Supreme Court New South Wales

• Medium Neutral Citation: Hancock & Anor v Rinehart & Ors [2013] NSWSC 1352
• Hearing dates: 11 September 2013
• Decision date: 18 September 2013
• Jurisdiction: Equity Division
• Before: Bergin CJ in Eq

Decision

Notices of Motion dismissed

• Catchwords: [PRACTICE AND PROCEDURE] - applications for stay of proceedings - whether amended claims and defences constitute a dispute "under" arbitration agreement; [COMMERCIAL ARBITRATION] - where arbitration agreement between the parties made at time when Commercial Arbitration 1985 (WA) in force - previous disputes the subject of arbitration - subsequent enactment of Commercial Arbitration Act 2012 (WA) - whether Commercial Arbitration Act 1985 (WA) applies by reason of transitional provision in the 2012 Act.
• Legislation Cited: Arbitration Act 1975 (UK); Arbitration Act 1996 (NZ); Arbitration (Foreign Awards and Agreements) Act 1974 (Cth); Commercial Arbitration Act 1985 (WA); Commercial Arbitration Act 2012 (WA); Commonwealth of Australia Constitution Act 1900 (Imp); Corporations Act 2001; International Arbitration Act 1974 (Cth); Trustees Act 1962 (WA)
• Cases Cited: Bank of Credit and Commerce International SA (in liq) v Ali [2002] 1 AC 251; Carter Holt Harvey Ltd v Genesis Power Ltd [2006] 3 NZLR 794; Casaceli v Natuzzi SpA (2012) 292 ALR 143; Channel Tunnel Group Ltd v Balfour Beatty Construction Ltd [1992] QB 656; Channel Tunnel Group Ltd v Balfour Beatty Construction Ltd [1993] AC 334; Comandate Marine Corp v Pan Australia Shipping Pty Ltd (2006) 157 FCR 45; Degiorgio v Dunn (2005) 62 NSWLR 284; Drummond-Vacksin v British Medical Association [1970] 1 WLR 688; Felton v Mulligan (1971) 124 CLR 367; Flakt Australia Ltd v Wilkins & Davies Construction Co Ltd [1979] 2 NSWLR 243; General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125; Gulf Canada Resources Ltd v Arochem International Ltd (1992) 66 BCLR (2d) 113; Recyclers of Australia Pty Ltd v Hettinga Equipment Inc (2000) 100 FCR 420; Rinehart v Welker [2012] NSWCA 95; Spellson v George (1992) 26 NSWLR 666; Tanning Research Laboratories Inc v O'Brien (1990) 169 CLR 332; Welker v Rinehart (No 2) [2011] NSWSC 1238; Welker v Rinehart (No 4) [2011] NSWSC 1636
• Category: Interlocutory applications
• Parties: John Langley Hancock (1st Plaintiff); Bianca Hope Rinehart (2nd Plaintiff); Gina Hope Rinehart (1st Defendant); Ginia Hope Frances Rinehart (2nd; Defendant); Hope Rinehart Welker (3rd Defendant); Hancock Prospecting Pty Limited (4th Defendant); Hope Downs Iron Ore Pty Ltd (5th Defendant)
• Representation: Counsel: CH Withers/N Zerial/A Hochroth (Plaintiffs); DG Russell QC/J Hutton (1st Defendant); RG McHugh SC/PW Flynn (2nd Defendant); DB Studdy SC/IC Colquhoun (4th and 5th Defendants); Solicitors: Yeldham Price O'Brien Lusk (Plaintiffs); Gadens Lawyers (2nd Defendant); Corrs Chambers Westgarth (1st, 4th and 5th Defendants)
• File Number(s): 2011/285907
• Publication restriction: Nil

Judgment

1 These are urgent applications by the active defendants to stay these proceedings, set down for hearing for 7 days commencing on 1 October 2013, and to refer part or all of the proceedings to mediation/arbitration. The applications are made at this time because the plaintiffs have only recently amended their pleading to bring new claims that have not previously been in issue in the proceedings. Although the parties have been involved in similar applications in these proceedings and, indeed, an appeal in respect of the dismissal of some of those applications, it is necessary to recount some of the history to their disputes because there is now a new litigious environment that requires consideration in the determination of these applications.

Background

2 The plaintiffs, John Langley Hancock (JLH) and Bianca Hope Rinehart (BHR), are children of the first defendant, Gina Hope Rinehart (GHR). The second and third defendants, Ginia Hope Frances Rinehart (GHFR) and Hope Rinehart Welker (HRW), are also GHR's children. The fourth defendant is Hancock Prospecting Pty Limited (HPPL). The fifth defendant is Hope Downs Iron Ore Pty Ltd (HDIO).

3 In the main proceedings the plaintiffs seek various forms of relief against GHR in respect of her conduct in her role as trustee of the Hope Margaret Hancock Trust (the Trust) established by her late father, Langley George Hancock, by a Deed made on 27 December 1988. The plaintiffs claim that GHR has misconducted herself in the administration of the Trust and has also breached her obligations as trustee of the Trust. The relief sought includes an order for GHR's removal as trustee of the Trust.

4 There has been disputation between the parties over the years. The parties settled their disputes and documented those settlements. Two such documents are the Confidential Settlement Deed of August 2006, referred to as the "Hope Downs Deed", (the Deed) and the Confidential Settlement Deed of 13 April 2007. The latter Settlement Deed had the effect, inter alia, of JLH agreeing to be bound by the Settlement Deed of August 2006.

5 These proceedings were commenced on 5 September 2011. The main issue in the proceedings at that time was whether GHR had acted wrongly and in breach of her obligations as trustee of the Trust in the days just prior to the filing of the proceedings in September 2011 in seeking releases and other undertakings from the beneficiaries in conjunction with the extension of the vesting of the Trust.

6 In October 2011 GHR and GHFR brought applications for a stay of the proceedings and an order for referral of the proceedings to mediation and arbitration. Those applications were dismissed: Welker v Rinehart (No 2) [2011] NSWSC 1238. In November 2011, prior to its joinder, HPPL also brought a similar application for a stay and referral of the proceedings to mediation and arbitration. That application was dismissed: Welker v Rinehart (No 4) [2011] NSWSC 1636.

7 An appeal from the dismissal of GHR's and GHFR's applications was dismissed on 20 April 2012: Rinehart v Welker [2012] NSWCA 95 (the Court of Appeal judgment).

8 Each of the abovementioned judgments sets out the history of the disputes between the parties and the history of the litigation. However, since April 2012, the plaintiffs have amended their pleading on a number of occasions to include additional matters upon which they rely in support of their claim for an order that GHR be removed as trustee of the Trust. As a result of some of those amendments and on the application of HPPL and HDIO, orders were made on 30 July 2013 joining those companies as the fourth and fifth defendants.

9 On 19 August 2013 the plaintiffs filed their Third Further Amended Statement of Claim (3SC). On 26 August 2013 GHR, via her solicitors, gave notice to the plaintiffs pursuant to clause 20 of the Deed, in respect of three disputes allegedly arising under the Deed.

The Applications

10 GHR, by Notice of Motion filed on 27 August 2013, GHFR, by Notice of Motion filed on 28 August 2013, and HPPL and HDIO, by Notice of Motion filed on 27 August 2013, seek orders staying all or part of the proceedings and referring all or part of the proceedings to mediation and arbitration.

11 The evidence in support of GHR's application consists of the affidavits of Paul Richard McCann sworn on 27 August 2013, 30 August 2013 and 10 September 2013. The evidence in support of GHFR's application is the affidavit of John Dalzell affirmed on 28 August 2013. The evidence in support of the application by HPPL and HDIO consists of the affidavits of Mark Anthony Wilks affirmed on 27 August 2013, 9 September 2013 and 10 September 2013 and the affidavits of Jeffrey Lewis Hall affirmed on 27 August 2013 and 9 September 2013. The plaintiffs relied upon three affidavits of Timothy Randolph Price, two sworn on 8 September 2013 and the third sworn on 10 September 2013.

12 The applications were heard on 11 September 2013. Mr DG Russell QC and Mr J Hutton, of counsel, appeared for GHR. Mr RG McHugh SC and Mr PW Flynn, of counsel, appeared for GHFR. Mr DB Studdy SC and Mr IC Colquhoun, of counsel, appeared for HPPL and HDIO. Mr CH Withers, of counsel, Ms N Zerial, of counsel, and Mr A Hochroth, of counsel, appeared for the plaintiffs.

13 The applicants claim that on the issues as joined on the recently amended pleadings there is a dispute "under" the Deed within the meaning of clause 20 of the Deed. It is contended that the dispute is a "matter which is the subject of an arbitration agreement" within the meaning of s 8(1) of the Commercial Arbitration Act 2012 (WA) and must be referred to arbitration. The plaintiffs resist the applications on various bases including that the applicants are seeking to re-litigate the matters the subject of the Court of Appeal judgment.

14 In the circumstances it is necessary to review the amended pleadings to identify the new claims made by the plaintiffs and the defences thereto for the purpose of determining whether there is a dispute "under" the Deed. It will also be necessary to review the relevant provisions of the Deed.

Additional background

15 Before undertaking that review, it is necessary to refer to some additional factual background that has only become relevant since the Court of Appeal judgment. The reference to these matters is, amongst other things, for the purpose of putting the Deed in context in the light of the new allegations made against GHR (and HPPL) in the amended pleadings referred to below.

16 In the Court of Appeal judgment Bathurst CJ referred to the recitals to the Deed of Obligation and Release entered into by JLH on 1 April 2005: [7]. It is appropriate to repeat Recital D. It was in the following terms:

Having particular regard to the commercial interests and the commercial sensitivities of the Hancock Group (and the potential for the Covenantor [JLH] to negatively seek exposure with the public or with the media particularly during periods of negotiation of large commercial projects such as the Hope Downs Project currently under complex negotiation by HPPL at the date of execution of this Deed), HPPL and the Hancock Group are desirous of obtaining the undertakings of the Covenantor to wholly retract, cease and desist from any such activities now and in the future.

17 In return for consideration under the Deed of Obligation and Release and the Deed of Loan, JLH provided to HPPL and others the releases and undertakings contained in the Deed of Obligation and Release: [7] per Bathurst CJ.

18 On 12 April 2005 JLH filed an application seeking leave to be heard in proceedings in the Supreme Court of Western Australia (No CIV 1327 of 2005) concerning GHR's position as trustee of the Trust (the WA proceedings).

19 On 1 July 2005 Rio Tinto announced that it had reached agreement with HPPL to purchase a 50% interest in the Hope Downs Iron Ore assets. It was also announced that Rio Tinto and HPPL would enter into a 50:50 unincorporated joint venture to develop the Hope Downs Iron Ore assets with the development and ongoing operation being managed by Rio Tinto. On 11 July 2005 JLH filed a Notice of Intention to be joined as a party to the WA proceedings and to make a cross-application in those proceedings. JLH indicated that he intended to apply for an order that his own nominee be appointed as trustee of the Trust in place of GHR because it was alleged that GHR had engaged in conduct in breach of her obligations as trustee.

