Rinehart v Rinehart

[2014] FCA 1241

FEDERAL COURT OF AUSTRALIA

Bianca Hope Rinehart v Georgina Hope Rinehart [2014] FCA 1241

Citation:

Bianca Hope Rinehart v Georgina Hope Rinehart [2014] FCA 1241

Parties:

BIANCA HOPE RINEHART and JOHN LANGLEY HANCOCK v GEORGINA HOPE RINEHART AND OTHERS NAMED IN THE SCHEDULE

File number:

NSD 1124 of 2014

Judge:

JACOBSON J

Date of judgment:

19 November 2014

Catchwords:

PRACTICE AND PROCEDURE – Application for interim suppression order pursuant to s 37AI of the Federal Court of Australia Act 1976 (Cth) – Whether proceeding is an abuse of process – Whether order is necessary to prevent prejudice to the administration of justice

PRACTICE AND PROCEDURE – Relevance of s 8(1) and s 16(9) of the Commercial Arbitration Act 2012 (WA) in considering application for suppression in this Court

PRACTICE AND PROCEDURE – Whether news articles published after the hearing date are of sufficient probative value to warrant reopening the proceeding so that they may be tendered

PRACTICE AND PROCEDURE – Whether an injunction pursuant to s 17J of the Commercial Arbitration Act 2012 (WA), or s 23 of the Federal Court of Australia Act 1976 (Cth) is appropriate

Legislation:

Commercial Arbitration Act 2012 (WA) – s 8(1), s 16(9), s 17, s 17J
Court Suppression and Non-publication Orders Act2010 (NSW) – s 8
Evidence Act 1995 (Cth) – s 140
Federal Court of Australia Act 1976 (Cth) – s 23, s 37AI
Federal Court Rules 2011 (Cth) – r 2.32
Trade Practices Act 1974 (Cth) – s 87(2)

Cases cited:

ABC v O’Neill (2006) 227 CLR 57
Casaceli v Natuzzi Spa (2012) 292 ALR 143
Comandate Marine Corp v Pan Australia Shipping Pty Ltd (2006) 157 FCR 45
Commissioner of Police NSW v Nationwide News Pty Ltd (2008) 70 NSWLR 643
John Fairfax Publications Pty Ltd v District Court of NSW (2004) 61 NSWLR 344
John Fairfax and Sons Ltd v Police Tribunal (NSW) (1986) 5 NSWLR 465
Grant v John Grant  Sons Pty Ltd (1954) 91 CLR 112
Hogan v Australian Crime Commission (2010) 240 CLR 651
Hogan v Hinch (2011) 85 ALJR 398
Llewellyn v Nine Network Australia Pty Ltd (2006) 154 FCR 293
Paper Products Pty Ltd v Tomlinsons (Rochdale) Ltd (1993) 43 FCR 439
Rinehart v Welker [2011] NSWCA 403
Telstra Corporation v Australian Competition and Consumer Commission (2008) 171 FCR 174
Welker v Rinehart [2011] NSWSC 1094
Williams v Spautz (1992) 174 CLR 509

Date of hearing:

11 November 2014

Date of last submissions:

14 November 2014

Place:

Sydney

Division:

GENERAL DIVISION

Category:

Catchwords

Number of paragraphs:

118

Counsel for the Applicants:

Mr C H Withers with Mr A M Hochroth and Mr P A Meagher

Solicitor for the Applicants:

Yeldham Price O’Brien Lusk

Counsel for the First Respondent:

Mr B R McClintock SC with Mr S A Lawrance

Solicitor for the First Respondent:

Speed and Stracey

Counsel for the HPPL Respondents:

Mr J Sheahan QC with Mr D B Studdy SC and
Mr C Colquhoun

Solicitor for the HPPL Respondents:

Corrs Chambers Westgarth

Counsel for Fairfax Media, Nationwide News and Nine Network Australia:

Ms L Barnett

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 1124 of 2014

BETWEEN:

BIANCA HOPE RINEHART
First Applicant

JOHN LANGLEY HANCOCK
Second Applicant

AND:

GEORGINA HOPE RINEHART AND
OTHERS NAMED IN THE SCHEDULE
Respondents

JUDGE:	JACOBSON J
DATE OF ORDER:	19 NOVEMBER 2014
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1.Pursuant to s 37A(1) of the Federal Court Act 1976 (Cth), the confidential addendum to the Statement of Claim filed on 31 October 2014 be kept confidential to the parties until further order of the Court.

2.Save as provided in Order 1, revoke the orders made on 3 November 2014 as extended and supplemented on 11 November 2014.

