Rinehart v Rinehart (No 3)
[2016] FCA 539
•26 May 2016
FEDERAL COURT OF AUSTRALIA
Rinehart v Rinehart (No 3) [2016] FCA 539
File number: NSD 1124 of 2014 Judge: GLEESON J Date of judgment: 26 May 2016 Catchwords: CORPORATIONS – commercial arbitration – interlocutory application seeking an order that the proceedings be referred to arbitration – whether the applicants had entered into an agreement to resolve the dispute by arbitration – whether the applicants are disentitled from seeking certain relief because of a contractual agreement to resolve disputes the subject of the proceeding by arbitration – should the Court direct that there be a trial to decide whether any or all of the arbitration agreements are null and void, inoperative or incapable of being performed – there be a trial of whether five of the agreements to arbitrate are null and void, inoperative or incapable of being performed
STATUTORY INTERPRETATION – whether s 8(1) of the Commercial Arbitration Act 2010 (NSW) or the Commercial Arbitration Act 2012 (WA) (“commercial arbitration legislation”) is ‘picked up’ by s 79 of the Judiciary Act 1903 (Cth) – what is the meaning of ‘domestic commercial arbitration’ in the commercial arbitration legislation – what facts must the party seeking referral to arbitration establish to engage s 8(1) of the arbitration legislation – to what standard of proof must these facts be established – does the Court have discretion to decide or not decide whether an arbitration agreement is null and void, inoperative or incapable of being performed
Legislation: Bankruptcy Act 1966 (Cth)
Corporations Act 2001 (Cth)
Federal Court of Australia Act 1976 (Cth)
Income Tax Assessment Act 1936 (Cth)
International Arbitration Act 1974 (Cth)
Judiciary Act 1903 (Cth)
Trade Practices Act 1974 (Cth)
Arbitration Act 1928 (Vic)
Arbitration Act 2011 (Vic)
Commercial Arbitration Act 2011 (Vic)
Commercial Arbitration Act 2010 (NSW)
Commercial Arbitration Act 1990 (Qld)
Commercial Arbitration Act 2012 (WA)
Commercial Arbitration Act 1985 (WA)
Property Law Act 1969 (WA)
Trustees Act 1962 (WA)
Arbitration Act 1996 (NZ)
Arbitration Act 1996 (UK)
International Arbitration Act (Singapore) (Cap 143A, 2002 Rev Ed)
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Amcor Packaging (Australia) Pty Ltd v Baulderstone Pty Ltd [2013] FCA 253
Ashton v Pratt [2015] NSWCA 12; (2015) 88 NSWLR 281
Ashville Investments Ltd v Elmer Contractors Ltd [1988] 2 All ER 577; [1989] QB 488; (1988) 3 WLR 868
Baltic Shipping Co v Merchant Mikhail Lermontov (1994) 36 NSWLR 361
Bank of Credit and Commerce International SA (in liq) v Ali [2002] 1 AC 251
Bautista v Star Cruises 396 F. 3d 1289 (11th Cir, 2005)
BHPB Freight Pty Ltd v Cosco Oceania Chartering Pty Ltd [2008] FCA 551; (2008) 168 FCR 169
Bond Corporation Pty Ltd v Thiess Contractors Pty Ltd (1987) 14 FCR 193
Cape Lambert Resources Ltd v MCC Australia Sanjin Mining Pty Ltd [2013] WASC 66; (2013) 298 ALR 666
Carr v Thomas [2009] NSWCA 208
Carter Holt Harvey Ltd v Genesis Power Ltd (No 2) [2006] 3 NZLR 794
Carter v McLaughlin (1996) 27 OR (3d) 792
Casaceli v Natuzzi SpA [2012] FCA 691; (2012) 292 ALR 143
City of London v Sancheti [2008] EWCA Civ 1283; [2008] 2 CLC 730; [2009] 1 Lloyd’s Rep 117
Collector of Customs vPozzolanic Enterprises Pty Ltd [1993] FCA 322; (1993) 43 FCR 280
Comandate Marine Corp v Pan Australia Shipping Pty Ltd [2006] FCAFC 192; (2006) 157 FCR 45
Cousens v Gray Ridge Pty Ltd [2000] VSCA 96
Dallah Real Estate and Tourism Holding Company v The Ministry of Religious Affairs, Government of Pakistan [2010] UKSC 46
Discount & Finance Ltd v Gehrig’s NSW Wines Ltd (1940) 40 SR (NSW) 598
El-Mir v Risk [2005] NSWCA 215
Fiona Trust and Holding Corp v Privalov [2007] UKHL 40; [2007] 4 All ER 951; [2008] 1 Lloyd’s Rep 254
Flakt Australia Ltd v Wilkins & Davies Construction Co Ltd (1979) 39 FLR 267; [1979] 2 NSWLR 243
Flint Ink NZ Ltd v Huhtamaki Australia Pty Ltd [2014] VSCA 166; (2014) 289 FLR 30
Francis Travel Marketing Pty Ltd v Virgin Atlantic Airways Ltd (1996) 39 NSWLR 160
Grant v John Grant & Sons Pty Ltd [1954] HCA 23; (1954) 91 CLR 112
Greer v Kettle [1938] AC 156
Gulf Canada Resources Ltd v Arochem International Ltd (1992) 66 BCLR (2d) 113
Hancock v Rinehart [2013] NSWSC 1352; (2013) 96 ACSR 76
Hancock v Rinehart [2013] NSWSC 1978
Harbour Assurance Co (UK) Ltd v Kansa General International Insurance Co Ltd [1992] 1 Lloyd’s Rep 81
Hashwani v Jivraj [2010] EWCA Civ 712; [2011] 1 All ER 50; [2010] 2 Lloyd’s Rep 534
Heller Financial Services Ltd v Theiss Contractors Pty Ltd [2000] FCA 802
Hi-Fert Pty Ltd v Kiukiang Maritime Carriers Inc (No 5) (1998) 90 FCR 1
Huddart Parker Ltd v Ship Mill Hill [1950] HCA 43; (1950) 81 CLR 502
IMC Aviation Solutions Pty Ltd v Altain Khuder LLC [2011] VSCA 248; (2011) 38 VR 303
John Pfeiffer Pty Ltd v Rogerson [2000] HCA 36; (2000) 203 CLR 503
Joint Stock Company ‘Aeroflot Russian Airlines’ v Berezovsky [2013] EWCA Civ 784; [2013] 2 CLC 206; [2013] 2 Lloyd’s Rep 242
Lady Carrington Steamship Co Ltd v The Commonwealth [1921] HCA 49; (1921) 29 CLR 596
Latteria Holdings Pty Ltd v Corcoran Parker Pty Ltd [2014] FCA 880; (2014) 224 FCR 519
Lavin v Toppi [2014] NSWCA 160; (2014) 87 NSWLR 159; (2014) 308 ALR 598
McDermott v Black [1940] HCA 4; (1940) 63 CLR 161
nearmap Ltd v Spookfish Pty Ltd [2014] NSWSC 1790
Northern Territory v GPAO [1999] HCA 8; (1999) 196 CLR 553
P. Elliot & Co. Ltd v FCC Elliot Construction Ltd [2012] IEHC 361
Paper Products Pty Ltd v Tomlinsons (Rochdale) Ltd (1993) 122 ALR 279; (1993) 43 FCR 439
Porteous v Donnelly (Trustee), in the matter of Hancock (Bankrupt) [2002] FCA 862
Porteous v Rinehart (1998) 19 WAR 495
Re 700 Form Holdings Pty Ltd [2014] VSC 385
Re Ku-ring-gai Co-operative Building Society (No 12) Ltd [1978] FCA 50; (1978) 36 FLR 134
Recyclers of Australia Pty Ltd v Hettinga Equipment Inc [2000] FCA 547; (2000) 100 FCR 420
Rhone Mediterranee Compagnia Francese Di Assicurazioni E Riassicurazoni v Lauro 712 F. 2d 50 (3rd Cir, 1983)
Rinehart v Hancock [2013] NSWCA 326
Rinehart v Rinehart [2014] FCA 1241; (2014) 320 ALR 195
Rinehart v Welker [2011] NSWCA 345
Rinehart v Welker [2011] NSWCA 403
Rinehart v Welker [2012] NSWCA 95
Robotunits Pty Ltd v Mennel [2015] VSC 268; (2015) 297 FLR 300
Roussel-Uclaf v GD Searle & Co Ltd (No 2) [1978] FSR 95; [1978] 1 Lloyd’s Rep 225
Seeley International Pty Ltd v Electra Air Conditioning BV [2008] FCA 29; (2008) 246 ALR 589
Shahid v Australasian College of Dermatologists [2008] FCAFC 72; (2008) 168 FCR 46
Sun Life Assurance Company of Canada v CX Reinsurance Company Ltd [2003] EWCA Civ 283; [2004] Lloyd’s Rep IR 58
Tanning Research Laboratories Inc v O’Brien [1990] HCA 8; (1990) 169 CLR 332
TCL Airconditioner (Zhongshan) Co Ltd v Castel Electronics Pty Ltd [2009] VSC 553
TCL Air Conditioner (Zhongshan) Co Ltd v The Judges of the Federal Court of Australia [2013] HCA 5; (2013) 251 CLR 533
Thomas v Star MaidInternational Pty Ltd [1999] FCA 911
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165
Tomolugen Holdings Ltd v Silica Investors Ltd [2015] SGCA 57
Trade Practices Commission v Milreis Pty Ltd (1977) 29 FLR 144; (1977) 14 ALR 623
Walter Rau Neusser Oel und Fett AG v Cross Pacific Trading Ltd [2005] FCA 1102
Welker v Rinehart (No 2) [2011] NSWSC 1238
Welker v Rinehart (No 4) [2011] NSWSC 1636
Welker v Rinehart [2011] NSWSC 1094
Holtzmann HM and and Neuhaus JE, A Guide to the UNICITRAL Model Law on International Commercial Arbitration: Legislative History and Commentary (Kluwer Law, 1994)
Joseph D, Jurisdiction and Arbitration Agreements and their Enforcement (3rd ed, Sweet & Maxwell, 2015)
Merkin R, Arbitration Law (LLP, 2004)
Dates of hearing: 24, 27, 28 April 2015, 15, 16, 17 June 2015, 14, 15 July 2015 Registry: New South Wales Division: General Division National Practice Area: Commercial and Corporations Sub-area: Commercial Contracts, Banking, Finance and Insurance Category: Catchwords Number of paragraphs: 669 Counsel for the Applicants: Mr CH Withers with Mr AM Hochroth and Mr PA Meagher Solicitor for the Applicants: Yeldham Price O’Brien Lusk Counsel for the First and Eighth Respondents: Mr BR McClintock SC with Mr SA Lawrance and Mr J Hutton Solicitor for the First and Eighth Respondents: Speed and Stracey Counsel for the Second, Third, Fifth, Sixth, Seventh, Twelfth, Thirteenth and Fifteenth Respondents: Mr NC Hutley SC with Mr C Colquhoun Solicitor for the Second, Third, Fifth, Sixth, Seventh, Twelfth, Thirteenth and Fifteenth Respondents: Corrs Chambers Westgarth Solicitor for the Ninth Respondent: Deutsch Miller Solicitor for the Tenth Respondent: Mr J Dalzell of Gadens ORDERS
NSD 1124 of 2014 BETWEEN: BIANCA HOPE RINEHART
First Applicant
JOHN LANGLEY HANCOCK
Second Applicant
AND: GEORGINA HOPE RINEHART (IN HER PERSONAL CAPACITY AS TRUSTEE OF THE HOPE MARGARET HANCOCK TRUST AND AS TRUSTEE OF THE HFMF TRUST)
First Respondent
HANCOCK PROSPECTING PTY LTD (ACN 008 676 417)
Second Respondent
HANCOCK MINERALS PTY LTD (ACN 057 326 824) (and others named in the Schedule)
Third Respondent
JUDGE:
GLEESON J
DATE OF ORDER:
26 MAY 2016
THE COURT ORDERS THAT:
1.Insofar as the interlocutory applications dated 3 and 23 December 2014 relied upon the arbitration agreement in the Porteous settlement deed, the applications be dismissed.