20 The negotiations with Rio Tinto continued and culminated in the Hope Downs Joint Venture Agreement (the HDJVA) which was entered into on 16 March 2006. Although its contents are confidential, it is not in issue that an important aspect of that Agreement is the maintenance of ownership and control of HPPL and HDIO by the Hancock family with similar provisions and definition of "Hancock Family Group Member" as those found in the Deed.

21 On 26 January 2006 BHR received a copy of HPPL's solicitors' letter of advice which contained a proposal to amend HPPL's Constitution "in order to restrict the transfer of all classes of shares to Hancock family members or family-controlled companies". The letter included an explanation of why the amendment was necessary. Without descending into the detail of the confidential arrangements, it suffices to say that HPPL regarded itself as bound to change the Constitution by reason of the commercial agreements that had been reached with Rio Tinto in respect of the Hope Downs Project. The letter included the following:

3. Proposed Amendment of the Articles

HPPL wishes to amend its Articles in order to confine the transfer of all classes of shares to Hancock family members or family-controlled companies, ie, to prevent the transfer of any class of shares to non-family members or companies.

...

Since the proposed amendment to the Articles would introduce transfer restrictions to which the existing shareholders of HPPL were not subject when they acquired their shares in the company, the proposed amendment requires the express written consent of all the existing shareholders of HPPL pursuant to section 140(2) of the Corporations Act 2001 ("Act"). This requirement is in addition to the requirement that HPPL obtain approval by special resolution to amend its Articles (see section 136(2) of the Act), but it seems that all shareholders of HPPL can give their written consent for the purpose of section 140(2) of the Act and section 249A of the Act (written resolutions of proprietary companies with more than 1 member) in the same document.

22 On 21 February 2006 BHR wrote to the directors of HPPL in the following terms:

Hope Downs

As a director of Hancock Prospecting Pty Ltd (HPPL), I am familiar with the Rio Tinto agreements relating to Hope Downs and I am therefore aware of the necessity for HPPL Articles to be changed to restrict transfer of shares in HPPL to Hancock Group Family Members (lineal descendants of the Chairman, including myself) which arises under those agreements.

I am therefore happy to ratify and confirm the Board's decision to approve the changes to the Articles of Association of HPPL which implement the restrictions on transfer of HPPL shares as referred to in the agreements with Rio Tinto on Hope Downs.

23 On 17 February 2006 JLH was provided with a copy of an email from GHR in which reference was made to the sensitive negotiations that were occurring with Rio Tinto. [Balance of paragraph removed pursuant to confidentiality orders]

24 On 28 March 2006 HPPL wrote to JLH's solicitors (Ex D2 C Confidential). Much of the material in this letter is confidential. However it is appropriate to record the portion relevant to the plaintiffs' new claim in respect of the 2006 Amendments. In this regard the letter included the following:

Your client has not only received assurance that his mother will only be leaving her Hancock company interests to her lineal descendents (sic), but also in relation to the agreement with RTIO and their requirements, only family members (which include Mrs Rinehart and her direct lineal descendents (sic)) can have ownership and control ... hence it is not possible for Mrs Rinehart to do otherwise in the Company Articles have been so amended to protect this important position.

25 The Confidential Settlement Deed of 13 April 2007, pursuant to which JLH became bound to the Deed, recited that GHR was bound by the terms of the Deed executed on 16 March 2006 with members of the Rio Tinto Limited Group to ensure that all her shares in HPPL and control of same did not depart from her lineal descendants. By clause 6 of the 2007 Deed, GHR agreed to leave all her shares in HPPL to her lineal descendants and undertook to make such provision by means of a will in appropriate terms. That clause provided that GHR was personally bound "to the fullest extent possible at law". Clause 15 of the 2007 Deed provides as follows:

Each party to this Deed irrevocably covenants not to take any proceedings against any of the other parties to this Deed in relation to any matter arising in any jurisdiction, in respect of the matters the subject of the releases referred to in this Deed and the Hope Downs Deed and withdraws and forever abandons any and all allegations made against any of the other parties to this Deed, including in connection with:

a) the subject matter of CIV 1327 of 2005;

b) the allegations contained in JLH's affidavit or draft affidavit of or around 27 September 2005;

c) any combination of the above.

26 It was on 20 April 2007 that consent orders were filed in the WA proceedings pursuant to which JLH's application to be joined as a party was dismissed.

The Deed

27 It is not in issue that all relevant parties are bound by the Deed. The Deed includes the following relevant provisions:

1. DEFINITIONS AND INTERPRETATION

1.1 Definitions

...

Claim means:

(a) any claim, demand, action, suit or proceeding whether existing or discontinued, whether at law, under statute, in equity or otherwise:

(i) for damages, injunctions, debt, restitution or other remedy including, without limitation, breach of fiduciary duty of whatever nature and howsoever arising with respect to events or matters arising or actions taken prior to the date of this deed but not including any claim, demand, action, suit or proceedings arising as a consequence of the obligations and releases which any of the parties to this deed have agreed to in the Deed of Obligation and Release or the Deed of Loan or the Porteous Settlement Deed;

(ii) with respect to any attempt to remove or vary the Trustee or any subsequent Hancock Family Group Member as trustee of the HMH Trust and replace the trustee with a person or entity who or which is not a Hancock Family Group Member; and

(iii) any damage, loss, liability, costs, charge, expense, outgoing or payment;

(iv) any action against any of the Directors of any company within the Hancock Group, including without limitation, the Other Directors; and

(b) without limitation of clause (a) includes any claim made in the Proceedings:

(c) any damage, loss, liability, costs, charge, expense, outgoing or payment; and

(d) without limitation of sub-clause (a) includes any claim made in the Proceedings; and

(d) 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 and without limitation and for clarity in the case of the Proceedings includes the unsigned draft affidavit of JLH;

...

Disparage in relation to a particular person means to comment, in written or oral form, in any forum, in a manner which is either misleading in relation to or to the memory of that particular person or which is in any way embarrassing to GHR or the Trustee or to the memory of the late Langley George Hancock or the late Hope Margaret Hancock such that it would or might lower his or her reputation in the estimation of the public;

...

Hancock Family Group Member means GHR and her lineal descendants;

Hancock Group means HPPL, and any Related Body Corporate of HPPL;

...

Proceedings (whether existing or discontinued or the subject of disputed discontinuance) mean Supreme Court of Western Australia action numbered CIV 1327 of 2005 the parties to which are the HMH Trust and GHR and to which JLH is seeking to be joined;

...

6 RELEASES

Each party hereto both in its own right and in any representative capacity hereby:

(a) releases and discharges each of the other parties hereto now and in the future from any Claims,

(b) Irrevocably covenants not to take any proceedings against any of the other parties to this deed in relation to any matter arising in any jurisdiction, in respect of the Claims;

(c) Withdraws and forever abandons any and all allegations made against any of the other parties to this deed in respect of or arising (in whole or in part) directly or indirectly out of:

(i) the Proceedings and any of the other Claims;

(ii) the subject matter of the Proceedings;

(iii) any claim relating to an undertaking given or costs orders made in the Proceedings,

wherever and whenever arising, whether;

(iv) known or unknown at the time of execution of this deed;

(v) presently in contemplation of such parties; or

(vi) arising under common law, equity, statute or otherwise.

7 UNDERTAKINGS

Each of the parties to this deed undertakes with each of the other parties to this deed

(a) that they will not at any time do, nor attempt to do nor encourage, nor assist in any way any other party or third party to do anything which could have an adverse impact on the Hancock Group's rights under:

the Services and Commingling Agreement entered into or which may subsequently be entered into between Hamersley Iron Pty Ltd and members of the Hancock Group;

or any of the documents entered into by the Rio Tinto Group and the Hancock Group in respect of the Hope Downs Joint Venture;

or under any of the financing arrangements entered into by members of the Hancock Group in respect of the Hope Downs Joint Venture;

(b) not to challenge the right of any member of the Hancock Group to any of the Hancock Group Interests at any time.

(c) 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; and

(d) not to Disparage at any time.

(e) subject to the rights of HPPL under the Deed of Loan not to challenge the rights of any of GHR, JLH, BHR, HGRW or GHFR who execute this Deed to any of their right title or interest in any of the Hancock Group or in any trust in which they or any member of the Hancock Group is a beneficiary.

8. GHR CONTROL OF HPPL

The parties hereto acknowledge that GHR by her direct ownership of the share capital of and voting power in HPPL, has control of HPPL and without limiting in any way the legal and other rights of GHR in that regard whether at law or in equity or pursuant to the Constitution of HPPL, the parties hereto acknowledge that during her lifetime GHR shall maintain full ongoing control and management of HPPL and that GHR shall accordingly have the continuing right during her lifetime at her election from time to time to maintain or relinquish or re-establish herself as the chairman on an executive or non executive basis as she in her sole discretion shall decide of HPPL.

9 VESTING OF HMH TRUST

9.1 Subject to GHR's agreement at any time prior to 6 September 2011, the Beneficiaries agree to extend the vesting date of the HMH Trust to the maximum extent permitted by law or to any prior date after 6 September 2011 by agreement of the majority of Beneficiaries.

9.2 Each of the Beneficiaries shall do all matters and things necessary to implement and facilitate any decision at any time by the Trustee to appoint any one or more of JLH, BHR, HGRW and GHFR as trustee of the HMH Trust and such appointment may be as an additional trustee together with the Trustee or to replace the Trustee permanently or temporarily or to succeed the Trustee when at some future time she may retire or otherwise cease to be trustee during her lifetime (which shall be deemed to be conditional upon the continuing right of GHR to decide to reassume the position of trustee by herself or with one or more of her children if and when she should subsequently so decide).

9.3 Notwithstanding either of the provisions in clause 9.1 and 9.2, the Trustee and the beneficiaries agree that nothing in this Deed limits any of the powers of the Trustee of the HMH Trust.

...

11. PLEA IN BAR

On and from the Effective Date each party may plead this deed in bar to any Claim or proceeding the subject of a release in this deed PROVIDED HOWEVER that nothing in this clause shall prevent any party from enforcing the provisions of this deed, the Porteous Settlement Deed, the Deed of Obligation and Release or Deed of Loan.

12. ACKNOWLEDGMENTS

12.1 Each party acknowledges that (except as set out in this deed) it:

(a) enters into this deed freely and voluntarily based upon its own information, investigation, and subject to 12.3 legal advice; and

(b) does not execute this deed as a result of or in reliance on any promise, representation, advice, statement, opinion or information of any kind given or offered to it by or on behalf of any other party, whether in answer to any inquiry or not and whether contained in any correspondence between the parties and/or their legal or other advisers or not.

12.2 This deed applies and the execution parties hereto are herby bound irrespective of whether those parties waive or do not waive the obtaining of legal or other expert advice, whether independent advice or otherwise.

12.3 Each party who executes this deed acknowledges that he, she or it acts wholly without duress or undue influence in making this deed and in executing same and acknowledges and declares that he, she or it has had and obtained or waived in writing the right to obtain or will in accordance with Clause 15 obtain legal, or other expert advice on all matters relating to or which are the subject of this deed.