3.The interlocutory application filed by the HPPL respondents on 3 November 2014 be otherwise dismissed.

4.The HPPL respondents to pay the costs of the interlocutory application.

5.The interlocutory application filed by GHR on 11 November 2014 be dismissed.

6.GHR to pay the costs of the interlocutory application filed on 11 November 2014.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 1124 of 2014

BETWEEN:

BIANCA HOPE RINEHART
First Applicant

JOHN LANGLEY HANCOCK
Second Applicant

AND:

GEORGINA HOPE RINEHART AND
OTHERS NAMED IN THE SCHEDULE
Respondents

JUDGE:	JACOBSON J
DATE:	19 NOVEMBER 2014
PLACE:	SYDNEY

REASONS FOR JUDGMENT

INTRODUCTION

1. This is an application for interim suppression orders under s 37AI of the Federal Court of Australia Act 1976 (Cth) (the FCA).  The application is brought by certain of the respondents to this proceeding (the HPPL respondents).  It is supported by the first respondent (GHR).

2. The proceeding may be described as the latest iteration of a bitter and long running dispute between some of the children of GHR and their mother as to GHR’s alleged misconduct in her administration of a trust of which the children are beneficiaries.

3. The HPPL respondents and GHR seek to suppress the contents of the Originating Application and Statement of Claim filed on 31 October 2014 and certain associated documents.  The matter was brought on urgently before me on 3 November 2014 when I made interim orders up to 11 November 2014 to enable the matter to be fully argued.

4. The orders which are now sought are for suppression of the documents referred to above until the hearing and determination of an application to be brought for a stay of the proceeding

5. The gravamen of the submissions made on behalf of the HPPL respondents is that the proceeding is an abuse of process.  This is because they contend that the proceeding is brought for the collateral purpose of obtaining publicity for the allegations as a tactic to put pressure on the HPPL respondents and GHR.

6. The alleged improper purpose is said to be inferred from a combination of circumstances which may be stated briefly. First it is said that both of the present applicants (BHR and JLH) are conscious of, and are continuing to act consistently with, past threats by JLH to use publicity as a tactic to secure concessions from the HPPL respondents (or some of them) and GHR in the settlement of earlier claims made against them.

7. Second, the HPPL respondents and GHR point to the fact that the earlier claims were settled under various deeds which contain releases of claims that are said to be encompassed in the present proceeding.

8. Third, the HPPL respondents and GHR rely upon the terms of each of those deeds which contained agreements to submit claims, as defined in the deeds, to confidential arbitration.

9. In addition, the HPPL respondents and GHR submitted that there is a real risk of commercial harm to them if suppression is refused.  This risk was said to flow from the public airing of the allegations.  It was submitted that this gave rise to the possibility that potential lenders and investors might decline to deal with the HPPL respondents in light of the serious allegations made in the Statement of Claim.

10. GHR adopted the submissions put on behalf of the HPPL respondents but sought to justify the need for a suppression order (and other alternative relief) on grounds to which I will refer later.

11. The making of the orders was opposed by BHR and JLH.  The orders were also opposed by Nationwide News Pty Ltd, Fairfax Media Publications Pty Ltd and Nine Network Australia (the Media interests).

12. BHR and JLH relied heavily upon the principle of “open justice” and the heavy burden of demonstrating that the orders are necessary to prevent prejudice to the proper administration of justice.  Those principles were stated and applied by the NSW Court of Appeal in Rinehart v Welker [2011] NSWCA 403 in which a suppression order was refused. No challenge was made before me to the principles stated by the Court of Appeal. Rather, the effect of the submissions put on behalf of the HPPL respondents and GHR was that the matters upon which they rely to support the making of an order are different from those which were considered in the Court of Appeal.

13. BHR and JLH gave four further reasons why the suppression orders ought to be refused.

14. First, BHR and JLH submitted that there was no evidence to support the contention made by the HPPL respondents and GHR that the present proceedings were commenced for the collateral purpose alleged.

15. Moreover, they submitted that they had no choice but to bring proceedings in the Court because some of the parties against whom they seek relief are not parties to any arbitration agreement.

16. Second, BHR and JLH submit that there is no reliable, or indeed admissible, evidence of commercial harm.

17. In particular BHR and JLH point to the concession made by the HPPL respondents that they would be bound to disclose to any potential lender or investor the allegations made in the Statement of Claim.