2.There be a trial of the question whether any of the following agreements is null and void, inoperative or incapable of being performed within the meaning of s 8(1) of the Commercial Arbitration Act 2010 (NSW) or the Commercial Arbitration Act 2012 (WA):
(a)Clause 14 of the 2005 deed of obligation and release;
(b)Clause 20.2 of the Hope Downs deed;
(c)Clause 9.2 of the 2007 HD deed;
(d)Clause 16 of the 2009 deed of further settlement; and
(e)Clause 11 of the 2010 deed of variation.
3.Costs of the interlocutory applications dated 3 and 23 December 2014 be reserved.
4.The matter be listed for a case management hearing on Thursday, 30 June 2016 at 9:30 am.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
INDEX
The case made by Mrs Rinehart and the HPPL respondents
[9]
The applicants’ response
[13]
Questions for determination
[19]
Summary of conclusions
[21]
Application of commercial arbitration legislation
[22]
Preliminary observations
[23]
Relevant statutory provisions
[30]
Domestic commercial arbitration
[39]
Agreed questions (1) and (2): What is the meaning and operation of s 1(1) of the commercial arbitration legislation? What factors are relevant to determining whether the legislation applies?
[41]
Meaning of “domestic” commercial arbitration
[44]
Meaning of domestic “commercial” arbitration
[51]
Agreed questions (3) and (4): Does there need to be a commercial relationship between the parties in order for an arbitration to be a domestic commercial arbitration? If so, have GHR and each of the HPPL respondents demonstrated that there was a commercial relationship between each of them and each of the applicants, as a result of which any arbitration between them should be characterised as a domestic commercial arbitration?
[72]
Requirements to establish application of commercial arbitration legislation
[74]
Proof of arbitration agreements
[76]
“Parties” to an arbitration agreement
[88]
Agreement that the disputes that have arisen between the parties are to be settled by (domestic commercial) arbitration
[89]
Whether disputes are commercial disputes
[90]
Section 8(1)
[91]
Agreed question (6): If the commercial arbitration legislation applies, what facts must the party seeking referral to arbitration establish in order to engage section 8(1)?
[91]
“Matter”
[93]
Scope of arbitration agreement
[98]
Agreed question (7): To what standard of proof must the facts identified by question 6 be established:
[103]
(a) does it require an arguable case or sustainable argument that the matter(s) in the court proceedings are the subject of an arbitration agreement; or
[103]
(b) does it require GHR and the HPPL respondents to prove, on the balance of probabilities, that matter(s) in the court proceedings are the subject of an arbitration agreement?
[103]
Agreed question (10): Does the Court have discretion to decide or not decide whether the arbitration agreement is null and void, inoperative or incapable of being performed?
[116]
How should the discretion be exercised?
[120]
Agreed question (12): Can the proviso in s 8(1) apply where an arbitration agreement is voidable rather than void?
[125]
The applicants must impeach the arbitration agreements
[126]
Null and void
[128]
Can the proviso apply to claims under the Trade Practices Act?
[138]
Standard of proof
[141]
Court’s power to refer parties to arbitration and stay proceedings (agreed questions (14) and (15))
[146]
Is s 8(1) “picked up” by s 79 of the Judiciary Act?
[146]
Power to stay proceedings
[160]
Facts
[164]
“Substantive claims” and “validity claims”
[165]
Factual findings sought by the applicants
[170]
Background to the main proceeding
[172]
The position at the time of Mr Hancock senior’s death
[190]
Mrs Rinehart’s roles and duties after Mr Hancock senior’s death
[194]
Alleged misconduct prior to 2003
[198]
1992 appropriation of Roy Hill tenements (section 8 of statement of claim)
[199]
Relief sought
[207]
1992 to 1994 manipulation of HFMF’s financial position (section 10 of statement of claim)
[209]
Relief sought
[215]
1995 “debt reconstruction” (sections 11 and 13 to 16 of statement of claim)
[217]
Debt reconstruction relief sought
[223]
1992 to 1998 appropriation of Nicholas Downs tenements (section 18 of statement of claim)
[225]
Relief sought
[227]
1998 appropriation of Mulga Downs tenement (section 18 of statement of claim)
[228]
Relief sought
[230]
Events leading to September 2003 Porteous settlement deed
[231]
September 2003 Porteous settlement deed
[240]
Terms of the Porteous settlement deed
[248]
Ms Rinehart’s relationships with respondents prior to the Porteous settlement deed
[261]
Mr Hancock’s relationships with respondents prior to the Porteous settlement deed
[269]
Commencement of disputes between Mr Hancock and Mrs Rinehart
[276]
Mr Hancock’s unsworn affidavit
[284]
Overlap between the statement of claim in this proceeding and the unsworn affidavit
[289]
Overlap of allegations concerning divestment of valuable assets held by HFMF
[300]
Events leading to April 2005 deed of obligation and release
[309]
April 2005 deed of obligation and release and deed of loan
[315]
Commercial relationships
[332]
Alleged misconduct in connection with the making of the 2005 deed of obligation and release (section 31 of statement of claim)
[335]
Relief sought
[337]
Hope Downs Joint Venture
[338]
Mr Hancock’s September 2005 affidavit
[344]
March 2006 Hope Downs Joint Venture Agreement (section 19 of the statement of claim)
[346]
August 2006 Hope Downs deed
[349]
Terms of the Hope Downs deed
[366]
Hancock Group Interests
[386]
Commercial relationships
[392]
Alleged misconduct in procuring the Hope Downs deed (sections 20, 22 to 30 and 37 of statement of claim)
[395]
Alleged misrepresentations (sections 23 and 27 of statement of claim)
[399]
Relief sought
[403]
Fraudulent concealment (section 24 of statement of claim)
[404]
Inter-creditor deed
[405]
Misleading and deceptive conduct (section 25 of statement of claim)
[407]
Relief sought
[409]
Unconscionable conduct (section 26 of statement of claim)
[410]
Relief sought
[413]
Undue influence and duress (sections 28 and 29 of statement of claim)
[414]
Breach of trust and fraud on trustee’s power (section 30 of statement of claim)
[416]
Events leading to the 2007 HD deed and the 2007 CS deed
[418]
2007 HD deed
[423]
2007 CS deed
[430]
Alleged misconduct in procuring the 2007 HD deed and the 2007 CS deed (sections 31 to 37 of statement of claim)
[438]
Misleading and deceptive conduct (section 32 of statement of claim)
[439]
Relief sought
[441]
Fraudulent concealment and misrepresentation, unconscionable conduct, undue influence and duress by Mrs Rinehart and HPPL (sections 33 to 36 of statement of claim)
[442]
Breach of trust and fraud on trustee’s power (section 37 of statement of claim)
[445]
Events between 13 April 2007 and February 2009
[447]
February 2009 appropriation of Mulga Downs tenement (section 18 of statement of claim)
[449]
August 2009 deed of further settlement
[451]
Alleged misconduct in procuring the August 2009 deed of further settlement (section 38 of statement of claim)
[459]
November 2010 deed of variation
[461]
Alleged misconduct in procuring the 2010 deed of variation (section 38 of statement of claim)
[468]
September 2011 Mrs Rinehart’s failure to account to the children for 25.5% of her shares in HPPL (section 13 of statement of claim)
[470]
Relief sought
[472]
Welker v Rinehart (No 2)
[473]
2012 transfer of HMH Trust’s shares in HMHTI to HPPL (section 12 of statement of claim)
[474]
Complaints about deployment of the Hope Downs deed (sections 39, 40, 41 of statement of claim)
[476]
Alleged affirmation of Hope Downs deed
[481]
Hancock v Rinehart 2013 (Bergin CJ in Eq)
[489]
Hancock v Rinehart 2013 (Brereton J)
[490]
Hancock v Rinehart 2015
[492]
Agreed question (5): Application of commercial arbitration legislation in this case
[498]
Apparently valid agreements to arbitrate
[499]
Agreements to submit to commercial arbitration?
[502]
Clause 16.2 of Porteous settlement deed
[503]
Clause 14 of the 2005 deed of obligation and release
[504]
Clause 20.2 of the Hope Downs deed
[505]
Clause 9.2 of the 2007 HD deed
[507]
Clause 16 of the 2009 deed of further settlement
[508]
Clause 11 of the 2010 deed of variation
[510]
Agreements to submit to arbitration disputes which have arisen between the parties?
[511]
Clause 16.2 of the Porteous settlement deed
[511]
Other arbitration clauses
[513]
“Parties” to the arbitration agreements (agreed question (8))
[515]
Mr Donnelly
[517]
HDIO, RHIO, MDI and MDIO
[518]
“through or under a party to”
[519]
HDIO
[528]
RHIO
[536]
MDI and MDIO
[541]
GHR as trustee of the HFMF trust
[542]
Places of business or habitual residence
[545]
Agreement that disputes that have arisen between the parties be settled by arbitration
[546]
Conclusions on agreed question (5)
[547]
Clause 16.2 of the Porteous settlement deed
[547]
Other arbitration clauses
[549]
Agreed question (9): what matters are subject of an arbitration agreement?
[552]
The relevant matters
[553]
Are the matters in the proceeding commercial disputes?
[559]
Claims concerning ownership of valuable commercial assets and entitlements to profits
[560]
Claims impugning the Hope Downs deed and the 2007 HD deed
[562]
Mr Hancock’s claim challenging the 2010 arbitration agreement
[564]
Mr Hancock’s claim challenging the 2009 release and the 2009 arbitration agreement
[570]
Mr Hancock’s claims challenging the validity and enforceability of the release in the 2007 CS deed, and seeking to set aside the 2007 CS deed
[575]
Other claims
[576]
Principles concerning scope of the arbitration agreements
[577]
Any dispute “under this deed”; “disputes hereunder”
[579]
Any dispute “arising out of or in relation to” relevant deeds
[588]
Principles governing interpretation of releases
[589]
Covenants not to sue and pleas in bar, and agreements to withdraw allegations
[592]
Matters subject of clause 14 of the 2005 deed of obligation and release
[597]
Matters subject of clause 20.2 of the Hope Downs deed
[608]
Are the “substantive claims” “Claims” within the meaning of the Hope Downs deed?
[609]
Are “substantive claims” allegations arising out of the subject matter of proceeding CIV 1327/2005 and therefore barred and released by the Hope Downs deed?
[622]
Are Ms Rinehart and Mr Hancock estopped from bringing the “substantive claims” by reason of clause 4 of the Hope Downs deed?
[625]
Must the “substantive claims” be submitted to arbitration by reason of the covenant not to sue in clause 7(b) or 7(e) of the Hope Downs deed?
[631]
Conclusions about “substantive claims” subject to clause 20.2
[634]
The “validity claims”
[637]
Matters subject of clause 9.2 of the 2007 HD deed
[647]
Matters subject of clause 16 of the 2009 deed of further settlement
[651]
Matters subject of clause 11 of the 2010 deed of variation
[659]
Agreed question (11): should the Court direct a trial on the arbitrability issue?
[662]
Remaining questions
[669]
GLEESON J:
This judgment deals with two interlocutory applications made by the first respondent (“Mrs Rinehart” or “GHR”) and several of the other respondents (“HPPL respondents”). Mrs Rinehart is the daughter of the late Langley George Hancock (“Mr Hancock senior” or “LGH”) and the mother of the applicants (“Ms Rinehart” or “BHR” and “Mr Hancock” or “JLH”). The HPPL respondents have various relationships with Mrs Rinehart.