12.4 Each of JLH, BHR, HGRW and GHFR shall on execution of this Deed provide a letter from a lawyer that they have advised the lawyer that they have read the deed and are executing or have executed it without duress or undue influence and have agreed to be bound irrespective of

(a) the mother/child/beneficiary aspects of the HMH Trust relationships between GHR, the Trustee and the Beneficiaries, or

(b) as employee/employer relationship or potential employee/employer relationship with the Hancock Group.

13. PARTIES NOT TO ASSIST PROSECUTION OF CLAIMS

Each party severally covenants with each of the other parties to this deed that he, she or it will not advance, cause, procure, finance, support, encourage or otherwise assist or facilitate in any way (except on compulsion of law including, but not limited to, service of a subpoena) directly or indirectly the advancement, institution or prosecution of any Claim the subject of a release in this deed.

28 Pivotal to the present applications is clause 20 which provides relevantly:

20. CONFIDENTIAL MEDIATION/ARBITRATION

In the event that there is any dispute under this deed then any party to his (sic) deed who has a dispute with any other party to this deed shall forthwith notify the other party or parties with whom there is the dispute and all other parties to this deed ("Notification") and the parties to this deed shall attempt to resolve such difference in the following manner.

20.1 Confidential Mediation

(a) the disputing parties shall first attempt to resolve their dispute by confidential mediation subject to Western Australian law to be conducted by a mediator agreed to by each of the disputing parties and GHR (or after her death or non-capacity, HPPL);

...

20.2 Confidential Arbitration

(a) Where the disputing parties are unable to agree to an appointment of a mediator for the purposes of this clause within fourteen (14) days of the date of the Notification or in the event any mediation is abandoned then the dispute shall on that date be automatically referred to arbitration for resolution ("Referral Date") ...

...

(b) The dispute shall be resolved by confidential arbitration by the arbitrator agreed to by each of the disputing parties or appointed pursuant to paragraph (2)(a)(i) above (or if more than one is appointed pursuant to paragraph 2(a)(ii) then as decided by not less than a majority of them) who shall resolve the matter pursuant to the Commercial Arbitration Act of Western Australia and whose decision shall be final and binding on the parties.

...

20.3 Time for Decision

The mediator will be requested to deliver his determination in writing to the parties within 60 days of the date of his acceptance of appointment and in the case of a determination by the arbitrator(s) within 60 days of the submissions of the parties.

29 The applicable law governing the Deed was stipulated in clause 21 as follows:

21. APPLICABLE LAW

This deed shall be governed by and be subject to and interpreted according to the laws of the State of Western Australia and (subject to the provisions hereof requiring all disputes hereunder to be resolved by confidential mediation and confidential arbitration) the parties agree to submit to the exclusive jurisdiction of the Courts of Western Australia for all purposes in respect of this deed.

The Court of Appeal Judgment

30 The Court of Appeal held that the phrase "under this deed" in clause 20 of the Deed is to be given a narrower construction than phrases such as "arising out of the deed" or "in connection with the deed": at [123] per Bathurst CJ. The Chief Justice said at [125]:

It seems to me that consistent with the authorities to which I have referred, if the outcome of the dispute was governed or controlled by the Settlement Deed, then there would be a dispute under the Settlement Deed irrespective of whether the claimant was invoking or enforcing some right created by the Settlement Deed.

31 Although the Defences as then filed raised disputes under the Deed because they relied on the provisions of the Deed in answer to the plaintiff's claims, the Chief Justice said that they did not necessarily determine the outcome of the proceedings: at [132]. His Honour also said at [135]:

If the Settlement Deed had the effect of barring the claims of the respondents, then it would follow that the dispute in question was governed or controlled by the Settlement Deed as the outcome would be regulated by its terms. However, the mere fact that these assertions were made does not mean it automatically follows that the whole claim is a dispute under the Settlement Deed. The primary Judge, in my opinion, was entitled to examine the claim to form a view as to whether he could properly conclude, in the light of the evidence available, that the assertion that the claim was barred by the Settlement Deed was sustainable: see Channel Tunnel Group Limited v Balfour Beatty Construction Ltd [1993] AC 334 at 356.

32 The Chief Justice concluded that clause 7(c) of the Deed did not bar the proceedings. In reaching that conclusion his Honour said that the claims (at that stage) did not seek to replace GHR with a non-Hancock Family Group Member and nor could it be said that this was an inevitable outcome "particularly when it is not sought" by the plaintiffs: at [144].

Events since the Court of Appeal judgment

33 On 12 March 2013 HRW, who was at the time the first plaintiff, was granted leave to discontinue the proceedings as between herself on one hand and GHR and GHFR on the other hand. An order was made removing HRW as first plaintiff and joining her as third defendant. A submitting appearance has been filed on her behalf. The remaining plaintiffs, JLH and BHR, were ordered to notify the defendants by 9 April 2013 of the identity of their proposed replacement trustee or trustees. On 11 April 2013 the plaintiffs were ordered to notify the defendants by 15 April 2013 whether (in the event that GHR is removed as trustee) there was any intention to seek the appointment of a trustee who was not a family member.

34 The plaintiffs' former solicitors, Butcher Paull & Calder, wrote to the defendants' solicitors advising that there was a recognition and acceptance by the plaintiffs that in the light of the "nature and extent of division between the beneficiaries" it was expected that the Court would make an appointment of an independent trustee to the Trust. The solicitors advised that they intended "forthwith" to seek leave of the Court to amend their pleading to include a claim for an order pursuant to s 77 of the Trustees Act 1962 (WA) appointing "an independent Trustee of the Trust" in substitution for GHR. The Amended Statement of Claim filed on 2 May 2013, out of time, included a prayer for such relief [8A]. However when the plaintiffs filed the Further Amended Statement of Claim on 23 May 2013 (pursuant to an order made on 9 May 2013) such claim disappeared. The only relief claimed in this regard was for the appointment of a replacement trustee "as the court considers appropriate" [8A].

35 On 18 April 2013 the plaintiffs' solicitors wrote to the defendants' solicitors advising that JLH consented to act as trustee of the Trust. On 15 May 2013 the plaintiffs' solicitors served a document entitled "Plaintiffs' Notice Concerning Potential Replacement Trustees" on the defendants' solicitors. The Notice recorded that both JLH and Mr Carter of Ferrier Hodgson were "available to be considered by the Court for appointment as Trustee of the Trust" and were prepared to serve in that role on the terms and conditions contained in the Notice.

36 Some of the pleadings that have been prepared since the Court of Appeal judgment have been filed in an unconventional manner because the parties have accepted that they contain confidential and sensitive information. These aspects of the pleadings are subject to consensual confidentiality orders.

37 The plaintiffs have amended their pleading a number of times since the Court of Appeal judgment. Although there are new claims made in respect of GHR's conduct in relation to her communications with the beneficiaries in September 2011, the main changes that are the subject of the present applications relate to the allegations made in the 3SC. The applicants claim that the focus of the plaintiffs' case as now pleaded in the 3SC "has shifted sufficiently so that discretionary considerations now favour staying the whole or part of the proceedings". It is necessary to refer in some detail to those amendments.

38 Another significant event since the Court of Appeal judgment is the enactment of the Commercial Arbitration Act 2012 (WA) (the 2012 Act) that came into force on 7 August 2013. The major difference is that there is now a mandatory statutory requirement that where "an action is brought in a matter which is the subject of an arbitration agreement" the Court must refer the parties to arbitration, unless the arbitration agreement is null and void, inoperative or incapable of being performed: s 8(1).

The New Claims in the 3SC

39 The plaintiffs claim that on or around 15 March 2006, GHR caused HPPL to pass a special resolution of the members of HPPL, the effect of which was to delete clauses 35 to 42 of HPPL's Constitution and replace them with new clauses 35 to 42 headed "Restriction on the Holding, Transfer and Transmission of Shares" (the 2006 Amendments): [71]-[72]. It is alleged that the 2006 Amendments "purported to impose restrictions on the transferability of shares" in HPPL, such that only Hancock Family Group Members could hold such shares: [73]. The pleading recites the definition in the Constitution of "Hancock Family Group Member" and the provision that the holding and controlling of shares in HPPL is limited to such a member: [74(a)] and [74(e)]. It also refers to clauses 35(b) and 35(c) pursuant to which rights and powers in relation to shares may be lost and shares may be lost with consequent financial disadvantage to individual members [74(b)] and [74(c)]. It also refers to the provisions of the Constitution pursuant to which the HPPL directors are authorised to "disregard any loss or disadvantage that may be suffered by individual members" by reason of the exercise of the powers under articles 35-42: [74(d)].

40 Clause 36(d) is also pleaded: [74(g)]. It provides as follows:

If a share is required to be transferred by an order of any court of competent jurisdiction to a non-Hancock Family Group Member, that person or entity shall not be entitled to be registered as a member and the member who is the registered holder of the shares is deemed, as of the date of the court order, to have offered to sell all of the shares referred to in the court order to the other members. In such event the registered holder of the shares irrevocably authorises and empowers the Company and for such purposes irrevocably appoints the Company as its agent and attorney to serve a Transfer Notice under clause 37(a) with respect to the shares referred to in the court order and also for the sale of the shares. The price of the shares will be the value as certified by the Auditor under clause 39 and otherwise the procedures referred to in clauses 37 and 38 will apply to the sale of those shares.

41 The pleading also refers to clause 36(e) that prohibits the creation directly or indirectly of an encumbrance over any HPPL share: [74(h)]. There is also the recital of clause 36(f) pursuant to which a similar regime of deemed sale and appointment of HPPL as agent and attorney is prescribed: [74(i)]. Clauses 36 and 37 are recited in the pleading at [74(j)]-[74(q)]. These include the prohibition on (1) the directors registering any purported transfer of a share to a non-Hancock Family Group Member; (2) any purported creation of an encumbrance over a share; (3) any purported transfer of a share that is not made in accordance with the provisions of the Constitution; and (4) any purported transfer of a share by an executor or trustee that is not made in accordance with the Constitution: [74(j)].

42 The procedure under clause 37 to be adopted in circumstances where a member proposes to transfer any share is also pleaded at [74(k)]-[74(q)] and [74(s)]-[74(t)]. Notice is to be given to HPPL of the proposal (cl 37(a)(i)). If the share is to be transferred pursuant to a Court order under clause 36(d) or inconsistently with the Constitution, HPPL is to provide a Transfer Notice under which the registered holder of the relevant shares is identified as the Transferor (cl 37(a)(ii)). The Transfer Notice is to specify the price per share that the Transferor or the Auditor fixes as the "fair value of the share" with a provision that HPPL is irrevocably constituted as the agent and attorney for the transferor for the sale of the share (cl 37(a)(iii)).

43 The shares the subject of the Transfer Notice are to be offered to all other members in proportion to the existing shares held by them (cl 37(b)). This "Offer Letter" may then be executed by the member and constitutes an acceptance of the offer (cl 37(d)). There are options for the offer of the remaining shares in various circumstances (cll 37(e)-37(f)). If there are shares in respect of which there has been no acceptance of the offer, HPPL will buy back those shares with the approval of the members (cll 37(g)-37(h)). HPPL may, in its sole discretion, pay the consideration (interest free) owed to a member with respect to the buy-back of the shares over a period of time in instalments (cl 37(i)).