18. Third, BHR and JLH submit that the claims which are now alleged do not fall within the scope of the arbitration agreements that have been entered into. In addition, they rely upon the proviso to s 8(1) of the Commercial Arbitration Act 2012 (WA) which provides for a referral to arbitration unless the Court “finds that the agreement is null and void, inoperative or incapable of being performed”.

19. The Originating Application in this case seeks declarations that each of the releases and arbitration clauses in all (except for one) of the relevant deeds is void ab initio pursuant to s 87(2) of the Trade Practices Act 1974 (Cth).

20. Fourth, BHR and JLH submit that the substance of the allegations which the HPPL respondents and BHR seek to suppress are already in the public domain.

    THE PRINCIPLES

21. The key principles stated by Bathurst CJ and McColl JA in Rinehart v Welker were drawn from a long line of authoritative decisions including Hogan v Australian Crime Commission (2010) 240 CLR 651; Hogan v Hinch (2011) 85 ALJR 398; John Fairfax and Sons Ltd v Police Tribunal (NSW) (1986) 5 NSWLR 465 and John Fairfax Publications Pty Ltd v District Court of NSW (2004) 61 NSWLR 344.

22. Those principles may be summarised in the following way.

23. First, the operative condition for making a suppression order under s 37AG of the FCA (and its analogue in s 8 of the Court Suppression and Non-publication Orders Act 2010 (NSW) (the CSPO Act) is that the order be “necessary” to prevent prejudice to the administration of justice.  This is a strong word which reinforces the legislative intention that suppression orders should only be made in exceptional circumstances: Rinehart v Welker at [27].

24. Second, the principle of open justice is one of the most fundamental aspects of the system of justice in Australia.  Departure from it may only be justified where its observance would frustrate the administration of justice or some other public interest for whose protection Parliament has modified the open justice rule: Rinehart v Welker at [29], [32].

25. Third, the necessity principle is reinforced by the requirement stated in s 37AE of the FCA (and s 6 of the CSPO Act) that the Court must take into account that a primary objective of the administration of justice is to safeguard the public interest in open justice: Rinehart v Welker at [32].

26. Fourth, the necessity principle encapsulates as its final and paramount consideration the need to do justice.  Publication is a means to that end and can only be avoided where necessity compels departure from the open justice principle: Rinehart v Welker at [30].

27. Fifth, the entitlement of the media to report on court proceedings is a corollary of the right of access to the court by all members of the public: Rinehart v Welker at [33].

28. Sixth, in general parties have to accept the embarrassment and damage to their reputation, and the possibility of consequential loss, which may be inherent in being involved in litigation.  It is the price of open justice that allegations about parties are aired in open court.  Those parties can make their response in the same forum and if the media publishes the allegations it would ordinarily be obliged to publish the response: Rinehart v Walker at [54].

29. Seventh, there are a number of recognised exceptions to the principles of open justice.  They include cases where the openness of the proceedings would destroy the attainment of justice by vindicating the activities of a blackmailer and cases where disclosure of the information would seriously affect the commercial value of the subject matter by revealing secret processes or confidential business information to competitors: Rinehart v Welker at [34]-[37].

30. Reference should also be made to the observation of Spigelman CJ in John Fairfax Publications v District Court at [99] that in a free society public access to the conduct of the courts and the results of deliberations in the courts is a human right:

    “ … as well as a mechanism for ensuring the integrity and efficacy of the institutions of the administration of justice.”

31. It should also be observed that, in this Court, the open justice principle is ordinarily engaged when proceedings are commenced: see rule 2.32(2)(a) of the Federal Court Rules 2011.  See also Llewellyn v Nine Network Australia Pty Ltd (2006) 154 FCR 293 at [23]. The only exception to this is that a non-party (including the media) is not entitled to inspect a document listed in rule 2.32 that the Court has ordered to be confidential: see rule 2.32(3) of the Federal Court Rules.

    THE ORIGINATING PROCESS

32. I was taken through the Statement of Claim in some detail.  It is 95 pages long and is accompanied by a “confidential addendum” of a further six pages.

33. The allegations in the Statement of Claim are similar to those which were made in the claims in Rinehart v Welker.  There are allegations of serious breaches of fiduciary duty by GHR in her capacity as trustee.  The breaches date back to 1992.  HPPL, as the main company in the HPPL Group, is said to have knowingly assisted in the breaches.

34. The differences between the earlier proceeding and the present may be stated briefly.

35. The principal difference is that the allegations of breach of fiduciary duty are said to found proprietary rights in equity.  Declarations of trust and an account of profits are sought.

36. Another significant difference is the approach taken by GHR and JLH to the effect of a Settlement Deed entered into between the parties in August 2006 known as the Hope Downs Deed.