By her interlocutory application dated 23 December 2014, Mrs Rinehart seeks an order pursuant to s 8(1) of the Commercial Arbitration Act 2010 (NSW) (“NSW Act”) that the parties to this proceeding be referred to arbitration in respect of the matters the subject of the proceeding, an order that the proceeding be dismissed or permanently stayed or, in the alternative, various orders pursuant to s 8(1). Section 8(1) provides:
(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.
By para 9 of their interlocutory application dated 3 December 2014, the HPPL respondents (comprising the second respondent (“HPPL”), third respondent (“HML”), fifth respondent (“Mr Watroba”), sixth respondent (“HRL” or “WRL”), seventh respondent (“HMHTI”), twelfth respondent (“HDIO”), thirteenth respondent (“RDIO”) and the fifteenth respondent (“MDIO”)) seek an order that the proceeding be stayed.
In support of their application, the HPPL respondents rely on s 8(1) of the NSW Act or alternatively s 8(1) of the Commercial Arbitration Act 2012 (WA) (“WA Act”), which is in identical terms.
In the main proceeding, the applicants seek extensive relief, based substantially upon allegations of misconduct by Mrs Rinehart since the death of Mr Hancock senior in March 1992, and concerning the administration of one or more trusts of which the applicants are beneficiaries. Mrs Rinehart and the HPPL respondents contend that the applicants are disentitled from seeking that relief because they are contractually bound to resolve the disputes that are the subject of the proceeding by arbitration.
Mrs Rinehart supported the interlocutory application made by the HPPL respondents and adopted their submissions.
The eighth respondent (“150 Investments”) consents to the orders sought by the interlocutory applications. The other respondents (being the fourth respondent (“HFMF”), the ninth respondent (“Ms Welker” or “HRW”), the tenth respondent (“Ms Ginia Rinehart” or “GHFR”), the eleventh respondent (“Mr Donnelly”) and the fourteenth respondent (“MDI”)) did not appear on the interlocutory applications. However, in correspondence, MDI consented to claims affecting MDI being stayed pending an arbitration in respect of those claims, and consented to those claims being determined by confidential arbitration.
Ms Welker and Ms Ginia Rinehart are also Mrs Rinehart’s children.
The case made by Mrs Rinehart and the HPPL respondents
The interlocutory applications are based on deeds executed by various of the applicants and respondents between September 2003 and November 2010. Six of the deeds are alleged to contain an “arbitration agreement” within the meaning of s 8(1). Those six deeds, described in more detail later in the judgment, are:
(1)the Porteous settlement deed;
(2)the 2005 deed of obligation and release;
(3)the Hope Downs deed (executed in about August 2006);
(4)the 2007 HD deed;
(5)the 2009 deed of further settlement; and
(6)the 2010 deed of variation.
As against Ms Rinehart, Mrs Rinehart and the HPPL respondents rely on the Porteous settlement deed, the Hope Downs deed and the 2007 HD deed.
As against Mr Hancock, they rely on all six deeds (noting that the reliance on the Hope Downs deed against Mr Hancock is based on his execution of the 2007 HD deed).
In brief, Mrs Rinehart and the HPPL respondents say that, by executing the deeds, the applicants have “repeatedly given up any right they may once have had to bring the claims now made in the statement of claim”. Further, they have “repeatedly agreed that any such claim is to be resolved by way of confidential arbitration proceedings”.
The applicants’ response
The applicants oppose the orders sought by Mrs Rinehart and the HPPL respondents.
As to five of the alleged arbitration agreements (being those other than the agreement to arbitrate in the Porteous settlement deed), the applicants allege that the execution of the deeds in which those agreements are contained was procured by misconduct on the part of Mrs Rinehart and HPPL. In the main proceeding, the applicants claim injunctive relief to restrain the enforcement of the arbitration clauses contained in the 2005 deed of obligation and release, the Hope Downs deed, the 2007 HD deed, the 2009 deed of further settlement and the 2010 deed of variation. They also seek declarations that those deeds and the arbitration clauses contained in them are void ab initio.
The applicants also dispute that s 8(1) applies in this case on several grounds. First, they dispute that s 8(1) applies to this Court as a court exercising federal jurisdiction because it is not “picked up” by s 79 of the Judiciary Act 1903 (Cth) (“Judiciary Act”).
If s 8(1) binds this Court pursuant to s 79, then the applicants dispute that s 8(1) applies because it is concerned only with “domestic commercial arbitrations”, being the subject matter of the NSW Act and the WA Act (individually and collectively “commercial arbitration legislation”). The applicants say (in summary) that the relationships between them and the respondents are not commercial relationships and, accordingly, any arbitration of disputes between the applicants and the respondents would not be a commercial arbitration.
If an arbitration between the applicants and the respondents of the matters in dispute in this proceeding would be a “domestic commercial arbitration”, then the applicants dispute that the pre‑conditions for an order under s 8(1) are satisfied in this case.
If the pre‑conditions to an order under s 8(1) are satisfied, then the applicants submit that, before granting the interlocutory relief sought, the Court should decide whether the arbitration agreements upon which the respondents rely are “null and void, inoperative or incapable of being performed” within the meaning of this proviso to s 8(1).
QUESTIONS FOR DETERMINATION
The parties identified the following 17 questions for determination (to which I have made minor adjustments to recognise the HPPL respondents’ reliance on the WA Act):
(1)What is the meaning and operation of s 1(1) of the commercial arbitration legislation?
(2)What factors are relevant to determining whether the commercial arbitration legislation applies?
(3)Does there need to be a commercial relationship between the parties in order for an arbitration to be a domestic commercial arbitration?
(4)If so, have GHR and each of the HPPL respondents demonstrated that there was a commercial relationship between each of them and each of the applicants, as a result of which any arbitration between them should be characterised as a domestic commercial arbitration?
(5)Have GHR and each of the HPPL respondents met their burden of proving that the commercial arbitration legislation applies as between each of them and the applicants?
(6)If the commercial arbitration legislation applies, what facts must the party seeking referral of the parties to arbitration establish in order to engage s 8(1)?
(7)To what standard of proof must those facts be established:
(a)does it require GHR and the HPPL respondents to demonstrate an arguable case or sustainable argument that the matter(s) in the court proceedings are the subject of an arbitration agreement; or
(b)does it require GHR and the HPPL respondents to prove, on the balance of probabilities, that matter(s) in the court proceedings are the subject of an arbitration agreement?
(8)Which, if any, of the respondents to these proceedings are “parties” to a deed containing an arbitration agreement with one or both of the applicants?
(9)Have GHR and the HPPL respondents met their burden of proving that the matter(s) in the current proceedings are “the subject of an arbitration agreement” within the meaning of s 8(1) of the commercial arbitration legislation? If so, which “matters” constitute:
(a)a dispute “under” the 2005 deed of obligation and release, the Hope Downs deed or the 2007 HD deed?
(b)a dispute “arising out of, relating to or in connection with” the Porteous settlement deed, the 2007 CS deed, or the 2009 deeed of further settlement and the 2010 deed of variation?
(10)Does the Court have discretion to decide or not decide whether the arbitration agreement is null and void, inoperative or incapable of being performed?
(11)If the Court does have discretion, should the Court direct that there be a trial before this Court on the question whether the arbitration agreements applicable to those matter(s) identified in answer to agreed question (9) are null and void, inoperative or incapable of being performed for the purposes of s 8(1), on any one or more of the following grounds:
(a)undue influence;
(b)duress;
(c)unconscionability;
(d)fraudulent concealment;
(e)mispresentation;
(f)misleading and deceptive conduct;
(g)fraud on a power?
(12)Can the proviso in s 8(1) apply where an arbitration agreement is voidable rather than void?
(13)If the Court determines that s 8(1) is engaged with respect to one or more of the matters in the proceedings, what should happen to those matters which are not the subject of an arbitration agreement?
(14)Is s 8(1) binding on this Court pursuant to s 79 of the Judiciary Act?
(15)If the Court determines that the commercial arbitration legislation does not apply or that GHR and the HPPL respondents have not met their burden of proving that any matter(s) in the proceedings are the subject of an arbitration agreement, does the Court otherwise have the power to stay the proceedings and refer the parties to arbitration?
(16)If so, should the Court exercise its discretion to do so?
(17)On the assumption that answers favourable to the respondents are given to the questions stated above, what form of order staying the proceedings or referring them to arbitration is appropriate to give effect to the Court’s reasons?
I have addressed the agreed questions in the course of addressing the following issues:
(1)The proper construction of s 8(1). This issue requires consideration of agreed questions (1), (2), (3), (6), (7), (10) and (12).
(2)The Court’s powers to make the orders sought (agreed questions (14) and (15)).
(3)Whether s 8(1) applies to the facts of this case. This issue requires consideration of agreed questions (4), (5), (8) and (9).
(4)The consequences that flow from the conclusions about the application of s 8(1) in this case. This issue raises, at least potentially, agreed questions (11), (13), (16) and (17).
SUMMARY OF CONCLUSIONS
For the reasons given below, I have concluded that:
(1)Section 79 of the Judiciary Act “picks up” s 8(1) of the commercial arbitration legislation;
(2)The NSW Act does not apply in this proceeding to the alleged arbitration agreement in the Porteous settlement deed, because it is not an agreement to submit to arbitration any dispute between the applicants and Mrs Rinehart or any of the HPPL respondents. If that conclusion is wrong, none of the claims in the proceeding is a matter which is the subject of the alleged arbitration agreement because the release in clause 3.9 of the Porteous settlement deed does not cover any claim made in this proceeding. It was not suggested that the WA Act applies to the Porteous settlement deed;
(3)The other five arbitration agreements relied upon by the applicants are arbitration agreements within of s 8(1) of either the NSW Act or the WA Act because they are apparently valid arbitration agreements within the meaning of s 7(1);
(4)The following matters in the proceeding are the subject of an apparently valid arbitration agreement, in that there is a sustainable argument that the outcome of those claims is governed or controlled by the Hope Downs deed:
(a)the claims in prayers 8, 23, 24, 27.2 and 28.1 to 28.3 of the originating application, concerning the ownership of shares in HPPL, by reason of clauses 20.2 and 7(e) of the Hope Downs deed;
(b)the claims in prayers 15 and 29 which seek declaratory relief as to the ownership by HDIO and HPPL respectively of the Hope Downs and Nicholas Downs tenements, by reason of clauses 20.2 and 7(b) of the Hope Downs deed;
(c)the claims in prayers 48 to 51, which appear to concern the rights of Mrs Rinehart and HPPL to “deploy” the Hope Downs deed.
(5)The following matters in the proceeding are the subject of an apparently valid arbitration agreement, in that there is a sustainable argument that the matters form part of a dispute under the Hope Downs deed within the meaning of clause 20.2, by reason of their close connection with the claims for relief identified in (4) above and the fact that the parties against whom the relief is claimed are parties to the Hope Downs deed:
(a)the claims in prayers 9 to 14, 27.1, 28.4 and 28.5 of the originating application concerning the ownership of HPPL shares;
(b)the claims in prayers 16, 17, 20 and 21 of the originating application, concerning the Hope Downs tenements;
(c)the claims in prayers 22, 25 and 26 of the originating application, concerning the 1988 Agreement (described below);
(d)the claims in prayers 30 and 31 of the originating application, concerning the Nicholas Downs tenements.
(6)The following matters in the proceeding are the subject of an apparently valid arbitration agreement, being clause 16 of the 2009 deed of further settlement:
(a)the claims in prayers 42 to 44 of the originating application, concerning the rights arising out of the 2007 HD deed and the 2007 CS deed against Mr Hancock;
(b)the claims in prayers 45.1, 45.2, 46.1, 46.2 and 47 of the originating application concerning the operation of the release and the arbitration clause in the 2009 deed of further settlement;
(7)The following matters in the proceeding are the subject of an apparently valid arbitration agreement, being clause 11 of the 2010 deed of variation:
(a)the claims in (6) above; and
(b)the claims in prayers 45.3, 46.3 and 47 of the originating application concerning clause 11 of the 2010 deed;
(8)The following matters in the proceeding are not the subject of an apparently valid arbitration agreement:
(a)the claims for relief in the following prayers in the originating application
(i)prayers 4 and 5 (against RHIO);
(ii)prayers 18 and 19 (against HDIO);
(iii)prayers 32 to 34 (against MDI and MDIO).