44 Clause 41 of the Constitution is also pleaded at [74(u)] of 3SC. It provides that if a share(s) in HPPL is required to be transferred by an order of any Court of competent jurisdiction to a non-Hancock Family Group Member, the voting rights attached to the share(s) are to be immediately suspended and will only be restored when the share(s) is transferred to a Hancock Family Group Member: [74(u)].

45 It is alleged that, prior to the 2006 Amendments, HPPL's Constitution did not preclude the transfer of shares to third parties who were not the lineal descendants of GHR or an Existing Corporate Member: [75]. It is alleged that at the time of the 2006 Amendments and now, the only persons who are Hancock Family Group Members are GHR, the plaintiffs, GHFR, HRW and the children of the plaintiffs and GHFR and HRW: [76]. It is alleged that at the time of the 2006 Amendments and now, the only member of HPPL who is a Hancock Family Group Member is GHR: [77].

46 It is alleged that had the Trust vested prior to the 2006 Amendments, the beneficiaries of the Trust could have taken a distribution of their shares in HPPL and sold some of those shares, or borrowed money against the security of those shares, for the purposes of meeting any capital gains tax liability arising upon a distribution of the shares: [78]. It is alleged that "at all material times" none of the beneficiaries had (or have) sufficient assets to meet capital gains tax liabilities if their share of the assets of the Trust are distributed to them: [79].

47 It is alleged that the 2006 Amendments to the Constitution removed the entitlement of the members of HPPL to transfer their shares in HPPL to persons outside of the Hancock Family Group: [80]. It is alleged that the regime that was put in place by the 2006 Amendments was as follows at [80]:

(a) if one of the beneficiaries of the Trust takes a distribution of shares in HPPL and purports to sell or transfer a single share in HPPL to a non-Hancock Family Group Member or Existing Corporate Member, he or she would be deemed by operation of clauses 36(a) and 36(f) to have offered for sale all of his or her shares to the other members of HPPL at a value to be determined by its auditor but on terms for payment determined by HPPL;

(b) where that occurs, or where a member otherwise offers his or her shares for sale pursuant to clause 37(a)(i), the shares to be transferred must, pursuant to clause 37(b), be offered in writing to all other members of HPPL in proportion to the existing shares held by them respectively (clause 37(b));

(c) the only persons who would be offered such shares for purchase pursuant to clause 37(b) would be the First Defendant and 150 Investments Pty Ltd ('150 Investments'), a company controlled by the First Defendant which presently holds 168,416 D Class Preference shares in HPPL;

(d) in the event that the First Defendant or 150 Investments declined to accept the offer to purchase those shares (in accordance with the procedure provided for in clause 37(d)), those shares would be acquired by HPPL on terms determined by HPPL in its 'sole discretion' (clauses 37(i) and (j));

(e) the First Defendant as controlling shareholder, Chairman and one of only two Directors of HPPL (together with Tadeusz Watroba), has the power to determine the terms upon which HPPL will pay for the shares compulsorily acquired by operation of clauses 36(a) and (f);

(f) following their acquisition, but before HPPL has paid any money for those shares to the former member, the Board of HPPL may cancel the shares so acquired thereby decreasing the number of issued shares in HPPL and increasing the First Defendant's ownership of HPPL, at no cost to her;

(g) the First Defendant, as controlling shareholder and Chairman and Director of HPPL, has the power, pursuant to clause 37(i) of the HPPL Constitution, to cause HPPL to cause HPPL to use its available cash to pay the First Defendant dividends, or invest those funds in the development of HPPL's business activities, or meet HPPL's expenditures, or remunerate herself as a Director, rather than pay for the shares compulsorily acquired by HPPL pursuant to clauses 36(a) and (f);

(h) in deciding in their sole discretion the terms on which it will pay the former member for its shares in HPPL, the Directors of HPPL (and the First Defendant, as controlling shareholder, Chairman and a Director of HPPL), has the power, pursuant to clause 35(d), to disregard any loss or disadvantage that may be suffered by the former member as a result of the acquisition by HPPL of the former member's shares in HPPL or by reason of the terms of such acquisition;

(i) the former member has, by virtue of clause 35(d), no right of action against HPPL or its directors for any loss or financial disadvantage incurred by him or her as a result of HPPL's refusal to pay the former member for the shares compulsorily acquired pursuant to clauses 36(a) and (f).

48 The plaintiffs allege that by causing the 2006 Amendments to the Constitution, GHR purported to engineer a situation in which (at [81]):

(a) none of the beneficiaries of the Trust could take a distribution of their shares in HPPL and sell some of those shares to a third party or use those shares as security for a loan in order to enable them to meet any capital gains tax liability arising from the distribution of shares to them;

(b) in such circumstances, the beneficiaries' only entitlement would be to receive income received by the Trust from HPPL, in the amounts determined by the First Defendant as controlling shareholder, Chairman and a Director of HPPL, provided that the First Defendant, as Trustee of the Trust, decides to distribute such income to the beneficiaries of the Trust;

(c) in the event that the First Defendant breaches her duties as Trustee of the Trust and is removed as Trustee and is replaced by a non-Hancock Family Group Member, the First Defendant in her personal capacity and in proportion to her existing shareholding would be offered the opportunity to purchase those shares in HPPL previously held by the First Defendant on behalf of the beneficiaries of the Trust;

(d) if the First Defendant declines to acquire those shares, they would be compulsorily acquired by HPPL on terms determined by HPPL in its sole discretion and by the First Defendant as controlling shareholder, Chairman and a Director of HPPL;

(e) the First Defendant could, as controlling shareholder, Chairman and a Director of HPPL, cause HPPL to use its available cash to pay the First Defendant dividends, or invest those funds in the development of HPPL's business activities, or meet HPPL's expenditures, or remunerate herself as a Director, rather than pay for the shares compulsorily acquired by HPPL as a result of her removal as Trustee;

(f) the First Defendant could, as controlling shareholder, Chairman and a Director of HPPL, cause HPPL to cancel the shares previously held by her on behalf of the beneficiaries of the Trust and thereby increase her ownership of HPPL in amount equalling the proportion of shares the First Defendant currently holds in HPPL on behalf of the beneficiaries of the Trust (23.45%), at no cost to the First Defendant;

(g) in the premises, by breaching her duties as Trustee of the Trust and causing herself to be removed as Trustee, the First Defendant would be in a position, if a non-Hancock Family Group Member is appointed as Trustee, to obtain 100% ownership of HPPL and for the beneficiaries of the Trust to lose the 23.45% interest they currently hold in HPPL.

49 The plaintiffs allege that in order for the restrictions to be binding upon GHR, it was necessary for her to provide her consent to them and that she did so by purporting to execute the special resolution in her capacity as Trustee of the Trust on 15 March 2006: [82]-[83]. It is alleged that in executing the special resolution and in relying upon the amended Constitution in these proceedings, GHR "breached and continues to breach the irreducible core of her duties" as trustee of the Trust by failing to act in the best interests of the beneficiaries of the Trust: [84].

50 The plaintiffs also allege that, by causing the 2006 Amendments, GHR intended to ensure that she continued indefinitely to control 100% of the voting shares in HPPL after the vesting of the Trust; that she intended to prevent or substantially impede the beneficiaries of the Trust from enforcing the due administration of the Trust after the vesting date; that she intended to ensure that she continued indefinitely to control 100% of the voting shares in HPPL in the event that she was removed as trustee of the Trust; and that she intended to provide herself with a right of pre-emption in proportion to her existing shareholding in HPPL in relation to any sale of the shares by any existing member of HPPL: [85].

51 It is alleged that GHR was and is in a position of actual or direct conflict with respect to her duties and interests as controlling shareholder, Chairman and Director of HPPL and her duties and obligations as trustee of the Trust: [86]. It is alleged that GHR has an interest in ensuring that HPPL buys back any of the beneficiaries' shares on terms most favourable to HPPL which it is alleged may be to the beneficiaries' significant financial disadvantage: [86]. It is also alleged that GHR has an interest in causing HPPL to pay dividends to her and her company (150 Investments Pty Ltd) rather than paying the beneficiaries consideration for their shares: [86]. It is also alleged that following the vesting of the Trust on 30 April 2012, the 2006 Amendments have had a direct effect on, and caused significant harm to, the beneficiaries of the Trust in particular, because they are precluded from taking a distribution "insofar as they would be unable to sell or encumber those shares to pay any capital gains tax liability arising as a result of such a distribution": [87].

52 The plaintiffs also allege that, by reason of her conflict of interest, GHR can not properly act in the best interests of the beneficiaries of the Trust "uninfluenced by her duties towards the financial interest" in HPPL and should be removed as trustee of the Trust: [89]. It is alleged that the relationship between GHR and the plaintiffs has irretrievably broken down and that GHR should not occupy a position overseeing the competing interests of the beneficiaries of the Trust particularly where GHR "is aligned" with GHFR and "against" the plaintiffs: [89A].

53 The plaintiffs also make a claim based on s 85 of the Trustees Act. It is alleged that upon the Court making an order (consequent upon the appointment of a new trustee) vesting the assets of the Trust in the new trustee, that new trustee will be entitled to transfer or call upon GHR and HPPL to transfer to the new trustee full title to the HPPL shares vested in the new trustee by the order of the Court: [92]-[93]. It is claimed that notwithstanding the provisions of clauses 36 and 37 of the HPPL Constitution, GHR must "give effect to the transfer and or comply with any direction or request made by the new Trustee to transfer full title to the Trust's shares in HPPL to the new Trustee": [94]. A similar claim is made in respect of HPPL: [95].

54 It is alleged that once GHR and HPPL receive notices in writing of an order of the Court vesting the Trust's shares in HPPL in the name of the new trustee, they are precluded by s 85(7) of the Trustees Act from taking any steps to transfer the shares including by buy-back of those shares: [96]-[97]. It is alleged that once the order has been made vesting the assets in a new trustee and a direction has been given to HPPL to transfer full title in the shares to the new trustee, HPPL will be required to cause the new trustee to be registered in its register of shares: [98].

55 The plaintiffs make an alternative claim that to the extent that the HPPL Constitution prevents a non-Hancock Family Group Member being appointed as a trustee of the Trust; or requires GHR to remain as trustee of the Trust; or requires the beneficiaries of the Trust to forfeit their interest in shares in HPPL, such provision is against public policy and is void, invalid and of no effect: [99]. The plaintiffs also claim that to the extent that clause 36(g) of the HPPL Constitution operates to prevent a new trustee taking full title to the shares in HPPL as vested in the new trustee by order of the Court, such provision would cause HPPL to breach an order of the Court and is against public policy and void, invalid and of no effect [100]. The plaintiffs also allege that because the 2006 Amendments were procured by GHR in breach of trust, insofar as they affect the HPPL shares held by GHR on behalf of the beneficiaries of the Trust, those Amendments are void, invalid and of no effect: [101].

56 The orders and declarations that are now sought include orders pursuant to ss 78 and 94 of the Trustees Act requiring HPPL to cause such persons who are appointed trustee(s) of the Trust "to be registered in the register of shares" maintained by HPPL as the holder of those shares vested in the new trustee, including the voting rights attached to those shares: [8BA].