37. In the earlier proceeding no challenge was made to the validity of the Hope Downs Deed which contained releases of claims against GHR to certain companies in the HPPL Group as well as an agreement to refer disputes “under this deed” to confidential arbitration.  The question which arose in the earlier proceeding was whether the claims then made were a dispute under the Deed: see Rinehart v Welker [2012] NSWCA 95.

38. In the present proceeding GHR and JLH seek to set aside the Hope Downs Deed and the Arbitration Agreement in that Deed by reason of, inter alia, misleading conduct on the part of GHR and officers of HPPL.  They also seek to set aside a number of other settlement deeds entered into between 2005 and 2008, including the arbitration agreements in those deeds.

39. Allegations of concealment of the causes of action are made in relation to the claims to set aside the Hope Downs Deed and the other settlement deeds.

40. A further difference is the way in which the claims made by GHR and JLH are formulated.  The new formulations of the claims include pleading the causes of action as claims for unconscionable conduct and a novel claim described as the tort of collateral abuse of process.

41. The confidential addendum to the Statement of Claim deals with communications between certain parties to the proceedings in relation to arbitrations that are on foot and the status of those arbitrations.

    ABUSE OF PROCESS

42. In my opinion the HPPL respondents and GHR have failed to establish a credible case that the present proceeding constitutes an abuse of process.  I do not consider the abuse of process contention to be hopeless but the question of whether the proceeding is an abuse can only be determined at the hearing of the foreshadowed stay application.  That application is unlikely to be heard for a considerable period of time and, if it proceeds, will no doubt occupy a lengthy period of court time.

43. In order to establish that the proceeding is brought as an abuse of process, the HPPL respondents and GHR must demonstrate that the dominant purpose of BHR and JLH is to use the legal process for a collateral purpose, that is to say for a purpose other than that for which it is designed: Williams v Spautz (1992) 174 CLR 509 at 529. The onus of establishing an abuse is a heavy one and must be made out to the Briginshaw standard reflected in s 140(2) of the Evidence Act 1995 (Cth).

44. Here, there is an insufficient evidentiary basis to establish a credible claim that BHR and JLH are using the proceeding for the improper purpose which is alleged, that is to say as a means for obtaining publicity to put pressure on the HPPL respondents and GHR.  The seriousness of that claim speaks for itself.  It was said to be tantamount to an attempt to blackmail the relevant respondents and therefore to fall within one of the established exceptions to the open justice principle.

45. The highest that the evidence rose was an email dated 23 November 2004 sent on behalf of JLH and certain recitals to a Confidential Deed of Obligation and Release dated 1 April 2005 between JLH and other parties including HPPL and GHR.  The parties to the Deed included BHR.

46. That evidence seems to me to be tendency evidence which is not admissible under s 97 of the Evidence Act because the notice requirements stated in para (1)(a) of that section were not satisfied.

47. But even if I were to accept the submission made on behalf of the HPPL respondents that the evidence is admissible because it provides the basis for an inference of purpose, it is insufficient by itself to establish such an inference to the requisite standard of proof.  The evidence is, to say the least, not recent, and it addresses the factual circumstances which existed at that time.

48. Moreover, the email was sent by or on behalf of JLH and the acknowledgments in the Deed of 1 April 2005 are in respect of JLH’s use of the media.  There is no evidence that BHR has sought to use the media as a tactic to put pressure on the relevant respondents.  The most that can be said is that she was aware, approximately 10 years ago, of HPPL’s commercial sensitivity to her brother’s use of “sensationalist media” to seek exposure with the public, particularly during periods of negotiation of large commercial projects.  That is a slender basis for suggesting the existence of a credible case against her.

49. In short, there is no evidence of any recent threat made by either BHR or JLH to use publicity as a tactic.  In my view that is sufficient to dispose of the contention that there is a credible argument that BHR and JLH are using the present proceeding for a purpose that is said to be tantamount to blackmail.

50. The abuse of process contention is not confined to the “blackmail” claim, although that is its major tenet.  It is also founded upon inferences to be drawn from the long history of settlement agreements in which it is said BHR and JLH released the present claims and agreed to submit their disputes to confidential arbitration.  There is, as was submitted on behalf of GHR a combination of contractual promises going back to 2003 in which BHR and JLH promised that they would not bring claims as defined in the relevant agreements and also promised that they would not publicise those claims.