(b)the disputes between the applicants, Mrs Rinehart and HPPL concerning ownership of the Roy Hills tenements arising from the claims made by prayers 1 to 3, 6 and 7 of the originating application;
(c)the disputes between Ms Rinehart, Mrs Rinehart and HPPL concerning the enforceability of the releases and arbitration clauses in the Hope Downs deed and the 2007 HD deed, arising from prayer 35;
(d)the disputes between Ms Rinehart, Mrs Rinehart and those HPPL respondents who are signatories to the Hope Downs deed and the 2007 HD deed concerning the validity of those deeds, arising from prayers 36 and 37;
(e)the disputes between Ms Rinehart and Mrs Rinehart concerning her conduct in executing the Hope Downs deed and the 2007 HD deed, arising from prayers 38 and 39;
(f)the disputes between Mr Hancock, Mrs Rinehart and the HPPL concerning the validity and enforceability of provisions of the 2005 deed of obligation and release, arising from prayers 40 and 41;
(9)Insofar as there are matters in the proceeding that are the subject of an arbitration agreement, the Court should exercise its discretion to decide whether any of the five arbitration agreements is null and void or inoperative within the meaning of s 8(1).
APPLICATION OF COMMERCIAL ARBITRATION LEGISLATION
Agreed questions (1) to (3), (6) and (7) concern the factual circumstances in which the commercial arbitration legislation and, in particular, s 8(1) may apply. Questions (10) and (12) also concern the proper interpretation of s 8(1).
Preliminary observations
The commercial arbitration legislation is based upon the UNCITRAL Model Law on International Commercial Arbitration, as adopted by the United Nations Commission on International Trade Law on 21 June 1985 with amendments as adopted by that Commission in 2006. The English text of the Model Law is set out in Schedule 2 to the International Arbitration Act 1974 (Cth) (“International Arbitration Act”).
In TCL Air Conditioner (Zhongshan) Co Ltd v The Judges of the Federal Court of Australia [2013] HCA 5; (2013) 251 CLR 533 (“TCL”) at [11], French CJ and Gageler J noted that “[t]he analytical commentary published by the UNCITRAL Secretariat to accompany the 1985 draft of the UNCITRAL Model Law (the UNCITRAL analytical commentary) spelt out that the UNCITRAL Model Law was ‘designed for consensual arbitration’, which the UNCITRAL analytical commentary explained to mean ‘arbitration based on voluntary agreement of the parties’.”
The development of the Model Law was explained by Maxwell P of the Victorian Court of Appeal in Subway Systems Australia Pty Ltd v Ireland [2014] VSCA 142. His Honour referred to the Explanatory Note from the UNCITRAL Secretariat which accompanied the Model Law, including the following statement:
Recent amendments to arbitration laws reveal a trend in favour of limiting and clearly defining court involvement in international commercial arbitration. This is justified in view of the fact that the parties to an arbitration agreement make a conscious decision to exclude court jurisdiction and prefer the finality and expediency of the arbitral process.
At [16], Maxwell P said:
Article 8 of the Model Law is concerned with court jurisdiction in the substantive sense, not the adjectival sense. The manifest purpose of art 8 is to ensure that, where parties have agreed to arbitrate their disputes, any recourse to a ‘court’ is precluded. The purpose of the Article is to impose an obligation on the ‘court’ in effect to enforce the agreement to arbitrate, by requiring that it decline to exercise jurisdiction over the dispute and instead refer the parties to arbitration.
Article 8(1) of the Model Law is in identical terms to s 8(1) of the commercial arbitration legislation except that the word “shall” is used instead of “must”. The UNCITRAL analytical commentary on the draft text of the original version of the Model Law (which contains Article 8 in its final form) states:
Article 8 deals with an important ‘negative’ effect of an arbitration agreement. The agreement to submit a certain matter to arbitration means that this matter shall not be heard and decided upon by any court, irrespective of whether this exclusion is expressed in the agreement.
The correct application of s 8(1) is complicated where, as here, there are disputes as to the enforceability of the asserted arbitration agreements, and as to the scope of those agreements. As appears below, the commercial arbitration legislation enshrines, in s 16, the doctrine of kompetenz-kompetenz by which arbitrators are empowered to decide for themselves whether they have jurisdiction under an arbitration clause, although their decision is provisional in that either party has the right to apply to the court to have the jurisdictional question reopened and reconsidered in full.
The scheme of the commercial arbitration legislation is intended to discourage the court (and, in some cases, may prohibit the court) from intruding into the remit of the arbitral tribunal’s kompetenz-kompetenz. However, the court must first be satisfied that s 8(1) is engaged on the facts of the case. In Albon (t/a NA Carriage Co) v Naza Motor Trading SDN BHD (No 3) [2007] EWHC 665 (Ch); [2007] 2 All ER 1075 (“Albon”), Lightman J considered a submission that the doctrine of kompetenz-kompetenz precluded the court from intervening in the arbitral process where the arbitral tribunal is seized of the issue of its own jurisdiction and in particular, from intervening on the issue of whether or not an arbitration agreement has been concluded. He concluded (at [20]):
Whilst the doctrine of ‘Kompetenz-Kompetenz’ (which is given effect in a domestic arbitration by s 30 of the [Arbitration Act 1996 (UK)]) provides that the arbitral tribunal shall have jurisdiction to determine whether the arbitration agreement was ever concluded, it does not preclude the court itself from determining that question. There are two reasons why the court must have jurisdiction to rule on whether the arbitration agreement was concluded. The first is that the rule of law in general and subject only to limited exceptions requires that a party should not be barred from access to the court for the resolution of disputes unless the grounds for such bar are established. A bar on the ground of the alleged conclusion of an arbitration agreement (in general and subject only to limited exceptions) is not established unless and until the court has ruled on the issue whether it has been concluded. The second is that, unless and until it is held that the arbitration agreement has been concluded, the compelling factors requiring respect for the terms agreed regarding arbitration do not come into play or at any rate do not come into play with their full force and effect.
Relevant statutory provisions
The provisions set out below are taken from the NSW Act. Relevantly, there are identical provisions in the WA Act.
The long title to the NSW Act is “[a]n Act relating to the conduct of commercial arbitrations; to repeal the Commercial Arbitration Act 1984; and for other purposes”. Section 1C is entitled “Paramount object of Act”. It provides:
(1)The paramount object of this Act is to facilitate the fair and final resolution of commercial disputes by impartial arbitral tribunals without unnecessary delay or expense.
(2) This Act aims to achieve its paramount object by:
(a)enabling parties to agree about how their commercial disputes are to be resolved (subject to subsection (3) and such safeguards as are necessary in the public interest), and
(b)providing arbitration procedures that enable commercial disputes to be resolved in a cost effective manner, informally and quickly.
(3)This Act must be interpreted, and the functions of an arbitral tribunal must be exercised, so that (as far as practicable) the paramount object of this Act is achieved.
Section 1 provides relevantly:
1 Scope of application
(cf Model Law Art 1)
(1) This Act applies to domestic commercial arbitrations.
Note. The International Arbitration Act 1974 of the Commonwealth covers international commercial arbitrations and the enforcement of foreign arbitral awards.
(2)The provisions of this Act, except sections 8, 9, 17H, 17I, 17J, 35 and 36, apply only if the place of arbitration is in New South Wales.
(3) An arbitration is domestic if:
(a)the parties to an arbitration agreement have, at the time of the conclusion of that agreement, their places of business in Australia, and
(b)the parties have (whether in the arbitration agreement or in any other document in writing) agreed that any dispute that has arisen or may arise between them is to be settled by arbitration, and
(c)it is not an arbitration to which the Model Law (as given effect by the International Arbitration Act 1974 of the Commonwealth) applies.
(4) For the purposes of subsection (3):
(a)if a party has more than one place of business, the place of business is that which has the closest relationship to the arbitration agreement, and
(b)if a party does not have a place of business, reference is to be made to the party’s habitual residence.
The following note appears at the end of s 1:
Model Law Note. The term “commercial” should be given a wide interpretation so as to cover matters arising from all relationships of a commercial nature, whether contractual or not. Relationships of a commercial nature include, but are not limited to, the following transactions: any trade transaction for the supply or exchange of goods or services; distribution agreement; commercial representation or agency; factoring; leasing; construction of works; consulting; engineering; licensing; investment; financing; banking; insurance; exploitation agreement or concession; joint venture and other forms of industrial or business co-operation; carriage of goods or passengers by air, sea, rail or road.
Section 2(1) contains the following relevant definitions:
arbitration means any domestic commercial arbitration whether or not administered by a permanent arbitral institution.
party means a party to an arbitration agreement and includes:
(a)any person claiming through or under a party to the arbitration agreement, and
(b)in any case where an arbitration does not involve all of the parties to the arbitration agreement, those parties to the arbitration agreement who are parties to the arbitration.
Section 2A provides:
2A International origin and general principles
(cf Model Law Art 2A)
(1)Subject to section 1C, in the interpretation of this Act, regard is to be had to the need to promote so far as practicable uniformity between the application of this Act to domestic commercial arbitrations and the application of the provisions of the Model Law (as given effect by the International Arbitration Act 1974 of the Commonwealth) to international commercial arbitrations and the observance of good faith.
(2)
Note. This section differs from the Model Law. Art 2A (1) has been changed as a consequence of the application of the Act to domestic (instead of international) commercial arbitrations. Art 2A (2) is omitted because it is covered by the provision referred to in section 1C (4). Subsections (3) and (4) reflect section 17 of the International Arbitration Act 1974 of the Commonwealth.
(3)Without limiting subsection (1), in interpreting this Act, reference may be made to the documents relating to the Model Law of:
(a)the United Nations Commission on International Trade Law, and
(b) its working groups for the preparation of the Model Law.
(4)Subsection (3) does not affect the application of section 34 (Use of extrinsic material in the interpretation of Acts and statutory rules) of the Interpretation Act 1987 for the purposes of interpreting this Act.
By s 7(1), an “arbitration agreement” is 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”.
An arbitration agreement may be in the form of an arbitration clause in a contract: s 7(2).
Section 16 provides relevantly:
16 Competence of arbitral tribunal to rule on its jurisdiction
(1)The arbitral tribunal may rule on its own jurisdiction, including any objections with respect to the existence or validity of the arbitration agreement.
(2)For that purpose, an arbitration clause which forms part of a contract is to be treated as an agreement independent of the other terms of the contract.
(3)A decision by the arbitral tribunal that the contract is null and void does not of itself entail the invalidity of the arbitration clause.
Note. The Model Law provides that such a decision does not “ipso jure” entail the invalidity of the arbitration clause.
(4)A plea that the arbitral tribunal does not have jurisdiction must be raised not later than the submission of the statement of defence.
…
(8)The arbitral tribunal may rule on a plea referred to in subsection (4) … either as a preliminary question or in an award on the merits.
(9)If the arbitral tribunal rules as a preliminary question that it has jurisdiction, any party may request, within 30 days after having received notice of that ruling, the Court to decide the matter.
(10)A decision of the Court under subsection (9) that is within the limits of the authority of the Court is final.
Domestic commercial arbitration
The parties argued at length over the meaning of “domestic commercial arbitration” and, in particular, “commercial arbitration” in the commercial arbitration legislation.
Mrs Rinehart explicitly accepted that s 8(1) will have no application unless the arbitration to which the parties are to be referred would be a domestic commercial arbitration.
Agreed questions (1) and (2): What is the meaning and operation of s 1(1) of the commercial arbitration legislation? What factors are relevant to determining whether the legislation applies?