57 The plaintiffs also seek an order enjoining HPPL from taking any steps pursuant to clauses 34-41 of HPPL's Constitution with respect to any shares in HPPL vested in the new trustee [8BB].

58 They also seek a declaration pursuant to s 85 of the Trustees Act that HPPL is required to cause the new trustee of the Trust to be registered in the register of shares maintained by HPPL as the holder of those shares vested in the new trustee immediately upon the receipt of a request by the new trustee to register such shares in the name of the new trustee [8BC].

59 The plaintiffs make an alternative claim for a declaration that those provisions of the HPPL Constitution that purport to prevent the transfer of shares in HPPL held by GHR on behalf of the Trust to a new trustee appointed by the Court who is not a Hancock Family Group Member, or those provisions that purport to prevent the registration of the new trustee as a holder of those shares on behalf of the Trust, are void, invalid and of no effect [8BD].

Notices of Dispute

60 GHR served Notices of Dispute under clause 20 of the Deed on the plaintiffs on 26 August 2013. GHFR served similar Notices on 28 August 2013. The solicitors for HPPL and HDIO wrote to the plaintiffs' solicitors on 14 August 2013 referring to the unverified pleading that was to be later amended to become the 3SC and requesting that such letter be treated as a Notice of Dispute under clause 20 of the Deed.

61 HPPL's 'Notice' referred to the provision of "certain releases" by the plaintiffs in the Deed and claimed that the extent to which the plaintiffs sought to "impugn the validity of the amendments to the HPPL Constitution" made in 2006, such allegations constituted a "Claim" under the Deed (HPPL Constitution).

62 GHR's Notice identified three disputes. The first was alleged breaches by the plaintiffs of clauses 6 and 13 of the Deed in seeking GHR's removal as trustee and the appointment of a non-Hancock Family Group Member as replacement trustee (Replacement Trustee). The second dispute related to alleged breaches of clause 7(a) and 7(b) of the Deed in seeking orders requiring HPPL to register a trustee "who may or may not be" a Hancock Family Group Member together with other claims in relation to the invalidity of the Constitution (HPPL Constitution). The third dispute was alleged breaches of clause 7(c) and 7(e) of the Deed in respect of the same matters.

63 GHFR's Notice identified three disputes. The first is alleged breaches of clauses 6 and 13 of the Deed by the pleaded claim in the 3SC that GHR caused the 2006 Amendments (the 2006 Amendments). The second is alleged breaches of clauses 7(a) and 7(b) of the Deed in the plaintiffs' claims in the 3SC and the correspondence to appoint a non-Hancock Family Group Member as trustee of the Trust (Replacement Trustee). The third is alleged breaches of 7(c) and 7(e) of the Deed in respect of the claim regarding the Replacement Trustee.

64 Although these Notices have some differences and some overlap each of the applicants adopted the submissions of each of the other applicants in respect of the alleged disputes "under" the Deed.

Defences

65 GHR admits that she caused the 2006 Amendments but claims that the special resolution was passed "with the awareness of all the beneficiaries" and that BHR, GHFR and HRW "gave their fully informed consent in writing to the Special Resolution": [71]. GHR denies that the provisions of the Constitution prior to the 2006 Amendments did not preclude the transfer of shares to non-Hancock Family Group Members. GHR claims that the Constitution, as it stood before the 2006 Amendments, provided that the directors of HPPL were entitled to refuse any transfer of any share to any person who was not already a member, where the directors were not of the opinion that it was desirable to admit the proposed transferee to membership: [75].

66 GHR denies that she engineered the situation as pleaded in the 3SC and denies that she is in breach of her duties as trustee of the Trust: [84]. GHR claims that the 2006 Amendments were necessary to protect the commercial agreements between HPPL and Rio Tinto; that they were procured in good faith and not for any improper or collateral purpose; that they substantially enhance the value of the Trust property; and that they were in the best interests of and for the benefit of HPPL, and its members as a whole, and the beneficiaries of the Trust: [84(ii)]. GHR also claims that at the time of the 2006 Amendments she obtained legal advice as to the propriety of the amendments and acted in accordance with that advice [84(iii)].

67 GHR also pleads as follows [84(vi)]:

as to the allegation that by executing the Special Resolution the first defendant breached her duties as trustee, [GHR] says that, by clauses 6, 7, 9, 11 and 13 of the Hope Downs Deed, the plaintiffs have released the first defendant from any claims in respect of the Special Resolution and are barred from asserting any such claims

68 GHR admits that her relationship with the plaintiffs "has not been without difficulties" but denies that it has irretrievably broken down: [89A]. GHR claims that because the Trust has now vested, there are no competing interests between the beneficiaries of the Trust. GHR claims that the difficulties in her relationship with the plaintiffs are primarily due to be plaintiffs' conduct and are not due to GHR's alleged conduct in the 3SC, which is in large part denied: [89A].

69 GHR denies any wrongdoing and puts forward a number of reasons why neither the welfare of the beneficiaries, nor the due administration of the Trust, would be advanced by her removal as Trustee: [93].

70 GHFR's Defence includes an admission that GHR obtained her consent in writing before making the 2006 Amendments: [83(b)]. The Defence also includes claims as to why JLH is "not a fit and proper person" to be appointed as trustee of the Trust: [103].

71 GHFR's Defence also includes claims that clauses 6 and 13 of the Hope Downs Deed have been breached by reason of the claims in respect of the 2006 Amendments being made in the 3SC. It is alleged that these claims are the subject of a release and discharge and were withdrawn and abandoned. It is alleged that such claims are barred and extinguished by clause 6 of the Deed: [148]. Similar claims are made in respect of the claims made in the 3SC in respect of the appointment of an independent trustee of the Trust and the orders in relation to the requirement to register that trustee [157]-[168].

72 HPPL and HDIO's Defence includes the following (omitting the particulars):

32. In further answer to the 3FASOC, the fourth defendant says that:

(a) by reason of clauses 6, 7, 11 and 13 of the Hope Downs Deed, and (in respect of the first defendant) clause 15 of the Confidential Settlement Deed, the plaintiffs are barred from:

(i) contending that the first defendant should be replaced as trustee of the Trust with a person who is not a Hancock Family Group Member;

(ii) contending that the first defendant has breached her obligations as trustee by reason of the Special Resolution, the 2006 Amendments and the HPPL Constitution;

(iii) contending that, notwithstanding the provisions of the HPPL Constitution, the fourth defendant will be obliged to transfer the shares in HPPL currently the subject of the Trust to a trustee who is not a Hancock Family Group Member;

(iv) contending that articles 36(d) and 36(g) of the HPPL Constitution and the 2006 Amendments are void, invalid and of no effect.

(b) the dispute as to whether the plaintiffs are barred from making the contentions pleaded in paragraph 30(a) (sic) above is a dispute under the Hope Downs Deed to be determined by arbitration in accordance with clause 20 of that Deed;

(c) the proceedings should be stayed pursuant to:

(i) s 8(1) of the Commercial Arbitration Act 2012 (WA)

(ii) s 53(i) of the Commercial Arbitration Act 1985 (WA)

(iii) s 67 of the Civil Procedure Act 2005 (NSW).

(iv) the inherent power of the Court,

to allow the dispute pleaded in paragraph 30(b) (sic) above to be determined by arbitration.

Consideration

73 At the time of the Court of Appeal judgment, s 53 of the Commercial Arbitration Act 1985 (WA) (the 1985 Act) provided as follows:

53 Power to Stay Court Proceedings

(1) If a party to an arbitration agreement commences proceedings in a court against another party to the arbitration agreement in respect of a matter agreed to be referred to arbitration by the agreement, that other party may, subject to sub-section (2), apply to the court to stay the proceedings and that court, if satisfied -

(a) that there is no sufficient reason why the matter should not be referred to arbitration in accordance with the agreement; and

(b) that the applicant was at the time when the proceedings were commenced and still remains ready and willing to do all things necessary for the proper conduct of the arbitration,

may make an order staying the proceedings and may further give such directions with respect to the future conduct of the arbitration as it thinks fit.

(2) An application under subsection (1) shall not, except with the leave of the court in which the proceedings have been commenced, be made after the applicant has delivered pleadings or taken any other step in the proceedings other than the entry of an appearance.

74 As I have said earlier, the 2012 Act came into force on 7 August 2013. The parties are at issue as to whether the 1985 Act or the 2012 Act applies to these applications.

75 Section 7(1) of the 2012 Act defines an "arbitration agreement" as an "agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not". Clause 20 of the Settlement Deed falls within the definition of arbitration agreement in s 7(1) of the 2012 Act. That Act provides relevantly as follows:

8. Arbitration agreement and substantive claim before court

(cf. Model Law Art 8)

(1) A court before which an action is brought in a matter which is the subject of an arbitration agreement must, if a party so requests not later than when submitting the party's first statement on the substance of the dispute, refer the parties to arbitration unless it finds that the agreement is null and void, inoperative or incapable of being performed.

(2) Where an action referred to in subsection (1) has been brought, arbitral proceedings may nevertheless be commenced or continued, and an award may be made, while the issue is pending before the court.

76 The paramount object of the 2012 Act is to "facilitate the fair and final resolution of commercial disputes by impartial arbitral tribunals without unnecessary delay or expense" (s 1C(1)).

77 The 2012 Act also provides as follows:

43 Savings and transitional provisions

(1) Subject to subsection (2) -

(a) this Act applies to an arbitration agreement (whether made before or after the commencement of this section) and to an arbitration under such an agreement; and

(b) a reference in an arbitration agreement to the Commercial Arbitration Act 1985, or a provision of that Act, is to be construed as a reference to this Act or to the corresponding provision (if any) of this Act.

(2) If an arbitration was commenced before the commencement of this section, the law governing the arbitration and the arbitration agreement is to be that which would have been applicable if this Act had not been enacted.

(3) For the purposes of this section, an arbitration is taken to have been commenced if -

(a) a dispute to which the relevant arbitration agreement applies has arisen; and

(b) the arbitral tribunal has been properly constituted.

78 There is no provision in the 1985 Act similar to s 8 of the 2012 Act pursuant to which a court "must", if a party so requests, refer the matter to arbitration.

79 The plaintiffs submitted that the 2012 Act does not apply because an arbitration has already commenced under clause 20 of the Deed. It is not in issue that an arbitrator has been appointed and is presently seized of a number of disputes that have arisen between the parties under the Deed. It is also not in issue that the arbitration commenced on 1 January 2012. The plaintiffs submit that in those circumstances s 43(2) of the 2012 Act applies because an arbitration was commenced before the commencement of the 2012 Act.

80 The plaintiffs also submit that the provisions of s 8(1) of the 2012 Act demonstrate that the legislature intended that the 2012 Act would not apply to proceedings that have been commenced and advanced prior to the 2012 Act coming in to force. In particular the plaintiffs rely upon the words in s 8(1), "if a party so requests not later than when submitting the party's first statement on the substance of the dispute". It was submitted that in the present case each of the defendants have filed defences to the plaintiffs' claims and a submitting appearance has been filed by HRW. It was submitted that the defendants are not able to request that the claims, insofar as they relate to any of the matters pleaded in their defences, be referred to arbitration. It was submitted that the time for that request has passed.

