family group member as trustee, and then to replace the trustee so removed with a person or entity not a Hancock family group member. To my mind, so structured, the words "and replace the trustee..." govern the whole of what goes before, and not just the second part of it. Indeed, it seems to me that the parties have effectively carved out from the scope of definition of a 'claim' an attempt to remove or vary the trustee and replace the trustee with a family group member.

24 Moreover, as HPPL concedes, I have previously held that the relevant definition of 'claim' is limited to one "existing or discontinued" at the date of the Hope Downs Deed. It is also to be borne in mind that releases are ordinarily narrowly construed, and are construed as relating to claims (etcetera) not yet existing or yet in contemplation only if it is very clear that that is the intention. Although it was suggested that the word "otherwise" at the conclusion of the prefatory words of clause 1.1(a) expanded the scope from existing or discontinued claims to future claims, in my view the word "otherwise", following the second and not the first "whether", is intended to make sure that claims, whether at law, under statute, in equity or otherwise are caught; not that future claims are caught. It is notable that a similar formulation is used in clause 6(c)(vi), which refers to claims wherever and whenever arising whether "arising under common law, equity, statute, or otherwise".

25 Accordingly, I reject ground 1.

26 Ground 2 seeks to characterise the substantive proceedings as a claim for the removal of the first defendant and her replacement as trustee by a non-Hancock family group member. The two answers to that contention are, first, that the claim, even if correctly so characterised, is not one that was 'existing or discontinued' as at the date of the Hope Downs Deed; and secondly that in any event that is simply not the claim that the plaintiffs make in the proceedings: they do not propose the replacement of the trustee by a non-family group member.

27 Ground 3 seeks to characterise the substantive proceedings as a claim within the definition in paragraph (a)(iv) of the term 'claim', namely 'any action against any of the directors' of HPPL. Again, there are two answers to this: first, it is not a claim that was existing or discontinued at the date of the Hope Downs Deed; secondly, the reference to 'any action against any of the directors' is a reference to an action against them qua director, and not in some other capacity. The subject claim here is not such an action.

28 Ground 4 contends that the substantive proceedings are a claim within clause 1.1(d) of the definition of that term, which provides: "without limitation of sub-clauses (a) and (b) includes any claim made in any proceeding or any discontinued proceeding and any documents to support such claim...". In my view, in the context that precedes it and the context of the deed as a whole, the reference to "any proceeding or any discontinued proceeding" is a reference to an existing proceeding or a discontinued proceeding, and not to a future proceeding. A proceeding not yet brought is not a 'proceeding'. The context of paragraph 1.1(d) in the definition of 'claim' as a whole, to my mind reinforces that conclusion. In the context of the earlier references to 'existing and discontinued claims', it is improbable that a reference to 'proceeding' was intended to catch future claims, rather than to ensure that it caught any claim made in any proceeding that was extant, or had been discontinued, and any documents in it.

29 Ground 5 contends that the substantive proceedings are brought in breach of undertakings given in clause 7(c) of the Hope Downs Deed. By that clause, each party, including each of the plaintiffs, undertook with each other "not to take any steps at any time which would result in HPPL ceasing to be wholly owned and controlled by Hancock family group members including, without limitation, any change to the trustee in contravention of the provisions of this deed". ( Incidentally, this clause is an example where clear words have been used to capture future matters as well as past and present matters).

30 The prohibition is on taking steps which would result in a certain outcome; not which could result in such an outcome. And it specifically excludes steps which would lead to a change to the trustee, other than in contravention of the provisions of the deed; accordingly it does not prohibit changes in conformity with the Deed. It is in conformity with the provisions of the deed that the trustee be removed and replaced by a Hancock family group member. Even if the proceedings could lead to a different result, that is not what the plaintiffs seek. Nor, in my view, is it an inevitable outcome of the present proceedings. While the submission that courts are often reluctant to appoint trustees resident outside the jurisdiction, or to appoint beneficiaries as trustees is not without force, where the trust instrument contemplates or even encourages such a course, the court will no doubt give weight to that. In my view, it cannot be said that the steps taken will lead to the prohibited result.

31 In ground 6, HPPL contends that the commencement of the substantive proceedings is a breach of clause 7(d), by which each party to the Hope Downs Deed undertook with the other not to 'disparage'. I dealt with this argument in the previous judgment. The bringing of proceedings against the trustee does not necessarily involve disparagement. At best, other parties to the deed might be entitled to an injunction restraining disparagement. That would not be the same thing as an injunction restraining the bringing of proceedings for the trustee's removal. A court would not grant an injunction restraining disparagement if that prevented the proper conduct or legitimate vigorous articulation of a case otherwise properly brought. I do not accept that, even if the proceedings in some respect involved disparagement, that would provide a basis for staying their prosecution.

32 Ground 7 contends that commencement of the substantive proceedings is a breach of clause 7(e), by which the parties undertook not to challenge the rights of any of, inter alia , the first defendant, to any of her right, title or interest in any of the Hancock Group. I addressed that argument in my previous judgment (at [46]).