Section 1(1) identifies the scope of operation of the commercial arbitration legislation. Relevantly, it limits the legislation’s application (and, accordingly, the application of s 8(1)) to agreements to submit disputes to domestic commercial arbitration within the meaning of the legislation. Consequently, an agreement to submit a dispute or disputes to an arbitration which would be of a kind other than a “domestic commercial” arbitration is not an agreement to which the commercial arbitration legislation applies.
It follows that, in order to apply s 8(1), it is necessary to be satisfied that an arbitration to which the parties would be referred would be a domestic commercial arbitration.
At [31] of the Report of the Secretary-General: possible features of a model law on international commercial arbitration (1981) UN Doc A/CN.9/207, the original drafters of the Model Law Note below s 1 (which first appeared as a note to the Model Law) referred to the differentiation of commercial arbitrations from arbitrations of a different nature:
[The term ‘commercial’] has by now gained a sufficiently clear meaning, at least as a modifier to arbitration, thus excluding arbitrations of a different nature such as those in labour disputes or family law matters.
Meaning of “domestic” commercial arbitration
The three criteria for an arbitration to be “domestic” are set out in s 1(3).
For criterion (a), it is necessary to identify the “parties” to an “arbitration agreement”. The “parties” are to be identified by reference to the extended definition of “party” in s 2(1). As noted above, the meaning of “arbitration agreement” is contained in s 7.
The applicants argued that the commercial arbitration legislation is concerned with commercial disputes between business people, based on the requirement in s 1(3)(a) that the parties to an arbitration agreement have their “places of business” in Australia. However, s 1(4) explicitly contemplates that a party to an arbitration agreement may not have a place of business.
The applicants’ case was that neither of them conducted any relevant business with the necessary consequence that neither of them had a place of business at any relevant time. However, they did not suggest that their habitual residences, at the time of execution of each of the deeds, were not in Australia.
In my view, the effect of s 1(3)(a), read with s 1(4)(b), is that criterion (a) will be satisfied where a party has his or her habitual residence in Australia even though they have no place of business in Australia. This criterion is directed to the parties’ physical connection with Australia, as opposed to the nature of their activities (which is the subject of the requirement that an arbitration be “commercial”).
For criterion (b), it is necessary to identify an agreement that any dispute that has arisen or may arise between the parties is to be settled by arbitration. This criterion requires interpretation of the alleged arbitration agreement (or any other relevant document) to determine whether the parties have agreed that a particular dispute is to be “settled by arbitration”.
For criterion (c), it is necessary to find that the arbitration the subject of the agreement is not an arbitration to which the Model Law applies. The applicants did not dispute that criterion (c) was satisfied for each of the alleged arbitration agreements.
Meaning of domestic “commercial” arbitration
It appears from s 1C(1) and (2) that the commercial arbitration legislation is concerned with the resolution of “commercial disputes”. A natural interpretation of the word “commercial” when qualifying the word “arbitration” is that it refers to arbitration of commercial disputes. The note to s 1 indicates that the term “commercial” should be given a wide interpretation, and that commercial disputes generally arise from a transaction between parties who have a relationship of a commercial nature. However, the legislation does not expressly require the identification of a commercial relationship between the parties to an arbitration agreement.
The adjective “commercial” is defined in the Macquarie Dictionary online, relevantly, to mean:
adjective
1. of, or of the nature of, commerce.
2. engaged in commerce.
3. capable of returning a profit: a commercial project.
4. capable of being sold in great numbers: is the invention commercial?
5. setting possible commercial return above artistic considerations.
6. preoccupied with profits or immediate gains.
…
The word “commerce” is defined, relevantly to mean:
noun
1. interchange of goods or commodities, especially on a large scale between different countries (foreign commerce) or between different parts of the same country (domestic commerce or internal commerce); trade; business.
The parties agreed that the concept of “commercial” in the commercial arbitration legislation is not confined by domestic law principles, recognising that the legislation has its origins in the UNCITRAL Model Law and having regard to s 2A.
In Chief Executive Officer of the Australian Sports Anti-Doping Authority v 34 Players [2014] VSC 635 (“ASADA”) at [11], Croft J set out the following extract from Holtzmann HM and and Neuhaus JE, A Guide to the UNICITRAL Model Law on International Commercial Arbitration: Legislative History and Commentary (Kluwer Law, 1994) (“Holtzmann and Neuhaus commentary”) :
(ii) ‘Commercial’. In the early stages of drafting the Model Law, the Working Group recognized the difficulties of defining the term ‘commercial’. Various suggestions were advanced, including use of the words ‘trade’, ‘commerce’, ‘economic transaction’, or ‘business’, but no comprehensive definition of the term was found. As the Secretariat noted in its commentary on the Working Group’s final draft, conventions on international commercial arbitration do not define the word. The view appears to have been that the compound term ‘commercial arbitration’ is widely used and has acquired a sufficiently clear meaning.
...
The footnote itself states that the term ‘commercial’ was to be given a wide interpretation, and this call is repeated throughout the legislative history. In particular, the Commission and Working Group reports emphasize that the term is not to be construed in accordance with national law definitions of ‘commercial’ in certain civil law countries, some of which include only those relationships dealt with in the commercial code or only transactions between ‘commercial persons’ (i.e., merchants). This concern arose out of experience with the provision in the New York Convention that allows States to restrict the Convention to awards arising out of ‘legal relationships ... which are considered as commercial under the national law of the State’ making the restriction. The view was that this proviso had resulted in an excessively narrow interpretation.
In both the Working Group and the Commission, attempts were made to make explicit in the Law this intent not to limit ‘commercial’ to transactions with merchants. Amendments to the footnote were offered that would have stipulated that the Law applied ‘irrespective of whether the parties are “commercial persons” (merchants) under any given national law’ or, in another version, ‘regardless of the nature or character of the parties’. Some delegations feared, however, that such a provision might be interpreted as touching upon the question of State or sovereign immunity. It was widely agreed that the Law is not intended to confer immunity on States that have waived it under the applicable rules (such as by engaging in non-governmental activities or signing arbitration clauses), nor to lift that immunity where it has not been waived. In the end, the Commission found that the footnote expressed sufficiently clearly that the ‘commercial’ nature of a relationship for purposes of the Model Law did not depend on the nature of the parties, and that view was further stipulated in the Report of the session.
The list of examples of commercial relationships is, by its terms, not exhaustive; it is intended merely to illustrate that the term is to be interpreted broadly. The Secretariat noted, for example, several relationships that were not included in the list, but should be considered to be ‘commercial’ within the meaning of Article 1, including arrangements to supply electrical energy or to transport liquefied gas via pipeline, and ‘non-transactions’ such as claims for damages arising in a commercial context. This is not to say that the term ‘commercial’ is boundless. The legislative history also provides examples of relationships that were not meant to be included in the term, in particular, labor and employment disputes and ordinary consumer claims. In addition, Article 1(5) of the Law places an additional limitation on the scope of relationships that are subject to the Law: no matter may be submitted to arbitration under the Model Law if it is not arbitrable under municipal law or if it may be submitted to arbitration only under other provisions of law. See the discussion of Article 1(5), pages 38-39 infra.
(Footnotes omitted)
The New York Convention mentioned in the Holtzmann and Neuhaus commentary is the Convention on the Recognition and Enforcement of Foreign Arbitral Awards adopted in 1958 by the United Nations Conference on International Commercial Arbitration at its twenty-fourth meeting, referred to in s 2D(d) of the International Arbitration Act.
In deciding that proceedings conducted by the Australian Football League Anti-Doping Tribunal were not “commercial” for the purposes of the Commercial Arbitration Act 2011 (Vic), Croft J had regard to relevant contractual provisions which indicated that the proceedings were properly characterised as a labour or employment dispute. The fact that “a variety of more commercial provisions were “mixed” with what may be described as player entitlement, engagement and employment provisions [did] not detract from the labour or employment characterisation” (at [56]).
The HPPL respondents referred to the following statement in the Analytical Commentary contained in the Report of the Secretary General to the Eighteenth Session of UNCITRAL (1984) UN Doc A/CN.9/264:
19.The footnote, while not giving a clear-cut definition, provides guidance for an autonomous interpretation of “commercial”; it does not refer, as does the 1958 New York Convention … to what the existing national law regards as commercial. Therefore it would be wrong to apply national concepts which define as commercial, for example, only those types of relationship dealt with in the commercial code or only those transactions the parties to which are commercial persons.
20.This latter idea of preclusion had been expressed in a previous draft of the footnote by the words … ‘irrespective of whether the parties are “commercial persons” (merchants) under any given national law’. This wording, which was exclusively intended to clarify that the commercial nature of the relationship is not dependent on the qualification of the parties as merchants (as used in some national laws for distinguishing between commercial and civil relationships), was nevertheless deleted lest it might be construed as dealing with the issue of State immunity.
The HPPL respondents also referred to Canadian authority construing the term “commercial” broadly. For example, in Carter v McLaughlin (1996) 27 OR (3d) 792, the question was whether an arbitration agreement or award arising from a dispute over a contract for sale of residential property was “commercial”. Rutherford J concluded that it was, saying (at 798 b‑d):
In my view, the arbitration agreement between the parties to this application and the resulting award should be viewed as being “commercial” within the meaning of that term as used in the International Commercial Arbitration Act of Ontario and the UNICITRAL Model Law it implements in this Province. While the sale of the home … was unconnected to the regular business activity of either party that, in my view, is insufficient to remove the transaction from the scope of what is meant by the term “commercial” in the legislation. The transaction was done in a business-like way, with the assistance of professional realtors and within a legal framework appropriate for a transaction involving a large sum of money. It bears all the earmarks of what goes on in trade and commerce except that the parties were not “commercial persons” … in regards to that transaction.
The Analytical Commentary to which the Ontario statute specifically refers for assistance in the interpretation of the Model Law, tells us that the Commissioners drafting the Model Law anticipated the term “commercial” being given a broad interpretation so as to embrace matters arising from all relationships of a commercial nature. The Analytical Commentary also suggests that were it not for concern as to its possible effect on the doctrine of State Immunity, a consideration irrelevant to this case, the footnote to article 1 would have stated that the broad interpretation intended for the term “commercial” would mean inclusion of commercial relationships irrespective of whether the parties are commercial persons or merchants under any given national law.
While the parties agreed that the word “commercial” should not be confined by analogous domestic law concepts, the HPPL respondents submitted that statements of Australian courts about the meaning of “trade or commerce” do help to elucidate the width or minimum content of the concept. In Re Ku-ring-gai Co-operative Building Society (No 12) Ltd [1978] FCA 50; (1978) 36 FLR 134 at 167, in considering the scope of the Trade Practices Act 1974 (Cth) (“Trade Practices Act”), Deane J said:
The terms “trade” and “commerce” are not terms of art. They are expressions of fact and terms of common knowledge. While the particular instances that may fall within them will depend upon the varying phrases of development of trade, commerce and commercial communication, the terms are clearly of the widest import (see, generally, W. & A. McArthur Ltd. v. State of Queensland (1920) 28 CLR, at pp 546 et seq and Bank of New South Wales v. The Commonwealth (1948) 76 CLR, at pp 284 et seq, 381 et seq). They are not restricted to dealings or communications which can properly be described as being at arm’s length in the sense that they are within open markets or between strangers or have a dominant objective of profit-making. They are apt to include commercial or business dealings in finance between a company and its members which are not within the mainstream of ordinary commercial activities and which, while being commercial in character, are marked by a degree of altruism which is not compatible with a dominant objective of profit-making.
Deane J’s statement was applied by a Full Federal Court in Shahid v Australasian College of Dermatologists [2008] FCAFC 72; (2008) 168 FCR 46 at [26] to [27]. In finding that the College had a commercial relationship with practitioners, Branson and Stone JJ referred to matters including fees charged and revenue generated from the sale of texts and the conduct of seminars and courses, and the considerable amount of revenue generated by the College.