81 The applicants submit that the dispute only arose after the 2012 Act came in to force. The plaintiffs' 3SC was filed on 19 August 2013 and the Defences were filed between 4 and 9 September 2013. Notices of Dispute and the Notices of Motion were served before these Defences were filed. The defendants have always made clear that they were preparing for trial without prejudice to their rights to make the present applications. Although the plaintiffs rely on these new claims as a further basis as to why GHR should be removed as trustee of the Trust, they are completely new claims that require separate consideration. The Defences filed in response to the plaintiffs' earlier pleadings contained no "statement on the substance of the dispute" because the dispute did not arise until after those earlier Defences were filed.

82 The applicants also submitted that s 43(2) of the 2012 Act does not apply because a dispute to which the relevant arbitration agreement, being the new dispute contained in the 3SC, had not arisen and an arbitral tribunal has not been properly constituted: s 43(3). I agree with those submissions. I am satisfied that the 2012 Act is the applicable statute in respect of the present applications.

83 For the purposes of s 8(1) of the 2012 Act, clause 20 of the Deed is an "arbitration agreement". In light of the applicability of s 8(1), it is necessary to consider whether the present proceedings as pleaded in the 3SC constitute "an action" which is brought "in a matter which is the subject of an arbitration agreement". There is no suggestion or contention that clause 20 is null and void or inoperative or incapable of being performed.

84 In interpreting s 8(1) of the 2012 Act, it is necessary to have regard to the need to promote as far as practicable uniformity between the application of the Act to domestic commercial arbitrations and the application of the provisions of the Model Law (the UNCITRAL Model Law on International Commercial Arbitration) and to the observance of good faith: s 2A(1). In this regard s 8(1) is materially similar to article 8(1) of the Model Law that is given the force of law in Australia by s 16(1) of the International Arbitration Act 1974 (Cth): Comandate Marine Corp v Pan Australia Shipping Pty Ltd (2006) 157 FCR 45 at 97 [197] per Allsop J, as the Chief Justice was then, with whom Finn and Finkelstein JJ agreed.

85 The 2012 Act has only been in force for about one month and jurisprudence in respect of its provisions, in particular s 8, is undeveloped. However similar provisions in other jurisdictions have been judicially considered. In Carter Holt Harvey Ltd v Genesis Power Ltd [2006] 3 NZLR 794 Randerson J, the Chief High Court Judge, considered the Arbitration Act 1996 (NZ) which, pursuant to s 6, included provisions of the Model Law, in particular articles 5 and 8 (which is in identical terms to s 8 of the 2012 Act). After reviewing the relevant authorities, his Honour said at 806-807 [58]:

The mere fact that there may be some connection between the Court proceeding and the matter which is the subject of an arbitration agreement is not sufficient to engage art 8(1). There must be a direct relationship between the matter before the Court and the matter which is the subject of the arbitration agreement. Ordinarily, this is likely to arise where the relationship between the two is sufficiently close as to give rise to a material risk of conflicting decisions on fact or law.

86 In dealing with the prospect of a stay of arbitral proceedings which were "clearly co-extensive", his Honour said at 807 [61]:

It is possible to envisage a case where there is such a substantial degree of overlap of factual or legal issues that it would be inappropriate for both Court and arbitral proceedings to proceed simultaneously, even if the matters in the Court proceeding were not the subject of an arbitration agreement in a way which would engage art 8. While a Court might well be reluctant to intervene in such circumstances, I would not wish to preclude the Court's jurisdiction to do so in an appropriate case. I express no view as to whether the present case might fall into that category.

87 In Gulf Canada Resources Ltd v Arochem International Ltd (1992) 66 BCLR (2d) 113 the Court of Appeal of British Colombia considered the provisions of s 8 of the International Commercial Arbitration Act 1986 (BC) which provided as follows:

8 Stay of legal proceedings

(1) Where a party to an arbitration agreement commences legal proceedings in court against another party to the agreement in respect of a matter agreed to be submitted to arbitration, a party to the legal proceedings may, before or after entering an appearance and before delivery of any pleadings or taking any other step in the proceedings, apply to that court to stay the proceedings.

(2) In an application under subsection (1), the court shall make an order staying the legal proceedings unless it determines that the arbitration agreement is null and void, inoperative or incapable of being performed.

(3) Notwithstanding that an application has been brought under subsection (1) and that the issue is pending before the court, an arbitration may be commenced or continued and an arbitral award made.

88 Hinkson JA (with whom Cumming JA concurred) noted the "mandatory" terms of subsection (2) and said that an applicant must show that a party to an arbitration agreement has commenced proceedings against another party to the agreement "in respect of the matter agreed to be submitted to arbitration": 119-120 [31]-[32]. His Honour said at 121 [40]:

Where it is arguable that the dispute falls within the terms of the arbitration agreement or where it is arguable that a party to the legal proceedings is a party to the arbitration agreement then, in my view, the stay should be granted and those matters left to be determined by the arbitral tribunal.

89 Flakt Australia Ltd v Wilkins & Davies Construction Co Ltd [1979] 2 NSWLR 243 involved, in part, the interpretation of s 7 of the Arbitration (Foreign Awards and Agreements) Act 1974 (Cth) (later to become the International Arbitration Act 1974 (Cth)) which provided relevantly:

(2) Subject to this Act, where -

(a) proceedings instituted by a party to an arbitration agreement to which this section applies against another party to the agreement are pending in a court; and

(b) the proceedings involve the determination of a matter that, in pursuance of the agreement, is capable of settlement by arbitration, on the application of a party to the agreement, the court shall, by order, upon such conditions (if any) as it thinks fit, stay the proceedings or so much of the proceedings as involves the determination of that matter, as the case may be, and refer the parties to arbitration in respect of that matter.

...

(5) A court shall not make an order under sub-section (2) if the court finds that the arbitration agreement is null and void, inoperative or incapable of being performed.

90 McLelland J said at 250:

In my opinion, the word "matter" in s 7(2)(b) denotes any claim for relief of a kind proper for determination in a court. It does not include every issue which would, or might, arise for decision in the course of the determination of such a claim. The use of the word "settlement" provides support for the view. "Settlement" is an apt term to be used in relation to a claim for relief - it is less apt in relation to a mere issue.

91 In Tanning Research Laboratories Inc v O'Brien (1990) 169 CLR 332 the High Court considered s 7(2) of the International Arbitration Act 1974 (Cth). After referring to the meaning of the word "matter" in Ch III of the Constitution as "the whole matter", Deane and Gaudron JJ said at 351 (footnotes omitted):

However, in any context, "matter" is a word of wide import. In the context of s 7(2), the expression "matter ... capable of settlement by arbitration" may, but does not necessarily, mean the whole matter in controversy in the court proceedings. So too, it may, but does not necessarily encompass all the claims within the scope of the controversy in the court proceedings. Even so, the expression "matter ... capable of settlement by arbitration" indicates something more than a mere issue which might fall for decision in the court proceedings or might fall for decision in arbitral proceedings if they were instituted. See Flakt. It requires that there be some subject matter, some right or liability in controversy which, if not co-extensive with the subject matter in controversy in the court proceedings, is at least susceptible of settlement as a discrete controversy. The words "capable of settlement by arbitration" indicate that the controversy must be one falling within the scope of the arbitration agreement and, perhaps, one relating to rights which are not required to be determined exclusively by the exercise of judicial power.

92 In Comandate Marine Corp v Pan Australia Shipping Pty Ltd, Allsop J said that the phrase "a matter" is apt to be understood at a level of generality by reference to the arbitration agreement. His Honour said at 106 [235]:

[T]he word "matter" in s 7(2)(b) can be seen to be a reference to the differences between the parties or the controversy that are or is covered by the terms of the arbitration agreement. That is, such part (or all) of the differences that fall within the scope of the arbitration agreement. It is that body of differences which is to be capable of settlement by arbitration.

93 In cases concerning the meaning of the word "matter" as used in s 7(2)(b) of the International Arbitration Act, it has been held that if proceedings "extend beyond the matter which can be referred to arbitration" then the whole of the proceedings must be stayed until an award is made on the matter so referred: Tanning Research Laboratories Inc v O'Brien at 345 per Brennan and Dawson JJ.

94 In Recyclers of Australia Pty Ltd v Hettinga Equipment Inc (2000) 100 FCR 420 Merkel J also considered the provisions of s 7(2) of the International Arbitration Act 1974 (Cth). That case involved an agreement that was governed by the law of Iowa. His Honour concluded that there was a matter that arose under the relevant sale agreement that was capable of settlement by arbitration. His Honour concluded that a stay of the proceedings in so far as it related to that "matter" had to be ordered under s 7(2) of the International Arbitration Act. In respect of the other aspects of the litigation his Honour said at 434-435 (some citations omitted):

65 In the event that a proceeding includes matters that are not capable of being referred to arbitration, but the determination of which is dependent upon the determination of the matters required to be submitted to arbitration, a court may, in the exercise of its discretion, stay the whole proceeding: see Tanning Research at 216 per Brennan and Dawson JJ. A court may also exercise a discretion to impose terms that the arbitration of the arbitrable claims not proceed prior to the determination of the non-arbitrable claims where the arbitral claims are seen to be subsidiary to or significantly less substantial than, but overlapping with, the non-arbitrable claims. The discretion may also be exercised to stay the proceedings were the non-arbitrable claims are the ancillary claims.

66 The broad discretion arises as part of the exercise of the court's general power to control its own proceedings. The basis for the discretion is that the spectre of two separate proceedings - one curial, one arbitral - proceeding in different places with the risk of inconsistent findings on largely overlapping facts, is undesirable.

95 Section 8(1) of the 2012 Act provides that it is the "matter" in respect of which the action is brought. In the present case the matter that is the subject of the action is the claim that GHR has misconducted herself in breach of trust, the appropriate remedy for which is claimed to be her removal as trustee of the Trust. GHR's conduct in causing the 2006 Amendments is but one aspect of her conduct relied upon in the matter, the subject of the action before the Court. However for the purposes of these applications, if there is a dispute "under" the Deed, I will assume that the 2012 Act requires that the parties, as opposed to the proceedings, be referred to arbitration.

96 The applicants claim that the plaintiffs' new claims give rise to three disputes "under" the Deed: (1) the attempt to appoint Mr Carter, a non-Hancock Family Group Member, as trustee of the Trust in substitution for GHR (the Replacement Trustee); (2) whether the 2006 Amendments claim is released under the Deed (the 2006 Amendments claim); and (3) whether the claim that the 2006 Amendments are void, invalid and of no effect is released under the Deed (the Constitution claim).

97 At the time of the Court of Appeal judgment, the dispute was whether GHR was entitled to engage in the conduct complained of and whether as a consequence the Trust should be split and/or GHR removed as trustee: Court of Appeal judgment at [130] per Bathurst CJ. The conduct complained of at that time was limited to conduct "said to have taken place in early September 2011": Welker v Rinehart (No 2) at [5]. There was nothing within the plaintiffs' claims at that time relating to GHR's conduct in 2006 prior to the entry into the Deed. The new claims in the 3SC raise serious allegations that GHR caused the 2006 Amendments, preferring her own interests to those of the beneficiaries of the Trust.