33 Ground 8 contends that the proceedings are a breach of clause 8 of the Hope Downs Deed, by which the parties acknowledge that, during her lifetime, the first defendant should maintain "full ongoing control and management of HPPL". I dealt with that argument in my previous judgment (at [48]).

34 Ground 9 contends that commencement of the proceedings was a breach of clause 9.2, by which the beneficiaries agreed to do all matters and things necessary to implement and facilitate any decision of the trustee to appoint any one or more of the beneficiaries as trustee, which appointment will be deemed to be conditional upon the continuing right of Gina Hope Rinehart to decide to re-assume the position of trustee by herself. I dealt with this argument in my previous judgment (at [49]). There is no independent conferral of any 'right' on the first defendant to re-assume the position of trustee except in the context of clause 9.2, which contemplates a voluntary decision by her to appoint one or other of the beneficiaries as trustee additionally to, or in place of, herself. In other words, the so-called 'right' to reassume the position of the trustee under clause 9.2, is a condition attached to the voluntary appointment of an additional or replacement trustee and not to a removal or replacement that happens otherwise.

35 Ground 10 contends that the plaintiffs' threatened disclosure of the Hope Downs Deed, and the Deed of Obligation and Release to a litigation funder, would be in breach of clause 10.1 of the former and clause 9 of the latter. If that be so, then HPPL might arguably be entitled to an injunction restraining such disclosure - although there may be many public policy reasons why that course would not be favoured by the court. But that is not the relief sought, and I do not see how a threatened breach of that provision makes the plaintiffs' claims in the substantive proceedings a dispute under Hope Downs Deed, or requires their submission to confidential mediation and arbitration.

36 Ground 11 contends that the plaintiffs' claim for an order that the first defendant provide accounts for the trust and for HPPL for the years 1992 to date is contrary to the release and discharge given in clause 2 of the Deed of Obligation and Release, and that that is imported into the Hope Downs Deed.

37 For the purposes of this and some of the subsequent grounds, it is necessary to understand how these provisions interrelate. Clause 2 of the Deed of Obligation and Release is a release and discharge. It contains no promise to do or refrain from doing anything. Clause 3, similarly contains a release, in (a); an abandonment of claims in (b); but in (c) extends to a promise not to bring or make any other claim or proceeding against the releasees "that is in any way connected with or incidental to the matters the subject of this deed or any earlier claims". The question, therefore, is, first, whether the present proceedings involve a claim or proceeding that is "in any way connected with or incidental to the matters the subject of" the Deed of Obligation and Release, is only a default under the Deed of Obligation and Release that is picked up as a default under the Hope Downs Deed, by clause 5(d) of the Hope Downs Deed. However, it is picked up there only for the purposes of the distribution covenant contained in clause 5; that is to say, clause 5(d) provides:

Any default by a beneficiary under the deed of obligation and release shall be deemed to be a default by that beneficiary for the purpose of this clause .

38 Thus the Hope Downs Deed does not pick up, for the purposes of clause 20 , a breach of the promise in clause 3(c) of the Deed of Obligation and Release if bringing the present claim be such a breach. In any event, the claim for accounts is merely an aspect of or incidental to the substantive relief sought in the proceedings and would not, in my judgment, result in the proceedings as a whole correctly being characterised as in respect of a dispute 'under this Deed'.

39 In any event, ground 11 could relate only to the second plaintiff, and could not justify a stay of the proceedings brought by the other plaintiffs. That of itself would be a very strong discretionary basis for not granting a stay at the suit of the second plaintiff.

40 Ground 12 likewise depends on the Deed of Obligation and Release and its incorporation into the Hope Downs Deed. For the reasons I have just given, it is incorporated in the Hope Downs Deed only for a limited purpose, and for substantially the same reasons I have given in respect of ground 11, this ground also fails.

41 Ground 13 is admittedly closely related to ground 11, and for substantially the same reasons also fails.

42 Ground 14 depends on the contention that the substantive proceedings involve claims within paragraphs (a)(iv) and (b) of the definition of that term in the Hope Downs Deed. For reasons already given, I do not accept that construction.

43 For those reasons, it seems to me that, regardless of the threshold points, HPPL is not entitled to a stay of the proceedings, and its motion should be dismissed, with costs.

44 The plaintiffs seek an order that those costs be assessable forthwith. To my mind (although I have not addressed the threshold objections) the circumstances (1) that there has already been a fully agitated application for a stay, by a party of which HPPL is not quite, but may very well be the alter ego; and (2) that HPPL is not presently a party to the proceedings; warrants an order to the effect sought by the plaintiffs.

45 My orders are as follows:

(1) Order that the motion filed in court on 22 December 2011 by the Australian Broadcasting Corporation and others be dismissed, with costs.

(2) Order that the motion filed by Hancock Prospecting Pty Ltd be dismissed, with costs, the costs of the motion to be assessable forthwith.

(3) By consent, order that paragraphs 69, 70, 71, 72 of the Statement of Claim be struck out.

(4) No order as to the costs of the Defendant's motion filed 20 December 2011.

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Decision last updated: 18 January 2012