In my view, having regard to the language of s 1C of the commercial arbitration legislation, an arbitration will be a “commercial” arbitration if it involves the resolution of a commercial dispute. A “commercial” arbitration is typically an arbitration to resolve a dispute between parties arising from a commercial relationship, typically although not invariably, at arms’ length. Typically, such disputes are not governed by any specific regime for arbitrations or other alternative dispute resolution, in contrast to the position in many jurisdictions for employment, family law and consumer disputes.
I accept that an arbitration is not a “commercial” arbitration merely because it involves a party which is a corporation, association or individual which carries on business: cf. ASADA at [52]. I also accept that the inclusion of a variety of commercial provisions in a contract will not necessarily render a dispute arising out of that contract a commercial dispute, as Croft J concluded in ASADA.
On the other hand, where a dispute is conducted in the manner of commercial litigation, for example, where the parties retain commercial legal advisers to conduct the dispute and where the dispute concerns multiple complex factual and legal questions about ownership of valuable assets, those matters frequently indicate the high financial stakes in the dispute. Features of this kind frequently demonstrate the commercial nature of a dispute.
A commercial dispute may arise from the terms of a contract between parties even though the parties do not have a pre-existing commercial relationship, although not every contractual dispute is also a commercial dispute.
In my view, a dispute is aptly described as a commercial dispute where it concerns ownership of commercially valuable assets and entitlements to profits generated by those assets. Typically, such disputes will arise from a relationship based on shared ownership of the relevant assets or contractual agreements concerning entitlements to profits generated by the assets. However, as this case illustrates, a dispute may arise over ownership of valuable commercial assets where those assets form part of a deceased estate or a family trust.
Mrs Rinehart and the HPPL respondents did not contend that the applicants had any relationship with any of the respondents of the kinds listed in the Model Law Note to s 1. However, the written submissions filed on Mrs Rinehart’s behalf argued that the relationships from which the present dispute arises are commercial and that this is demonstrated by the following matters:
(1)The various interests of the parties in HPPL and the assets of the Hancock Group;
(2)The commercial activities of the corporate respondents;
(3)The terms of the deeds relied upon by Mrs Rinehart and the HPPL respondents;
(4)References to resolution of disputes under commercial arbitration legislation in some of the deeds; and
(5)The identities of the various parties to the deeds.
The HPPL respondents pointed to various features of the circumstances in which disputes between the parties arose which would cause an arbitration of those disputes to be a “commercial arbitration”. The HPPL respondents identified the following factors as relevant to characterising a putative arbitration as a “commercial” arbitration:
(1)the nature of the parties;
(2)the circumstances in which the alleged arbitration agreement was entered into;
(3)the terms of the arbitration agreement;
(4)the subject matter of the dispute to be arbitrated;
(5)the issues raised for determination in the dispute;
(6)the conduct of the parties in relation to the dispute; and
(7)the manner in which the arbitration can be expected to be conducted.
I accept that each of the factors set out above may have a bearing on the characterisation of a dispute as a “commercial dispute” and hence an arbitration of that dispute as a “commercial arbitration”.
The applicants emphasised the familial relationship between the applicants and Mrs Rinehart and facts which, they argued, demonstrated the absence of any “commercial relationship” between the applicants and the respondents. They also emphasised that the dispute is substantially concerned with the affairs of a family trust (or, as they argued, two family trusts). The applicants’ case was presented as one arising from strong feelings of personal hurt and, perhaps, animosity, resulting from their beliefs that they have been wronged by their mother. The applicants contended that the dispute in this proceeding should be characterised as a dispute about a family trust arrangement, albeit one involving substantial assets.
In my view, the applicants’ characterisation of the dispute is not necessarily inconsistent with its characterisation as a “commercial dispute”. However, it draws attention to features of the case which may affect the application of s 8(1) and which are unusual in commercial contexts. In particular:
(1)The alleged arbitration agreements are all contained in agreements for the resolution of disputes about entitlements following the death of Mr Hancock senior, as distinct from agreements to engage in commercial activity; and
(2)The claims made by the applicants, and which are said to be the subject of the arbitration agreements, concern their disputed entitlements which ultimately arise from their status as grandchildren of Mr Hancock senior rather than from any commercial activity.
Agreed questions (3) and (4): Does there need to be a commercial relationship between the parties in order for an arbitration to be a domestic commercial arbitration? If so, have GHR and each of the HPPL respondents demonstrated that there was a commercial relationship between each of them and each of the applicants, as a result of which any arbitration between them should be characterised as a domestic commercial arbitration?
As to agreed question (3), no. For the reasons given above, there must be a commercial dispute. Giving the word “commercial” a wide interpretation, there may be circumstances in which parties to a commercial dispute are not, and have not been, in a relationship of a commercial nature (beyond any such relationship created by the dispute itself). The commercial nature of the dispute may arise from issues about ownership of commercial assets, or entitlements to profits, or other features of the context of the dispute which reveal an underlying concern with the making of profits or commercial gains.
Accordingly, agreed question (4) does not arise. However, in case I am wrong, I have made findings below about whether the applicants had a commercial relationship with any of the respondents at relevant times.
Requirements to establish application of commercial arbitration legislation
In my view, based on s 1, in order to establish that the commercial arbitration legislation may apply to their respective interlocutory applications, Mrs Rinehart and the HPPL respondents must prove the following matters:
(1)An “arbitration agreement” to which the applicants, Mrs Rinehart, HPPL respondents and the other respondents are “parties”. This involves identifying:
(a)an agreement to arbitrate, being an agreement by the parties to submit to (domestic commercial) arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship;
(b)the parties to any such agreement;
(2)That the parties have their places of business or habitual residence in Australia;
(3)That the parties have agreed that the disputes that have arisen between them are to be settled by (domestic commercial) arbitration; and
(4)That the disputes to which any arbitration agreement applies are commercial disputes, so that an arbitration of those disputes would be a commercial arbitration.
Concerning matter (2), it was not disputed by either party that all parties to the proceeding have either their relevant place of business or their habitual residence in Australia.
Proof of arbitration agreements
In this case, the parties are at issue as to the enforceability of various of the alleged arbitration agreements. They also dispute the scope of the alleged arbitration agreements. Mrs Rinehart and the HPPL respondents contend that these issues should be resolved by arbitration in accordance with s 16 of the commercial arbitration legislation. The applicants contend that they should be determined by this Court.
The HPPL respondents observed that s 16 empowers an arbitral tribunal to rule on its own jurisdiction, enshrining the arbitral principles of separability and kompetenz-kompetenz in the legislation. I have mentioned kompetenz-kompetenz earlier in these reasons. The principle of severability is also reflected in s 7(2) of the legislation, which provides that an arbitration agreement may be in the form of an arbitration clause in a contract. In Merkin R, Arbitration Law (LLP, 2004) , the principle was explained as follows (at 5.40):
[T]he arbitration clause is treated as a separate contractual undertaking: under the concept of separability, the obligation to go to arbitration is distinct from the main contract, so that disputes as to the scope, or even the existence, of the main contract can be arbitrated.
In Comandate Marine Corp v Pan Australia Shipping Pty Ltd [2006] FCAFC 192; (2006) 157 FCR 45 (“Comandate”) at [219], Allsop J (as his Honour then was) explained that the doctrine of separability has two aspects of importance:
First, the arbitrator can be seen to have a clear basis of jurisdiction to decide whether the substantive contract was void or voidable or should be rescinded, without destroying his or her own authority or jurisdiction to arbitrate. Secondly, and underpinning this first question, the invalidity of the substantive contract does not necessarily entail the invalidity of the arbitration clause.
In Fiona Trust and Holding Corp v Privalov [2007] UKHL 40; [2007] 4 All ER 951; [2008] 1 Lloyd’s Rep 254 (“Fiona Trust”), the House of Lords held that the doctrine of separability required direct impeachment of the arbitration agreement before it could be set aside. In that case, there was an inference that the owners’ agent had been bribed to consent to the main agreement, but that did not show that he had been bribed to enter into the arbitration agreement. Accordingly, the arbitration agreement had to be given effect and the parties who invoked the arbitration agreement were entitled to a stay of proceedings. The judgment of Lord Hoffman emphasises the business context in which the relevant arbitration agreement was made. At [19], he noted that “[i]t would have been remarkable for [the agent] to enter into any charter without an arbitration agreement, whatever its other terms had been”.
As a matter of construction of s 8(1), by itself and in the context of s 16, it is plainly not necessary to establish, on a final basis, the validity or enforceability of the asserted arbitration agreement in order for the commercial arbitration legislation to apply. Section 8 contemplates the possibility of an arbitration agreement which is “null and void, inoperative or incapable of being performed”.
In Joint Stock Company ‘Aeroflot Russian Airlines’ v Berezovsky [2013] EWCA Civ 784; [2013] 2 CLC 206; [2013] 2 Lloyd’s Rep 242 (“Berezovsky”) at [72] to [74], Aikens LJ (Mann J and Laws LJ agreeing) said:
How should the court deal with an application to stay under s 9 of the AA 1996?
72.It is necessary first to analyse the structure of section 9(1) and (4) of the [Arbitration Act 1996 (UK)], to see where the burden lies and what standard of proof is required when there is an application for a stay of proceedings because one side asserts that two parties are bound by an arbitration agreement to submit the disputes being litigated to arbitration and the other side asserts that there was no concluded arbitration agreement or it is is [sic] “null and void”. Section 9(1) and (4) are based on Article II of the New York Convention 1958. That stipulates that each Contracting State “shall” recognise arbitration agreements in writing and it further obliges a court of a Contracting State to refer the parties to arbitration if requested to do so by one of the parties in the context of an action in a matter which is the subject of an arbitration agreement, unless the court “finds that the said agreement is null and void, inoperative or incapable of being performed”.
73. That has been translated into the terms of section 9(1) so as to give a party the right to apply for a stay of proceedings “in respect of a matter which under the [arbitration] agreement is to be referred to arbitration”. Therefore, it seems to me in principle that there is a burden on the party asserting that there is (a) a concluded arbitration agreement as defined in the 1996 Act, and (b) that it covers the disputes that are the subject of the court proceedings, to prove that this is the case. This is borne out by the authorities: [See eg: Fiona Trust at para 36 per Longmore LJ; Albon v Naza Motor Trading Sdn Bhd (No 3) (2007) 2 Lloyd’s Rep 1; [2007] 2 All ER (Comm) 513 at para 15 per Lightman J; JSC BTA Bank v Ablyuzov [2011] 2 Lloyd’s Rep 129 at paras 31 to 33 per Christopher Clarke J; The Barito [2013] EWHC 1240 (Comm) at paras 49 and 50 per Popplewell J]. If the party seeking a stay cannot prove both (a) and (b), then there is no jurisdiction to grant a stay under section 9(1) and (4) of the [Arbitration Act 1996 (UK)]. However, if the court considers that it cannot decide those issues for itself in a summary fashion on the written evidence, it has two other options, as this court made clear in Ahmed Al-Naimi (T/A Buildmaster Construction Services) v Islamic Press Agency Inc [[2000] CLC 647 at 650-2]. It can direct an issue to be tried, pursuant to CPR Pt 62.8(3), or it can stay the proceedings (under its inherent jurisdiction) so that the putative arbitral panel can decide the issue of the existence of the arbitration agreement, pursuant to section 30 of the [Arbitration Act 1996 (UK)]. If the court decides that it will and can determine whether or not there was a concluded arbitration agreement on the written evidence before it, then, in my view, the authorities establish that it is for the party asserting the existence of the concluded arbitration clause to prove it on a balance of probabilities. As I point out below, the position appears to be different if the court decides, on an application for a stay, that it cannot, on the materials before it, determine whether there was a concluded arbitration agreement.