98 The applicants claim that the new claims have been released by the Deed and that the plaintiffs are barred from bringing these claims. The plaintiffs claim that the new claims were not released by the Deed and they are not barred from bringing them. That is said to be the dispute "under" the Deed, the outcome of which is governed and controlled by the Deed. Notwithstanding the introduction of the 2012 Act, all parties proceeded in these applications on the basis that in determining whether there is such a dispute it is necessary to determine whether the assertions that the claims are barred are "sustainable": Court of Appeal judgment at [135] per Bathurst CJ.

99 The passage of the case referred to by the Chief Justice in support of the statement that it is appropriate to decide whether the assertion that the claim was barred was "sustainable" is in Channel Tunnel Group Ltd v Balfour Beatty Construction Ltd [1993] AC 334 at 356. That case involved a contract in relation to the construction of the tunnel under the English Channel between England and France. A clause in the contract provided for the initial reference of disputes or differences as to the valuation of variations to a panel of experts and provided for final settlement by arbitration in Brussels. A dispute arose in relation to particular amounts payable and the defendants threatened to suspend work alleging that the plaintiffs were in breach of contract. The plaintiffs sought an injunction to restrain the defendants from suspending the work. The primary Judge (Evans J) concluded that, although inclined to grant an injunction, no order would be made because of the defendants' undertaking to give notice of any suspension of works. The primary Judge also dismissed a Summons by the defendants to stay the plaintiffs' action in favour of arbitration under the Arbitration Act 1975 (UK).

100 The Court of Appeal allowed the appeal in relation to the dismissal of the application for a stay, holding that a party to an arbitration agreement was not entitled to disregard it and bring an action merely because a preliminary step was not taken: Channel Tunnel Group Ltd v Balfour Beatty Construction Ltd [1992] QB 656 at 669 per Staughton LJ. It was held that the trial court had no power to grant an injunction and, in any event, such power should not be exercised as a matter of judicial restraint where there was an agreement to submit a dispute to arbitration abroad: at 676-677. The appeal to House of Lords was dismissed. Lord Mustill (with whom the other Law Lords agreed) referred to the legislative background, in particular the Arbitration Act 1975 (at 350) and said at 356:

If the plaintiff to an action which the defendant has applied to stay can show that there is no defence to the claim, the court is enabled at one and the same time to refuse the defendant a stay and to give final judgment for the plaintiff. ... I believe however that care should be taken not to confuse a situation in which the defendant disputes the claim on grounds which the plaintiff is very likely indeed to overcome, with the situation in which the defendant is not really raising a dispute at all.

101 The applicants submitted that this passage suggests a test akin to that in General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125. Although not shying away from bearing the onus to prove an entitlement to an order for referral to mediation/arbitration and a stay, the applicants submitted that it appears from this passage of Lord Mustill's speech (referring to a respondent's capacity to "show" that there was "no defence") that the onus "shifts around". In any event, it was submitted that as the Chief Justice had cited this passage in referring to a "sustainable" assertion, it should be understood that the test is whether the assertion that the claim is barred is reasonably arguable.

102 A "clearly unsustainable" claim is one where it is "plain and obvious" that the claim "cannot succeed": Drummond-Jackson v British Medical Association [1970] 1 WLR 688 at 696 per Lord Pearson. In some contexts an argument with reasonable prospects of success may equate to one that is reasonably arguable: Degiorgio v Dunn (No 2) (2005) 62 NSWLR 284 at 291 [21]; [2005] NSWSC 3. It has also been said that an argument with reasonable prospects of success connotes something less than likelihood of success: Degiorgio v Dunn (No 2) at 291 [22].

103 Lord Mustill's reference in Channel Tunnel Group Ltd v Balfour Beatty Construction Ltd to there being "no defence" to the case, combined with Bathurst CJ's reference in the Court of Appeal judgment to the assertion being "sustainable", supports the conclusion that the test is whether the assertion has reasonable prospects of success. As the opposite to the description by Lord Pearson in Drummond-Jackson v British Medical Association, it is one that can succeed.

104 I am of the view that a "sustainable" assertion in the context of these applications is one in respect of which there would be reasonable prospects of success, that is, reasonable prospects of a finding that any of the new claims as pleaded in the 3SC, have been released by the Deed.

Replacement Trustee

105 The correspondence referred to earlier in this judgment and the numerous amendments to the plaintiffs' pleading have not made it easy for the parties, or indeed the Court, to discern with certainty the plaintiffs' true intention in relation to their claims for the appointment of a replacement trustee, should GHR be removed as trustee.

106 The applicants rely upon clause 7(c) of the Deed which is the undertaking not to "take any steps at any time" that "would result" in HPPL ceasing to be wholly owned and controlled by Hancock Family Group Members. This argument was dealt with in detail both at first instance and in the Court of Appeal judgment. It seems to me that nothing has changed in the interim except for the provision of the form of consent from Mr Carter. The manner in which this issue has now arisen is by reason of the contentions in GHR's Defence. In paragraph 95(i), it is pleaded that the plaintiffs have claimed that GHR should be removed and that she "be replaced by a trustee who is not a Hancock Family Group Member". There is a contention in the Defence that if such a replacement were to occur it would be contrary to clauses 7(c) and 7(e) of the Deed. Issue has been joined with that claim in the Reply (filed after the hearing of the Motions). As those parts of the Reply are confidential it is not necessary to descend into the detail. It is sufficient to say that the Reply is limited to a claim that "each of the persons identified by the Plaintiffs as potential trustees" being JLH and Mr Carter, has "agreed to serve" in that role subject to the terms and conditions "the Court considers appropriate".

107 The applicants contend that it would not be appropriate for JLH to be appointed as trustee of the Trust for reasons it is unnecessary to detail. It is submitted that in those circumstances the only other alternative on the plaintiffs' case is the independent trustee. The applicants emphasised the premise upon which the Court of Appeal judgment proceeded in respect of this argument. The Chief Justice referred to the fact that the plaintiffs did not seek to replace GHR with a non-Hancock Family Group Member and nor could it be said that this was an "inevitable" outcome "particularly when it is was not sought" by the plaintiffs: at [144].

108 GHR's contention that the plaintiffs have claimed that she should be replaced by a non-Hancock Family Group Member misconstrues the plaintiffs' claim. Although the plaintiffs did propound such a case in their earlier pleading, I am satisfied that they have abandoned that claim. It seems that the form of consent obtained from Mr Carter was obtained "in case" the Court might wish to consider the appointment of an independent trustee. The fact that the plaintiffs took the step of obtaining the consent does not propound a positive case for the appointment of an independent trustee.

109 I am satisfied that the argument that there is a dispute under the Deed in respect of the plaintiffs' claim for the appointment of a trustee to replace GHR is not sustainable.

The 2006 Amendments

110 The claims made against GHR in the 3SC in relation to the 2006 Amendments are asserted to be "claims" that were released by the plaintiffs in the Deed. It is contended that Clause 6 of the Deed released, barred and extinguished such claim. It is also asserted that by reason of the plaintiffs "bringing and maintaining" this claim they have breached and continue to breach clause 6(b) of the Deed.

111 Whether such claims are released is a question of construction of the Deed. The applicants submitted that there is a sustainable argument that, on their proper construction, clause 6(a) and clause 6(c) of the Deed releases the 2006 Amendments claim and clause 6(b) and clause 13 of the Deed prevent it from being litigated.

112 The expression "any dispute under this Deed" in the arbitration agreement in clause 20 of the Deed was construed by Brereton J to mean "a dispute which derives from or depends on the Deed, or involves enforcing or invoking some right created by the deed": at [30]. On appeal, the Chief Justice construed the expression to mean that "if the outcome of the dispute was governed or controlled" by the Deed there would be a dispute under the Deed, "irrespective of whether the claimant was invoking or enforcing some right created" by the Deed: at [125].

113 There is no issue that in deciding whether there is a dispute "under" the Deed, it is appropriate to have regard to both the claims made by the plaintiffs and the defences raised by the defendants: Felton v Mulligan (1971) 124 CLR 367 at 387-388 per Windeyer J. This would also include the Reply to the Defences. It is also appropriate to examine the applicants' assertion that the Deed has released the 2006 Amendment claim to determine on balance whether a conclusion can properly be reached that the assertion that the claim is barred by the Deed is sustainable: at [135] per Bathurst CJ.

114 As the scope of the definition of "Claim" and the terms of clause 6 of the Deed are pivotal to the applicants' arguments they are repeated here for convenience:

Claim means:

(a) any claim, demand, action, suit or proceeding whether existing or discontinued, whether at law, under statute, in equity or otherwise:

(i) for damages, injunctions, debt, restitution or other remedy including, without limitation, breach of fiduciary duty of whatever nature and howsoever arising with respect to events or matters arising or actions taken prior to the date of this deed but not including any claim, demand, action, suit or proceedings arising as a consequence of the obligations and releases which any of the parties to this deed have agreed to in the Deed of Obligation and Release or the Deed of Loan or the Porteous Settlement Deed;

(ii) with respect to any attempt to remove or vary the Trustee or any subsequent Hancock Family Group Member as trustee of the HMH Trust and replace the trustee with a person or entity who or which is not a Hancock Family Group Member; and

(iii) any damage, loss, liability, costs, charge, expense, outgoing or payment;

(iv) any action against any of the Directors of any company within the Hancock Group, including without limitation, the Other Directors; and

(b) without limitation of clause (a) includes any claim made in the Proceedings:

(c) any damage, loss, liability, costs, charge, expense, outgoing or payment; and

(d) without limitation of sub-clause (a) includes any claim made in the Proceedings; and

(d) 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 and without limitation and for clarity in the case of the Proceedings includes the unsigned draft affidavit of JLH;

...

6 RELEASES

Each party hereto both in its own right and in any representative capacity hereby:

(a) releases and discharges each of the other parties hereto now and in the future from any Claims,

(b) Irrevocably covenants not to take any proceedings against any of the other parties to this deed in relation to any matter arising in any jurisdiction, in respect of the Claims;

(c) Withdraws and forever abandons any and all allegations made against any of the other parties to this deed in respect of or arising (in whole or in part) directly or indirectly out of:

(i) the Proceedings and any of the other Claims;

(ii) the subject matter of the Proceedings;

(iii) any claim relating to an undertaking given or costs orders made in the Proceedings,

wherever and whenever arising, whether;

(iv) known or unknown at the time of execution of this deed;

(v) presently in contemplation of such parties; or

(vi) arising under common law, equity, statute or otherwise.