51. It is not necessary to trace through each of the relevant agreements.  It is sufficient to say that in my opinion the proposition put by the HPPL respondents and GHR is reasonably arguable.  However, it is sufficient for present purposes to say that in my view there are two short answers to that argument which would need to be fully considered at a hearing of the stay application.

1. The first is that four of the HPPL respondents, against whom equitable relief is sought, are not parties to the agreements.  They are necessary parties to this proceeding and cannot be forced to arbitrate because they are not subject to an arbitration agreement.

2. It would be open to the Court in the stay application to order a stay of the arbitrable claims and defer the hearing of the non-arbitral claims pending the determination of the arbitration.  However, that is a matter for the exercise of discretion in the application:  Casaceli v Natuzzi Spa (2012) 292 ALR 143 at [48].

3. Second, BHR and JLH seek to set aside the settlement deeds and the arbitration agreements.  That is a sufficient answer at this stage to the submission put on behalf of GHR that the arbitration agreements are independent of the settlement deeds: see Comandate Marine Corp v Pan Australia Shipping Pty Ltd (2006) 157 FCR 45 at [226]-[227].

4. It is true, as was emphasised on behalf of the HPPL respondents and GHR, that there are numerous settlement deeds.  Indeed, BHR and JLH have acted inconsistently with the claim they now seek to make setting aside the deeds.  They did so in an arbitration in which they sought to  invoke the distribution covenant contained in clause 5 of the Hope Downs Deed, which they now contend to be invalid.

5. Moreover, the arbitration agreement in clause 20 of the Hope Downs Deed relates only to disputes “under this deed”.  In my view this provides a slender basis for the contention that the arbitration agreement was procured in order to provide a cloak of confidentiality for GHR’s alleged misconduct.

6. Nevertheless, as I have said, these are matters which need to be determined at the hearing of the stay application.

7. I have taken into account the fact that BHR and JLH do not seek to set aside the Deed of Settlement and Release entered into on 15 September 2003 known as the “Porteous Deed”. It seems to me that the releases given in that Deed do not extend to the matters which are the subject of the Statement of Claim.

   NO COMMERCIAL HARM

8. It was accepted on behalf of the HPPL respondents and GHR that any damage to their reputations flowing from publication of the allegations in the Statement of Claim is not a proper basis upon which suppression orders may be justified.

9. However, the HPPL respondents and GHR submitted that commercial damage would be suffered by them if allegations are published in the media.  They relied upon evidence contained in the affidavits of Mr Korte and Mr Klepec.  The “evidence” was, in effect, no more than a submission or a belief that harm would be occasioned in dealings with lenders and investors.

10. The value of the mining projects conducted by the HPPL respondents in the Pilbara region of Western Australia is well known.  Details are given in Mr Korte’s affidavit.  Mr Korte also deposes to the current status of the project and the large number of employees and contractors who are engaged in it.

11. Mr Klepec refers to other business operations conducted by HPPL and some members of the HPPL Group.

12. There is no doubt that the value of all of these operations is immense and that a large number of persons benefit from it.  Indeed, as Mr McClintock SC submitted, the projects in question are of very substantial national and international significance.

13. However, the short answer to the submissions made by the HPPL respondents and GHR is that the evidence of Mr Korte and Mr Klepec establishes that the relevant HPPL respondents intend to, and are indeed obliged, to disclose to their lenders and other counter-parties the allegations made in the Statement of Claim.

14. Ultimately the submission that was made on behalf of the HPPL respondents and GHR was that they wish to avoid the glare of media scrutiny lest it prejudice their dealings with some of their counter-parties who might be cautious about dealing with the companies in light of a “media circus”.

15. I do not consider that this submission can be sustained.  All of the counter-parties are sophisticated commercial organisations.  They will be provided with full details of the allegations in the Statement of Claim and are well able to distinguish between allegations and factual findings.

16. Moreover, as Brereton J said in Welker v Rinehart [2011] NSWSC 1094 at [20], the evidence does not reach the requisite level of certainty and the fact that the pendency of litigation might have an impact on a party’s dealings with others is not an established or sufficient basis for departing from the open justice principle.

    WHETHER THE CLAIMS NOW MADE FALL WITHIN THE SCOPE OF THE ARBITRATION AGREEMENTS OR THE RELEASES

17. The question of whether disputes fall within an arbitration clause depends upon the language of the clause. The language is to be construed consistently with its ordinary meaning and is to be liberally construed: see the authorities cited by Bathurst CJ in the appeal in the stay application at [120].

18. As his Honour observed in that case at [123], the phrase “under this deed” is given a narrower construction than phrases such as “arising out of the deed” or “in connection with the deed”.