74. Under section 9(4) [of the Arbitration Act 1996 (UK)] the court “shall grant a stay” unless “satisfied” that the arbitration agreement is “null and void, [or] inoperative…”. This means, in my view, that once the first party has established the existence of an apparently concluded relevant arbitration agreement and that it covers the matters in dispute in the proceedings, it is for the party resisting a stay to “satisfy” the court that the apparently existing arbitration agreement is “null and void”. That was the position under the old law, ie. section 1 of the Arbitration Act 1975, which provision first gave statutory effect in English law to the New York Convention. This court has said that this remains the position under the [Arbitration Act 1996 (UK)], albeit without elaborating on its reasoning.
(Footnotes omitted)
On an application for enforcement of a foreign arbitral award, the Victorian Court of Appeal (Hansen JA and Kyrou AJA) in IMC Aviation Solutions Pty Ltd v Altain Khuder LLC [2011] VSCA 248; (2011) 38 VR 303 at [135] and [136] accepted that the scheme of the New York Convention, reflected in s 9 of the International Arbitration Act, gives “limited prima facie credit to apparently valid arbitration awards based on apparently valid and applicable arbitration agreements”, citing Lord Mance JSC in Dallah Real Estate and Tourism Holding Company v The Ministry of Religious Affairs, Government of Pakistan [2010] UKSC 46 at [30].
I do not accept that the general principle in Grant has been superceded: see, for example, Ashton v Pratt [2015] NSWCA 12; (2015) 88 NSWLR 281 at [174] Bathurst CJ (McColl JA and Meagher JA agreeing). I also do not accept that Bergin CJ in Eq misapplied Grant or applied a different principle to the principle stated in Grant.
The HPPL respondents contended that:
(1)Bergin CJ in Eq and the Court of Appeal did not have occasion to address the level of specificity at which a claim must have been “made” or “asserted” as at the date of the Hope Downs deed in order for it to be caught by the definition of “Claim”, because there was no suggestion in those proceedings that the relevant claims (being claims relating to the validity of amendments to the articles of HPPL in 2006 shortly before the Hope Downs deed) had been asserted at that time.
(2)It would not be appropriate to construe the definition of “Claim” so that a claim made before the Hope Downs deed was entered into needed to have the same legal formulation as the claim said to be released or barred. If that construction were adopted, a party could avoid the releases and bars in clauses 6, 11 and 13 simply by changing the cause of action relied upon (for instance, asserting a Barnes v Addy claim instead of a direct breach of trust claim). Such a construction would fall foul of the observations of Gleeson CJ in Francis Travel at 165 (see [100] above), by making the application of the releases and bars depend on “fine shades of difference in the legal character of individual issues” or “the ingenuity of lawyers in developing points of argument”. The parties are not likely to have intended such an outcome.
(3)The terms of Hope Downs deed confirm that the parties did not intend the releases and bars in respect of “Claims” to be restricted to any particular legal formulation of any claim. Clause 1.1(a)(i) plainly intends to capture all potential causes of action or remedies (“for damages, injunctions, debt, restitution or other remedy including, without limitation, breach of fiduciary duty of whatever nature and howsoever arising…”). Clause 1.1(d) also specifically extends the definition of “Claim” to the claims made in Mr Hancock’s unsworn affidavit in circumstances where the claims asserted in that document are not formally pleaded and no particular form of relief is specified. The text is not consistent with the parties intending only to release claims of a particular legal character.
(4)For similar reasons, the definition of “Claim” should not be construed so that every particular of the claim alleged to be released or barred needs to have been articulated at the time of the release in order for that claim to have been “made”. A claim may be “made” without any degree of particularisation. Further, in concluding that the definition of “Claim” extended only to consummate claims, Bergin CJ in Eq relied on the judgment of Lord Nicholls of Birkinhead in BCCI, where his Lordship stated that while there was no room for special “rules” of interpretation of general releases, such releases were frequently to be understood as being intended to apply to claims, known or unknown, “relating to a particular subject matter” (at [118]). Confining the terms of the release to a particular “subject matter” is not consistent with a construction of clause 1.1(a) that allows a party to circumvent the release on the basis that the claims asserted by it at the time of the release differed in their particulars from the claims it presently asserts.
(5)Finally, an approach requiring a strict or complete overlap between the particulars of the claim made at the time of the release and the claim alleged to have been released or barred would also not be consistent with the rationale stated in Grant of preventing a party from “escaping the fulfilment of obligations falling outside the true purpose of the transaction as ascertained from the nature of the instrument and the surrounding circumstances” (Grant at 129-130). In Grant itself the High Court found that the general release was confined to a particular “area of dispute” (at 131). It did not suggest that it was confined to a particularised claim or set of particularised claims.
Accordingly, the HPPL respondents submitted that in applying the definition of “Claim”, it is sufficient that the claim in question is one the substance of which was made at the time of the release, even if the claim that was made differs in its particular legal formulation. I accept that this submission is arguably correct.
Applying the propositions set out above, the HPPL respondents submitted that all of the “substantive claims” were asserted in substance in Mr Hancock’s unsworn affidavit. I accept that this submission is arguable in relation to alleged 1992 to 1994 manipulation of HFMF’s financial position and the 1995 “debt reconstruction”, on the basis that the matters pleaded in paras 128 to 274 of the statement of claim on those subjects are recorded, in substance, in the affidavit. The HPPL respondents did not explain how the other matters pleaded in the “substantive claims” were asserted “in substance” in the affidavit beyond saying that “the broad subject matter” of the unsworn affidavit is the same as the “substantive claims”. I am not satisfied that the unsworn affidavit says anything that could be construed as a reference to the Roy Hills tenements.
There are certain claims made in the unsworn affidavit (whether a claim for something or a right to something) that are “Claims” for the purposes of clause 1.1 of the Hope Downs Deed. For example, as Brereton J found in Hancock v Rinehart 2015 (at [351]), the unsworn affidavit included a claim for accounts of the HMH Trust up to 30 August 2006. At least to that extent, the reference to the unsworn affidavit in the definition of “Claims” is given content.
However, I do not accept that there is a sustainable argument that the statements in the unsworn affidavit that there “should be some redress” and “there must be some redress” are “Claims”. The statements do not amount to a demand for something, or the assertion of a right to something. They are expressions of a belief that “redress” should or must be given for wrongs identified in the affidavit. Further, the language of “redress” does not identify the substance of what might be demanded or of any right which might be asserted. Accordingly, I do not accept that there is a sustainable argument that any of the claims made in this proceeding (being the claims for relief in the originating application as distinct from the “substantive claims”, as defined by the HPPL respondents) were made, in substance or at all, in the unsworn affidavit.
Since the applicants in this proceeding are not making any “Claims” within the meaning of the Hope Downs deed, and Mrs Rinehart and the HPPL respondents did not identify a basis for applying clause 6(b) if the applicants are not making any such “Claims”, I do not consider there to be a sustainable argument that the proceedings are “in respect of the Claims” within the meaning of clause 6(b).
Are “substantive claims” allegations arising out of the subject matter of proceeding CIV 1327/2005 and therefore barred and released by the Hope Downs deed?
The release in clause 6 is not confined to “Claims”. By clause 6(c) it provides that each party:
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 … wherever and whenever arising, whether … known or unknown at the time of execution of this deed.
The “Proceedings” are proceeding CIV 1327/2005. In my view, the “subject matter” of the proceedings refers to the rights or liabilities in dispute in the proceedings (that is, its words have a similar meaning to the word “matter”). Allegations made in respect of the subject matter of proceeding CIV 1327/2005 include allegations contained in Mr Hancock’s unsworn affidavit.
The HPPL respondents contended that clause 6(c) is a release. While no special form of words is necessary to achieve an effective release, what must be demonstrated by the language used is that there is an intention to discharge some right of action or to give up some claim. Neither Mrs Rinehart nor the HPPL respondents identified any case in which language of the kind used in clause 6(c) has been construed as a release. Having regard to McDermott, I accept that there is a sustainable argument that the language of withdrawal and abandonment of allegations is capable of being construed as amounting to the discharge of a right of action or a claim. Accordingly, I accept that there is a sustainable argument that clause 6(c) operates to bar and release the claims made in the proceeding by Mr Hancock, based on allegations made by him in the unsworn affidavit. Those claims are the claims based on the alleged 1992 to 1994 manipulation of HFMF’s financial position and the 1995 “deed reconstruction”. I accept that there is a sustainable argument that the claims based on the alleged misappropriation of the Nicholas Downs and Mulga Downs tenements are also covered by clause 6(c). Mr Hancock is bound by the Hope Downs deed by his execution of the April 2007 HD deed (subject to his claims about the validity or enforceability of those deeds). I do not accept that clause 6(c) has any relevant operation for claims made by Ms Rinehart since she made no relevant allegation which could be withdrawn by clause 6(c).
Are Ms Rinehart and Mr Hancock estopped from bringing the “substantive claims” by reason of clause 4 of the Hope Downs deed?
By clause 4 of the Hope Downs deed, the parties acknowledged:
… that at all material times the Hancock Group Interests have been and remain beneficially owned by the Hancock Group member that purports to own them including, without limitation, the Hope Downs Tenements which Tenements have been at all times beneficially owned by only HPPL and or HDIO and which are now fifty per cent (50%) beneficially and legally owned by HDIO.
I have previously found that each of the Hope Downs, Roy Hills, Nicholas Downs tenements and the Mulga Downs tenement are “Hancock Group Interests” within the meaning of clause 4.
The HPPL respondents submitted that the acknowledgment in clause 4 governs or controls the outcome of all of the “substantive claims”, relying on estoppel by deed. The basis of estoppel by deed is explained by Lord Maugham in Greer v Kettle [1938] AC 156 at 171:
Estoppel by deed is a rule of evidence founded on the principle that a solemn and unambiguous statement or engagement in a deed must be taken as binding between parties and privies, and therefore as not admitting any contradictory proof. It is important to observe that this is a rule of common law, though it may be noted that an exception arises when the deed is fraudulent or illegal. The position in equity is and was always different in this respect, that where there are proper grounds for rectifying a deed, e.g., because it is based upon a common mistake of fact, then to the extent of the rectification there can plainly be no estoppel based upon the original form of the instrument. It is at least equally clear that in equity a party to a deed could not set up an estoppel in reliance on a deed in relation to which there is an equitable right to rescission or in reliance on an untrue statement or an untrue recital induced by his own misrepresentation, whether innocent or otherwise to the other party.
In Cousens v Gray Ridge Pty Ltd [2000] VSCA 96, Batt JA (Charles JA and Chernov JA agreeing) said (at [57]):
Estoppel by deed is not confined to statements in recitals but applies also, and indeed originally applied only, to statements in operative provisions: Coke on Litt (1832 edn., vol.2) 352(b); Greer v. Kettle per Lord Maugham and, for instance, Helmich & Taylor v. Thorp & Strathdee [1997] 3 NZLR 86 at 92. If estoppel by deed is now properly to be considered as a form of estoppel by convention (as Sir Alexander Turner may be said to have demonstrated), then it may be that even at common law no estoppel arose here, for there is no estoppel by convention unless it can be shown that the alleged assumption has in fact been adopted by the parties as the conventional basis of their relationship (Con-Stan Industries of Australia) …
(footnotes omitted)
As previously noted, in Rinehart v Walker, Bathurst CJ concluded that to the extent that certain provisions of the Hope Downs deed gave rise to an estoppel by convention, that was not a matter governed or controlled by the deed, although the assumptions said to arise from the deed would be relevant to the determination of the claim. Once it is accepted that the relevant estoppel is an estoppel by convention, Bathurst CJ’s conclusion applies to any dispute arising out of clause 4 of the Hope Downs deed.
Accordingly, I do not accept that there is a sustainable argument that clause 4 governs or controls the outcome of any of the claims for relief based on the “substantive claims”.
Must the “substantive claims” be submitted to arbitration by reason of the covenant not to sue in clause 7(b) or 7(e) of the Hope Downs deed?
In Rinehart v Welker, the Court of Appeal found that the undertakings in clauses 7(c), (d) and (e) of the Hope Downs deed did not “govern or control” the outcome of the claims asserted in those proceedings, being claims for the removal of Mrs Rinehart as trustee of the HMH Trust by reason of events occurring in 2011 (at [146]). However, the Court of Appeal did not consider clause 7(b), nor did it consider the application of clause 7 to claims other than the claims then asserted by the applicants for removal of Mrs Rinehart as trustee.