115 Clause 6(a) contains a release and a discharge "now and in the future" from any Claims. The expression "now and in the future" means that the parties agreed to release each other from the Claims, as defined, forever. The definition of "Claim" in clause 1.1 of the Deed has been construed by the Court of Appeal to be "limited to claims existing or discontinued or claims which were in existence at the time the Settlement Deed was entered into": at [137] per Bathurst CJ. The words "or otherwise" in paragraph (a) of the definition in clause 1.1 of the Deed have also been construed by the Court of Appeal to refer to the nature of the claim and not to extend the operation of the definition to "claims which had not arisen at the time of entry into the Settlement Deed": [142] per Bathurst CJ. The Chief Justice's expression "claims which had not arisen" was emphasised by the applicants to contend that the expression "existing" claims includes those that have "arisen" but need not have been "made". However this expression must be read in the context of the Deed and in particular with the Chief Justice's findings in paragraph [133] of the Court of Appeal judgment. I will return to this contention later.

116 The plaintiffs submit that the release in clause 6(a) of the Deed is limited to those claims that have been "made" at the time of the execution of the Deed. It was submitted that the words of a release must be very clear to include the release of a claim that is unknown to the party giving the release. In Bank of Credit and Commerce International SA (in liq) v Ali [2002] 1 AC 251 at 263 [17] Lord Bingham of Cornhill referred to the "cautionary principle" that should inform the approach of the Court in construing general releases, in particular where it is alleged the release is in relation to claims that are unknown at the time of the release. Lord Nicholls of Birkenhead said at [26]:

Further, there is no room today for the application of any special 'rules' of interpretation in the case of general releases. There is no room for any special rules because there is now no occasion for them. A general release is a term in a contract. The meaning to be given to the words used in a contract is the meaning which ought reasonably to be ascribed to those words having due regard to the purpose of the contract and the circumstances in which the contract was made. This general principle is as much applicable to a general release as to any other contractual term.

117 His Lordship dealt with the wording of general releases and said at 265 [27]:

The wording of a general release and the context in which it was given commonly make plain that the parties intended that the release should not be confined to known claims.

118 However his Lordship continued at 266 [28]:

This approach, however, should not be pressed too far. It does not mean that once the possibility of further claims has been foreseen, a newly emergent claim will always be regarded as caught by a general release, whatever the circumstances in which it arises and whatever its subject matter may be. However widely drawn the language, the circumstances in which the release was given may suggest, and frequently they do suggest, that the parties intended, or, more precisely, the parties are reasonably to be taken to have intended, that the release should apply only to claims, known or unknown, relating to a particular subject matter.

119 The question in this case is whether the ordinary meaning of the terms of clause 6(a) of the Deed and the circumstances in which the release was given, demonstrate that the parties are reasonably to be taken to have intended that the release should apply to claims that were not made at the time the Deed was executed. In reliance upon the Chief Justice's expression "claims which had not arisen", the applicants submitted that the 2006 Amendments claim had "arisen" by reason of the plaintiffs' knowledge of the 2006 Amendments and was thus an "existing" claim.

120 The release in clause 6(a) is in general terms. Notwithstanding its generality it is limited to those matters defined as "Claims". Although the definition in clause 1.1 of the Deed is of the singular "claim", the parties agreed that this expression included the plural "Claims" (cl 1.2(a)). The release is in respect of "any existing or discontinued" claim for any "remedy" including for breach of fiduciary duty of "whatever nature and howsoever arising with respect to events or matters arising or actions taken prior to the date" of the Deed. The parties excluded claims "arising as a consequence" of the obligations and releases in the previous Deeds into which the parties had entered, being the Deed of Obligation and Release, the Deed of Loan and the Porteous Settlement Deed. The parties preserved the rights and continued their obligations to comply with the provisions of these Deeds. This preservation was not limited to claims that existed at the time of the entry into the Deed. Rather their rights were preserved to enforce claims that might arise at a later time in respect of any breaches of those deeds.

121 The general release in clause 6(a) was limited to claims that existed, that is, claims that had come into and remained in existence, or were discontinued, that is, that had come into existence but were discontinued at the time of the execution of the Deed.

122 The use of the expression "existing or discontinued" in respect of any "claim, demand, action, suit or proceeding" supports the construction that the parties intended to release only those claims and demands that had been made (or discontinued) and those suits or proceedings that had been commenced (or discontinued). The use of the expression "existing or discontinued" also supports the construction that the parties did not intend to release those circumstances or conduct that may ground a claim but that had not been formulated into a claim. The language used by the parties demonstrates a clear intention that the claims to be released were consummate claims and not inchoate claims. The absence of the expression "known and unknown" as used in clause 6(c) also supports this conclusion.

123 The other parts of the definition support this conclusion. In particular in paragraph (b) there is the expression "any claim made" in the proceedings. In sub-paragraph (d) (where secondly appearing) there is the expression "any claim made in any proceeding". It is also supported by the references to documents supporting such a claim and the unsigned draft affidavit of JLH. These are all claims that have been made or in the instance of the unsigned affidavit, claims that were made that were yet to be the subject of signature as required in the court process. They are circumstances and events that have been formulated into claims. They are "existing" claims. I am respectfully of the view that the expression used by the Chief Justice in relation to "claims which had not arisen" in paragraph [142] when read with the conclusions in paragraph [137] of the Chief Justice's judgment was intended to be a reference to claims that were not in existence, that is, claims that had not been made.

124 The other clause upon which reliance was placed is clause 6(c) of the Deed. Its subject matter is certain "allegations made against" the parties to the Deed by the other parties to the Deed. Each of the parties agreed to withdraw and forever abandon any and all of those allegations. The nature of the allegations was defined as those: (a) in respect of; (b) arising directly in whole or in part; and (c) arising indirectly in whole or in part out of: (i) the WA proceedings; (ii) the subject matter of the WA proceedings; or (iii) any claim relating to any undertaking given in the WA proceedings or costs orders made in the WA proceedings. Further attributes of the allegations were defined as: (1) wherever or whenever arising; (2) whether they were known or unknown at the time of execution of the Deed; (3) whether they were presently in the contemplation of the parties; or (4) whether arising under common law, equity, statute or otherwise.

125 From this definition it can be seen that the parties agreed to abandon and withdraw forever the allegations made against the other parties to the Deed including those of which the other parties to the Deed may not have been aware at the time of the execution of the Deed ("known or unknown") and those that may have been made against another party to the Deed but made to a third party ("whenever or wherever arising"). I am of the view that in the context of the Deed, the use of the expression "whenever arising" is limited to any time prior to the execution date of the Deed by reason of the subject matter for the withdrawal and abandonment of "allegations made".

126 The plaintiffs also submitted that even if clause 6 of the Deed applied to a claim for breach of trust with respect to the 2006 Amendments the release would be ineffective. It was submitted that overlaying the contractual relationship between the parties is the fiduciary relationship between the plaintiffs and GHR in her capacity as trustee of the Trust. In this regard it was submitted that there is a rule of equity that for a beneficiary to consent to a breach of trust the beneficiary must have "full knowledge" of all the material facts giving rise to the breach. In this regard reliance was placed on the following passage of Handley JA's judgment in Spellson v George (1992) 26 NSWLR 666 at 669:

It is established by long standing authority that the consent of a beneficiary to conduct by trustees which would otherwise be a breach of trust may be a defence to any action by that beneficiary for that breach. However, as other judgments demonstrate, the same authorities establish that consent is only a prima facie defence and that the Court must consider in detail "all the circumstances" in order to determine whether it would be "fair and equitable" for that beneficiary to be permitted to complain of that breach. An application for summary dismissal is a most inappropriate proceeding for the determination of this issue whether consent relied upon is informal and is sort to be inferred from conduct.

127 In the same case Hope A-JA said at 673:

The other issue in relation to which I wish to say something is the defence of consent itself. It is clear that consent (or concurrent) by a beneficiary to a breach of trust can be an important element in the defence of the trustee to proceedings brought against him by the beneficiary on the basis of that breach. However, as it seems to me, it is only part of the defence. Consent having been established, the beneficiary does not automatically fail. The Court must consider all the circumstances of the case and decide whether it is fair and equitable that the beneficiary should sue the trustee.

128 The plaintiffs submitted that the evidence relied upon by the applicants cannot meet the standard of fully informed consent or knowledge of the existence of a claim for breach of trust in causing the 2006 Amendments. It was submitted that the correspondence relied upon by the plaintiffs in respect of JLH does not demonstrate that he was ever shown or had knowledge of the extent of the 2006 Amendments. I agree with that submission. Indeed the evidence in respect of JLH's knowledge and awareness of the detail of the 2006 Amendments is sparse. There is no evidence in these applications that establishes that JLH ever received a copy of the 2006 Amendments, proposed or approved, prior to the date that he agreed to the terms of the Deed in 2007. There is no evidence that could establish that JLH was even aware of the real detail of the amendments, let alone be in a position to give his consent to them (if such consent were to be an issue).

129 It was also submitted that the evidence does not establish that BHR was ever made aware of the detail of the 2006 Amendments. BHR is in a different position to JLH. She was a director of HPPL and indicated in her correspondence that she was "familiar" with the relevant agreements and was "therefore aware of the necessity" for the changes to the Constitution. In her capacity as a director of HPPL, she advised that she was "therefore happy to ratify and confirm" the Board's decision to approve the changes to the Constitution. The evidence does not expressly establish that BHR had access to a copy of the clauses in the Constitution in respect of which she was providing her ratification and confirmation. However it is to be assumed that a director of a company would not ratify and confirm a decision to approve amendments to that company's Articles of Associations without being fully aware of those amendments: s 129(4) Corporations Act 2001 (Cth). If the definition of claim had included claims that might have been available but had not been made, this may have assisted the applicants.

130 The success of these applications depends on the availability of a sustainable argument that any conduct of which the plaintiffs were aware at the time of the execution of the Deed that would ground a claim against the defendants would be released by the Deed. I am of the view that the release is limited to claims that were "in existence or discontinued" that is, to claims that had been made or abandoned.

131 In those circumstances it is not necessary to consider the other provisions of the Deed referred to in the Notices of Dispute.

132 I am not satisfied that the applicants' assertion that the 2006 Amendments Claim has been released by the Deed is sustainable. I am satisfied that the assertion cannot succeed. I am satisfied that there is no reasonable prospect of a finding that the 2006 Amendments claim was a claim in existence at the time of the Deed or that it was released by the Deed. I am satisfied that there is no dispute under the Deed in respect of the 2006 Amendments claim.

HPPL Constitution

133 The applicants' Notices of Dispute in respect of the plaintiffs' contentions that the provisions of the Constitution as amended are void, invalid and of no effect depend in part upon the assertion that the plaintiffs have sought to have a replacement trustee appointed who is a non-Hancock Family Group Member. As I have concluded that there is no dispute under the Deed in respect of the Replacement Trustee this claim also falls away. In any event the claims in this regard are claims for breaches of undertakings which have been dealt with in detail by the Court of Appeal.

134 The 'Notice' served by HPPL included the assertion that the plaintiffs attempt to impugn the validity of the 2006 Amendments was a claim that had been released under the Deed. Having regard to the finding that I have made above in respect of the 2006 Amendments, this claim must fail.

Conclusion

135 The applicants' Notices of Motion are dismissed. The applicants are to pay the plaintiffs' costs of these Motions subject to any application that might be made within the next 7 days for an order otherwise.

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Decision last updated: 18 September 2013