19. The general words of a release are to be restrained by the particular occasion which is the subject of the agreement and the scope of a general release is to be determined from the nature of the instrument and the circumstances in which it was made including the state of knowledge of the parties concerning the character of the liability in question: Grant v John Grant  Sons Pty Ltd (1954) 91 CLR 112 at 123, 129-130.

20. The arbitration clauses and the releases in the settlement deeds in the present case are different in each instance.

21. It seems to me to be inappropriate in an application for suppression orders to consider the wide range of questions which would arise.

22. There is some force in the submission made by BHR and JLH that the allegations in the Statement of Claim do not give rise to a dispute under the Hope Downs Deed because the claims include applications to have the Deed declared void by reason of pre-contractual-conduct: see Paper Products Pty Ltd v Tomlinsons (Rochdale) Ltd (1993) 43 FCR 439 at 448.

23. In any event, there are three short answers to the contentions put on behalf of the HPPL respondents and GHR.

24. First, even if there is a credible argument that the Court is likely to give effect to an arbitration agreement by ordering a stay, that is not determinative of the question of whether it is necessary for the proper administration of justice for the Court to make a suppression order: Rinehart v Welker at [51]-[55].

25. Second, if an application is made under s 8(1) of the Commercial Arbitration Act 2012 (WA) to refer the matter to arbitration, it will be necessary in such an application to determine whether the arbitration agreement is null and void within the proviso to that subsection.

26. I reject the submission made on behalf of the HPPL respondents and GHR that the proviso only applies where there has already been a finding that the agreement is inoperative.  That submission seems to me to ignore the wording of the proviso commencing with the phrase “unless it finds …”.

27. Third, the evidence is not sufficiently clear to make good the submission that there is a credible argument that the claims made in the Statement of Claim have been released.

    THE SUBSTANCE OF THE ALLEGATIONS IS IN THE PUBLIC DOMAIN

28. It is well established that the Court will avoid making orders that are futile and this principle will apply where a suppression order is sought in respect of material that is in the public domain: Commissioner of Police NSW v Nationwide News Pty Ltd (2008) 70 NSWLR 643 at [43].

29. The observations made by Brereton J in Welker v Rinehart [2011] NSWSC 1094 at [2] are apt in the present case. His Honour observed that this is not the first occasion of discord in the family, which has immense wealth, no small part of which resides in the trust. He went on to say that in the past the affairs of the family, including such discord, have attracted considerable publicity.

30. So much is plain from the bulk of the material exhibited to the affidavit of Mr Price.  The high water mark of that evidence seems to be a newspaper article published in The West Australian dated 13 March 2011 bearing the headline “Little trust where the assets were”.  That article contains an allegation made by JLH that:

    “… his late grandfather, Lang Hancock, had intended that the Hope Margaret Hancock Trust hold 49 per cent of the shares in Hancock Prospecting on behalf of Mrs Rinehart’s four children but she had significantly reduced the amount of shares while beefing up her own stake in the company.”

31. The allegations in the present Statement of Claim are wider in terms than those which have been previously published.  In particular, the claims are formulated differently and there are now proprietary claims as well as a claim of concealment of some of the causes of action.

32. It is true, as was submitted on behalf of the HPPL respondents and GHR that certain aspects of the factual substratum contained in the Statement of Claim are not in the public domain.  Those matters include, in particular, allegations concerning the valuable mining tenements referred to in the course of argument as well as new allegations of misconduct by GHR and the HPPL respondents that are alleged to give rise to the newly formulated proprietary claims.

33. However, it is clear that the claims made in the earlier proceeding were based upon serious allegations of breach of fiduciary duty by GHR, with the knowing participation of HPPL.  The gravamen of those allegations was that GHR had, in breach of her duties as a trustee, acted in her own interests, at the expense of the interests of her children as beneficiaries so as to increase her entitlements and dilute those of the children.

34. In my opinion, the allegations that are now made, whilst adding to the detail of the earlier allegations and claiming other relief, fall within the nature of the claims that are already in the public domain.

35. I accept that taking a narrow view it is possible to conclude that some of the detail is not in the public domain.  However, in my opinion, the long and sorry history of this litigation and the substantial media attention which it has attracted calls for a practical and commonsense approach rather than one which parses and analyses every paragraph of the Statement of Claim.  It is significant in this regard that the HPPL respondents and GHR sought a blanket suppression order for the whole of the Statement of Claim.

36. In my opinion the better view is that the substance of the allegations is significantly in the public domain and it would be futile to make the suppression order sought by the HPPL respondents and GHR.

