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Rinehart v Hancock Prospecting Pty Ltd

Rinehart v Hancock Prospecting Pty Ltd

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HIGH COURT OF AUSTRALIA
KIEFEL CJ,
GAGELER, NETTLE, GORDON AND EDELMAN JJ
Matter No S143/2018
BIANCA HOPE RINEHART & ANOR   APPELLANTS
AND
HANCOCK PROSPECTING PTY LTD & ORS  RESPONDENTS
Matter No S144/2018
BIANCA HOPE RINEHART & ANOR   APPELLANTS
AND
GEORGINA HOPE RINEHART (IN HER
PERSONAL CAPACITY AND AS TRUSTEE OF
THE HOPE MARGARET HANCOCK TRUST AND
AS TRUSTEE OF THE HFMF TRUST) & ORS  RESPONDENTS
Rinehart v Hancock Prospecting Pty Ltd
Rinehart v Rinehart
[2019] HCA 13
8 May 2019
S143/2018 & S144/2018
ORDER
Matter No S143/2018
1.The appeal be dismissed with costs.
2. The third party companies' application for special leave to cross-appeal be allowed.

3.The cross-appeal be treated as instituted and heard instanter and allowed.
4. Orders 5, 6 and 8 of the orders of the Full Court of the Federal Court of Australia made on 15 December 2017 be set aside and, in their place, it is ordered that:
"5. The orders of the Court made on 26 May 2016 be set aside and in lieu thereof order:
(a) that the proceeding brought in the Court by the applicants being NSD 1124 of 2014 be stayed under s 8(1) of the Commercial Arbitration Act 2010 (NSW) (CA Act) pending any arbitral reference between the parties or until further order, save and except for those claims made against Mulga Downs Investments Pty Ltd; and
(b) the first and second applicants to the main proceedings (being the first and second respondents to the appeals) pay the costs of the moving parties to the interlocutory application filed on 3 November 2014 in proceedings NSD 1124 of 2014 in connection with paragraph 9 thereof and the costs of the moving parties to the interlocutory application filed on 24 December 2014 in those proceedings, subject to Mulga Downs Investments Pty Ltd paying the costs related to the question of whether it is a party to the arbitration agreement pursuant to s 2 of the CA Act.

6. The claims made by the applicants in the underlying proceedings against Mulga Downs Investments Pty Ltd be stayed on the same terms as the stay in order 5.
8. The first and second respondents pay the appellants' costs of appeal including the costs of the application for leave to appeal, subject to Mulga Downs Investments Pty Ltd paying the costs related to the question as to whether it is a party to the arbitration agreement pursuant to s 2 of the CA Act."

5.The respondents to the cross-appeal pay the cross-appellants' costs of the cross-appeal.

Matter No S144/2018
The appeal be dismissed with costs.

On appeal from the Federal Court of Australia
Representation
B W Walker SC and G E S Ng for the appellants in both matters (instructed by Yeldham Price O'Brien Lusk Lawyers)
N C Hutley SC with I C Colquhoun and J J Hutton for the first to eighth respondents in S143/2018 and the third to tenth respondents in S144/2018 (instructed by Corrs Chambers Westgarth)
P J Brereton SC…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2019] HCA 13
Decision Date: 8 May 2019

CaseChat Overview and Summary

The High Court of Australia considered appeals and cross-appeals concerning the construction and application of arbitration clauses within certain deeds. The primary dispute involved allegations by the appellants of breaches of equitable and contractual duties, which they asserted rendered the deeds invalid due to alleged misconduct, undue influence, or duress in their procurement. The respondents sought to enforce the arbitration clauses, arguing that these disputes were subject to confidential arbitration as stipulated in the deeds.

The central legal issues before the court were whether the appellants' claims, which challenged the validity of the deeds themselves, fell within the scope of the arbitration clauses, and whether third parties claiming "through or under" a party to an arbitration agreement could be compelled to arbitrate. Specifically, the court had to determine the breadth of the phrase "dispute under this deed" and the meaning of "party" as defined in the Commercial Arbitration Act 2010 (NSW).

The High Court reasoned that the context and purpose of the deeds were crucial to their construction. The deeds were executed against a backdrop of threatened and actual litigation, with a fundamental purpose of quelling disputes regarding asset title and facilitating commercial arrangements. The court found that the arbitral clauses were intended to have wide coverage for the confidential resolution of disputes. Applying this purposive approach, the court concluded that the validity claims, despite challenging the deeds, were intrinsically linked to the rights and obligations created by those deeds and therefore constituted "disputes under this deed" subject to arbitration. Furthermore, the court affirmed that the definition of "party" in the Commercial Arbitration Act extended to those claiming through or under an original party to an arbitration agreement, encompassing the third party companies in this instance.

The High Court dismissed the appeals, allowing the cross-appeals. The orders made by the Full Court of the Federal Court of Australia were set aside and replaced with orders staying the proceedings under section 8(1) of the Commercial Arbitration Act 2010 (NSW), pending arbitral reference, with specific exceptions. The court also made orders regarding costs.