    Application to reopen

37. On 12 November 2014, the day after I reserved my judgment, BHR and JLH sought leave to reopen to tender a number of newspaper reports of the interlocutory hearing that were published that morning.  The reports are relevant to the submission of BHR and JLH that the subject matter of the Statement of Claim is in the public domain.

38. The ultimate question for the Court in an application to reopen is whether it is in the interests of justice that the further evidence be admitted.  Clearly enough, the evidence was not available during the hearing but an important consideration in determining the exercise of the relevant discretion is whether the additional evidence is sufficiently probative to affect the result: see Telstra Corporation v Australian Competition and Consumer Commission (2008) 171 FCR 174 at [207]-[211].

39. The HPPL respondents and GHR oppose the grant of leave.  They submit that BHR and JLH are seeking to take advantage of statements which their counsel made in open court in circumstances in which I asked all counsel to address in a way that did not disclose the detailed basis underlying the claim for the confidentiality orders.

40. Counsel for the HPPL respondents and GHR went on to submit that not all of the matters referred to in the newspaper articles were raised during the hearing.  They submitted that it was to be  inferred that someone in the “camp” of BHR and JLH must therefore have provided the information about these matters to the media.  They further submitted that this provides strong support for their contention that the proceedings are brought for the collateral purpose of creating adverse publicity.

41. For the reasons stated above I do not consider that the articles published on 12 November 2014 affect the view that I have reached that the substance of the allegations is already in the public domain.  I therefore reject the application for leave to reopen but I will mark the newspaper articles as MFI 1.

42. I should add that I reject the submission of impropriety that was made by the HPPL respondents and GHR as to the circumstances in which the information came to the attention of the media.  There is insufficient evidence to support that submission, particularly when regard is paid to the seriousness of the allegation.

    RINEHART V WELKER NOT DISTINGUISHABLE

43. The present application is not distinguishable from the matter which was before the Court of Appeal in Rinehart v Welker.  In that case the suppression order was sought on the basis that the proceedings were an abuse of process, having been commenced without prior compliance with the alternative dispute resolution procedures for which the relevant Deed provided:  see per Bathurst CJ and McColl JA at [9].

44. The attempt to distinguish that case upon the footing that the new proceedings are an abuse of process, or at least that there is a credible argument of abuse, fails for the reasons set out above.

45. The conclusions reached by Bathurst CJ and McColl JA at [51]-[55] that the suppression order did not meet the necessity test therefore apply equally in the present case.  Their Honours’ observation at [52] that the proper conduct of trustees is a matter which warrants close public scrutiny is apt in the present case.

    GHR’S SUBMISSIONS

46. Mr McClintock’s submissions placed considerable emphasis upon the new legislative scheme which is embodied in the Commercial Arbitration Act 2012 (WA) (CAA) and its analogues. The effect of his submission was that the CAA gives primacy to the concept of party autonomy reflected in private arbitration agreements and that the approach taken by BHR and JLH in the present proceeding runs counter to the CAA.

47. In particular he submitted that the refusal of a suppression order would defeat the object and purpose of the CAA by avoiding the carefully structured confidentiality provisions contained in that legislation in circumstances in which it is likely that the Court will ultimately rule that arbitration is the proper forum for the dispute.

48. A number of provisions of the CAA support the submission that the Court will, in appropriate matters, give primacy to the parties’ contractual expression of their agreement to submit commercial disputes to confidential private arbitration.

49. These provisions include the statement of the paramount object of the CAA in section 1C and the extensive powers given to arbitral tribunals in s 16 which enable a tribunal to rule on its own jurisdiction. The power of an arbitral tribunal to grant interim awards under s 17 is also relevant.

50. It is true that in any stay application brought in this Court, the provisions to which Mr McClintock pointed will need to be addressed.  But I do not see that they have any bearing on the application for a suppression order because the HPPL respondents and GHR have failed to make good the submission that there is a credible argument that the proceeding is an abuse of process.  As I have already said, the abuse of process question will have to be determined in the stay application.

51. I do not see that this conclusion is affected by s 16(9) of the CAA. That sub-section provides that if the arbitral tribunal rules as a preliminary question that it has jurisdiction, any party may request within 30 days of having received notice of the ruling that the Court decide the matter.

52. It does not follow from s 16(9) that the Court is bound to refer the present application for a stay to the arbitrators who are apparently seized of disputes which have previously been referred to them.

53. Mr McClintock also submitted that when considering the operative provision of s 37AG of the FCA namely that a suppression order must be necessary to prevent prejudice to the administration of justice, the Court should also take into account as part of the administration of justice the integrity of the arbitral process.

54. I accept that in certain instances the Court should look to the wider interests of the relationship between court proceedings and the arbitral process.  However, there are two short answers to this submission in the present case.

55. First, the position here is no different from that which arose in Rinehart v Welker. As Bathurst CJ and McColl JA said at [53], if the HPPL respondents and GHR obtain a stay, they will have the benefit of the substance of the allegations being dealt with fully in private arbitration rather than in a public forum; that benefit remains irrespective of whether the allegations now made are publicly disclosed.

56. Second, the allegations which concern events that have occurred in the course of existing arbitrations are the subject of the confidential addendum to the Statement of Claim. It seems to me that it is necessary to prevent prejudice to the administration of justice to suppress the addendum. To do otherwise would be contrary to the confidentiality provisions that underlie the CAA.

57. Finally, Mr McClintock sought to rely upon an interlocutory application filed belatedly by GHR seeking to invoke s 17J of the CAA, or alternatively, s 23 of the FCA to injunct BHR and JLH from inter alia publishing or disseminating the Statement of Claim, Originating Application or any other document filed in this proceeding.

58. It seems to me that the application raises the same consideration as arise in relation to the suppression order and should be refused for the reasons referred to above.

59. In short, GHR has failed to establish a prima facie case within the well known principles stated in ABC v O’Neill (2006) 227 CLR 57 at [65]. Moreover, the balance of convenience leans against the grant of relief for a number of reasons.

60. Those reasons include the fact that there is no commercial inconvenience to GHR in light of the concession that the allegations in the  Statement of Claim will be disclosed to the HPPL Group’s counterparties.  In addition, the substance of the allegations is already in the public domain and there is likely to be significant delay in bringing the stay application on for hearing.  That application is unlikely to be one which would be capable of speedy hearing and determination.

61. In addition, the public interest in open justice and the entitlement of the media, including the media interests who are party to the present application, must be taken into account on the balance of convenience.

    RULE 2.32

62. The HPPL respondents sought an order under rule 2.32(3) of the Federal Court Rules that the Statement of Claim and other documents remain confidential.

63. For the reasons set out above I do not propose to make that Order.

    CONCLUSION AND ORDERS

64. I propose to make an order revoking the interim suppression Orders made on 3 November 2014, as extended and supplemented on 11 November 2013. I will order pursuant to s 37AI(1) of the FCA that the confidential addendum to the Statement of Claim be suppressed and that its contents be kept confidential to the parties and their legal advisors.

65. I will order that the interlocutory application filed by the HPPL respondents on 3 November 2014 be otherwise dismissed.

66. I will also order that the interlocutory application filed by GHR in Court on 11 November 2014 be dismissed.

67. The HPPL respondents are to pay the costs of and incidental to the application filed on 3 November 2014.  GHR is to pay the costs of and incidental to her interlocutory application.

I certify that the preceding one hundred and eighteen (118) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jacobson.

Associate: 

Dated:  19 November 2014

SCHEDULE

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 1124 of 2014

Second Applicant	JOHN LANGLEY HANCOCK
Second Respondent	HANCOCK PROSPECTING PTY LTD ACN 008 676 417
Third Respondent	HANCOCK MINERALS PTY LTD ACN 057 326 824
Fourth Respondent	HANCOCK FAMILY MEMORIAL FOUNDATION LTD ACN 008 499 312
Fifth Respondent	TADEUSZ JOSEF WATROBA
Sixth Respondent	WESTRAINT RESOURCES PTY LTD ACN 009 083 783
Seventh Respondent	HMHT INVESTMENTS PTY LTD ACN 070 550 104
Eighth Respondent	150 INVESTMENTS PTY LTD ACN 070 550 159
Ninth Respondent	HOPE RINEHART WELKER
Tenth Respondent	GINIA HOPE FRANCES RINEHART
Eleventh Respondent	MAX CHRISTOPHER DONNELLY (IN HIS CAPACITY AS TRUSTEE OF THE BANKRUPT ESTATE OF THE LATE LANGLEY GEORGE HANCOCK)
Twelfth Respondent	HOPE DOWNS IRON ORE PTY LTD ACN 071 514 308
Thirteenth Respondent	ROY HILL IRON ORE PTY LTD ACN 123 722 038
Fourteenth Respondent	MULGA DOWNS INVESTMENTS PTY LTD ACN 132 484 050
Fifteenth Respondent	MULGA DOWNS IRON ORE PTY LTD ACN 080 659 150