Orders

Orders of the court

Matter No S143/2018

1. The appeal be dismissed with costs.

2. The third party companies' application for special leave to cross-appeal be allowed.

3. The cross-appeal be treated as instituted and heard instanter and allowed.

4. Orders 5, 6 and 8 of the orders of the Full Court of the Federal Court of Australia made on 15 December 2017 be set aside and, in their place, it is ordered that:

"5. The orders of the Court made on 26 May 2016 be set aside and in lieu thereof order:

(a) that the proceeding brought in the Court by the applicants being NSD 1124 of 2014 be stayed under s 8(1) of the Commercial Arbitration Act 2010 (NSW) (CA Act) pending any arbitral reference between the parties or until further order, save and except for those claims made against Mulga Downs Investments Pty Ltd; and

(b) the first and second applicants to the main proceedings (being the first and second respondents to the appeals) pay the costs of the moving parties to the interlocutory application filed on 3 November 2014 in proceedings NSD 1124 of 2014 in connection with paragraph 9 thereof and the costs of the moving parties to the interlocutory application filed on 24 December 2014 in those proceedings, subject to Mulga Downs Investments Pty Ltd paying the costs related to the question of whether it is a party to the arbitration agreement pursuant to s 2 of the CA Act.

6. The claims made by the applicants in the underlying proceedings against Mulga Downs Investments Pty Ltd be stayed on the same terms as the stay in order 5.

8. The first and second respondents pay the appellants' costs of appeal including the costs of the application for leave to appeal, subject to Mulga Downs Investments Pty Ltd paying the costs related to the question as to whether it is a party to the arbitration agreement pursuant to s 2 of the CA Act."

5. The respondents to the cross-appeal pay the cross-appellants' costs of the cross-appeal.

Matter No S144/2018

The appeal be dismissed with costs.

Background

Background to the litigation

Nevertheless, as the Full Court recognised, Fiona Trust was not critical to the resolution of these appeals. It is unnecessary to consider, or rely upon, Fiona Trust, or the observations of Bathurst CJ in Rinehart v Welker concerning Fiona Trust, to dispose of these appeals.The background to and purpose of the Deeds As the Full Court concluded: "[c]ontext will almost always tell one more about the objectively intended reach of such phrases than textual comparison of words of a general relational character"[20]. There may be cases which have to be resolved largely, if not entirely, by reference to the language of the arbitral clause in question. But this is not such a case. The background to and the purposes of the Deeds, as reflected in their terms[21], point clearly to arbitral clauses of wide coverage with respect to what was to be the subject of confidential processes of dispute resolution.[20]Hancock Prospecting Pty Ltd v Rinehart (2017) 257 FCR 442 at 496 [193].[21]Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 at 348, 352 per Mason J; [1982] HCA 24; Maggbury Pty Ltd v Hafele Australia Pty Ltd (2001) 210 CLR 181 at 188 [11] per Gleeson CJ, Gummow and Hayne JJ; [2001] HCA 70; Royal Botanic Gardens and Domain Trust v South Sydney City Council (2002) 240 CLR 45 at 52-53 [10] per Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ; [2002] HCA 5; Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451 at 461-462 [22] per Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ; [2004] HCA 35; Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 at 178-179 [38] per Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ; [2004] HCA 52; Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640 at 656 [35] per French CJ, Hayne, Crennan and Kiefel JJ; [2014] HCA 7. The Full Court treated the context and purposes for which the Deeds were made as important to their construction. Their Honours identified the context for the making of the Deeds as the growing number of claims being made. One of the fundamental purposes of the Deeds, their Honours said, was the quelling of disputes about the title to assets, which was of great commercial importance to the prospective arrangements with a joint venturer[22]. We respectfully agree. It is necessary to consider each of the Deeds in further detail.[22]Hancock Prospecting Pty Ltd v Rinehart (2017) 257 FCR 442 at 498 [203].The Deed of Obligation and Release The background to the Deed of Obligation and Release was investigations undertaken by Mr Hancock around 2003, or perhaps earlier, and the possibility he had raised of commencing litigation against Mrs Rinehart. In October 2004 Mr Hancock's solicitors sent a copy of an affidavit by him, unsworn, which contained many of the allegations concerning wrongful conduct on the part of Mrs Rinehart as trustee which now form part of the substantive claims. Mr Hancock's unsworn affidavit and correspondence entered into leading up to the execution of the Deed of Obligation and Release refer to proposals to buy Mr Hancock's interests in the HMH Trust or achieve some kind of settlement. In March 2005 Mrs Rinehart commenced proceedings in the Supreme Court of Western Australia seeking her discharge as trustee of the HMH Trust and the appointment of her nominee.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

KIEFEL CJ, GAGELER, NETTLE AND GORDON JJ EDELMAN J

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Ratio Decidendi

Legal Principle Established

Established by: KIEFEL CJ, GAGELER, NETTLE AND GORDON JJ, EDELMAN J

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