I accept that it is arguable that clause 7(b) of the Hope Downs deed is properly construed as an absolute and unconditional covenant promise “not to challenge” the right of any member of the “Hancock Group” to any of the “Hancock Group Interests”. It is arguable that a “challenge” would include prayers 15 and 29 of the originating application which seek declaratory relief as to the ownership by HDIO and HPPL respectively of the Hope Downs and Nicholas Downs tenements. Prayers 1 and 29 do not fall within the scope of clause 7(b) because they challenge the rights of entities which were not in existence at the time of the Hope Downs deed and, so, do not fall within the meaning of “Hancock Group”.
Clause 7(e) relevantly precludes challenges to the rights of Mrs Rinehart “to any of [her] right title or interest in any of the Hancock group or in any trust in which [she] or any members of the Hancock Group is a beneficiary”. In my view, clause 7(e) arguably covers prayer 8 (which seeks a declaration as to Mrs Rinehart’s ownership of shares in HPPL), the consequential relief sought in prayers 23, 24 and 28.1 to 28.3 and the related relief sought in prayer 27.2 of the originating application.
Conclusions about “substantive claims” subject to clause 20.2
In my view, by reason of clause 6(c) of the Hope Downs deed, there is a sustainable argument that Mr Hancock’s claims based on the alleged 1992 to 1994 manipulation of HFMF’s finances and the 1995 “debt reconstruction”, and for relief arising from the alleged misappropriation of the Nicholas Downs and Mulga Downs tenements, fall within the scope of clause 20.2.
By reason of clauses 7(b) and (e) variously, the applicants’ claims for declarations in prayers 8, 9, 15, 23, 24, 27.2, 28.1 to 28.3 and 29 of the originating application also fall within the scope of clause 20.2.
Construing clause 20.2, so as to avoid a conclusion that the parties intended that the appropriate tribunal should be determined by “fine shades of difference in the legal character of individual issues”, in my view, there is a sustainable argument that clause 20.2 also covers the claims made by prayers 10 to 14, 16 to 21, 22, 25, 26, 27.1, 28.4 and 28.5, 30 and 31 of the originating application.
The “validity claims”
The HPPL respondents referred to the applicants’ claims disputing the validity of the various deeds as “validity claims”, being the various claims pleaded in paras 275 to 506 of the statement of claim.
At [168] above, I noted that the relief sought in prayers 35 to 47 broadly corresponds with the “validity claims”. In turn, matters (6) to (10) in [556] above are defined by reference to the relief sought within prayers 35 to 47.
In their written submissions, the HPPL respondents contended that, seen in context, the “validity claims” “are directed solely towards preventing the respondents from relying on the releases, bars, covenants not to sue, and referrals to arbitration contained in the Hope Downs deed and the April 2007 HD deed”. This contention is not correct as a matter of construction of the relief sought in the originating application. Matters (9) and (10) in [556] above are not directed to those ends at all. In fact, only matter (6) is as narrowly confined as the HPPL respondents suggested.
However, I accept that the “validity claims” are, in large part, directed towards preventing the respondents from relying on the releases, bars, covenants not to sue, and referrals to arbitration contained in the Hope Downs deed and the April 2007 HD deed (see, for example, statement of claim paras 326, 338, 341, 344, 348, 358, 379, 407, 417, 421, 426, 435, 467, 500). The applicants also make claims, in the alternative, premised on loss suffered by reason of those releases, bars and covenants not to sue being effective (statement of claim para 378) and legal costs incurred in responding to attempts to deploy the releases, bars, covenants not to sue, and referrals to arbitration (statement of claim paras 504-506).
The HPPL respondents next contended that the “validity” claims “are in truth matters that in substance arise in reply to a defence on the part of the respondents that the substantive claims are released or barred. It is in anticipation of such a defence that the “validity claims” are advanced.” I do not doubt that the “validity” claims are made, at least in part, pre-emptively in anticipation of the respondents’ reliance on the releases, bars, covenants not to sue and arbitration agreements. However, that does not mean that those claims are not properly made in the statement of claim. As Mr McClintock SC conceded in relation to the allegations of duress in the statement of claim, they are not “demurrable”.
The HPPL respondents next contended that the scope of a “dispute” (within the meaning of clause 20 of the Hope Downs deed) is not measured only by reference to the claims brought by the claimant. As the judgment in Rinehart v Welker makes clear (at [128] ff), it also turns on the defences deployed or to be deployed in response to those claims. By extension, the HPPL respondents argued, it also extends to matters relied upon in reply to those defences.
Based on these premises, the HPPL respondents argued that the proper analysis of whether the “validity claims” are required to be referred to arbitration is as follows:
(1)There will be a dispute “under” the Hope Downs deed if there is a sustainable argument that “the outcome of the dispute [is] governed or controlled by the [Hope Downs deed]”, for instance, because the Hope Downs Deed releases or bars the claims based on the “substantive claims”;
(2)For the reasons given by the HPPL respondents, various clauses of the Hope Downs deed (applying by its own force and through the April 2007 HD deed to Mr Hancock) provide a complete answer to the “substantive claims” and thus “govern or control” the dispute; and
(3)The “validity claims” do not form a separate dispute. They are, in substance, matters raised in reply to the releases and bars that will be put forward by the HPPL respondents (and Mrs Rinehart) in defence of the “substantive claims”. Accordingly, when the “validity claims” are taken into account, the dispute remains one the outcome of which is “governed or controlled” by the Hope Downs deed.
While I accept proposition (1), for the reasons set out above, in my view, only some of the claims for relief based on the alleged facts that are referred to by the HPPL respondents as the “substantive claims” are claims in respect of which there is a sustainable argument that one or more clauses of the Hope Downs deed provide a complete answer. Thus, proposition (2) is only partly correct.
I do not accept that the characterisation of the “validity claims” as matters raised in reply to releases and bars lead to the conclusion that they form part of a dispute “under” the Hope Downs deed. This is because the existence of a dispute “under” the Hope Downs deed depends upon the existence of the deed itself. The Hope Downs deed cannot govern or control the outcome of a dispute about its validity.
Accordingly, I am not satisfied that any of the claims arising from the “validity claims” is a matter that is the subject of clause 20.2.
Matters subject of clause 9.2 of the 2007 HD deed
The HPPL respondents did not make separate written submissions concerning the scope of clause 9.2. Nor did Mrs Rinehart.
The 2007 HD deed does not contain separate releases, but clause 3 of the deed provides that the parties to the Hope Downs deed and Mr Hancock “jointly and severally ratify and confirm the Hope Downs Deed as hereby amended”.
In oral submissions, Mr McClintock SC contended that, by virtue of clause 3, an attack on the Hope Downs deed is a dispute “under” the 2007 HD deed within the meaning of clause 9.2. I do not accept this contention: the language of clause 3 does not “govern or control” a claim which seeks to impugn the Hope Downs deed by reason of pre-contractual conduct. At most, it is evidence that might be relied upon in defending an attack on the deed.
I therefore conclude that clause 9.2 of the 2007 HD deed does not cover any matters in the proceeding that do not already fall within the scope of clause 20.2 of the Hope Downs deed.
Matters subject of clause 16 of the 2009 deed of further settlement
Clause 16 is set out at [457] above, and governs disputes or claims “arising out of or in relation to” the 2009 deed of further settlement or the 2007 CS deed. It is necessary to remember that the parties to each of these deeds are Mr Hancock, Mrs Rinehart and HPPL. Accordingly, it does not govern the claims for relief made by Ms Rinehart, or against respondents other than Mrs Rinehart and HPPL.
Consistent with the reasons set out above, I accept that there is a sustainable argument that the matters arising from the claims (as propounded by Mr Hancock against Mrs Rinehart or HPPL) that arguably fall within the scope of the Hope Downs deed also fall within the scope of clause 15 of the 2007 CS deed and, consequently give rise to disputes or claims “arising out of or in relation to” the 2009 deed of further settlement within the meaning of clause 16 of the latter deed.
The HPPL respondents argued that the words “in connection with” in clause 15 give rise to a sustainable argument that clause 15 covers claims such as claims for misrepresentation and innocent misrepresentation inducing “the contract in question” (which I take to be the 2007 CS deed). In addition, they contended that, to the extent that the “substantive claims” were not made in Mr Hancock’s unsworn affidavit, “there can be no real contest to the proposition that they are claims ‘in connection with’ the claims and allegations in” the unsworn affidavit.
The words “in connection with” are “capable of describing a spectrum of relationships ranging from the direct and immediate to the tenuous and remote”: Collector of Customs vPozzolanic Enterprises Pty Ltd [1993] FCA 322; (1993) 43 FCR 280 at 288. In the context of a release, the words will be limited by reference to the “true purpose of the transaction”. On the evidence, there was nothing to indicate that clause 15 is intended to cover claims in relation to the Roy Hills, Nicholas Downs and Mulga Downs tenements. In particular, there is nothing in the recitals to support such a construction. Accordingly, I am not satisfied that there is a sustainable argument to that effect.
I accept that there is a sustainable argument that Mr Hancock’s challenges to the 2009 release and the 2009 arbitration clause, clause 15 of the 2007 CS deed and his claim to set aside the 2007 CS deed fall within the scope of clause 16 of the 2009 deed of further settlement.
The HPPL respondents contended that, insofar as the “validity claims” are asserted by Mr Hancock, they are all required to be submitted to arbitration under the 2009 deed of further settlement. The argument appeared to be based upon a misconstruction of clause 16, to the effect that it covers any dispute “arising out of or in relation to” the Hope Downs deed. I reject that contention.
A similar argument was put on Mrs Rinehart’s behalf, based on clause 15 of the 2007 CS deed. It was submitted that clause 15 is an “affirmation of the validity of the April 2007 HD deed”, by which Mr Hancock acceded to the Hope Downs deed. Clause 15 was said to create an estoppel by deed, which is a defence to Mr Hancock’s claim challenging the validity of the 2007 HD deed.
Mrs Rinehart’s submissions did not develop this argument. There is no reference to the 2007 HD deed in clause 15 and, to the extent that it was put, I do not accept that the reference, in clause 15, to the releases referred to in the Hope Downs deed, is an “affirmation of the validity of the 2007 HD deed”. In any event, an estoppel by deed requires the identification of a “precise and unambiguous statement of the fact in question”: Discount & Finance Ltd v Gehrig’s NSW Wines Ltd (1940) 40 SR (NSW) 598 at 603. The precise statement of fact said to give rise to an estoppel by deed was not identified. Clause 15 does not contain any express statement of fact. It was not explained how the reference to releases in the Hope Downs deed could amount to a statement of fact capable of preventing Mr Hancock from attempting to prove his claim to set aside the Hope Downs deed. Accordingly, I do not accept that Mr Hancock’s “validity claims” give rise to a dispute “arising out of or in relation to” the 2009 deed of further settlement and the 2010 deed of variation except for the claims concerning the validity of those particular deeds.
Matters subject of clause 11 of the 2010 deed of variation
Clause 11(ii) is set out at [466] above, and governs disputes or claims “arising out of or in relation to” the 2010 deed of variation. As with clause 16 of the 2009 deed of further settlement, clause 11(ii) does not govern the claims for relief made against respondents other than Mrs Rinehart and HPPL.
Mrs Rinehart argued, based on recital E and clauses 8 and 10 of the 2010 deed of variation, that Mr Hancock is estopped from denying the validity of the Hope Downs deed. Consequently, she argued, the claims challenging the validity of the Hope Downs deed and the 2007 HD deed are disputes falling within the scope of clause 11(ii). I accept that there is a sustainable argument that clause 11(ii) may be construed this broadly, in relation to claims for relief against Mrs Rinehart and HPPL concerning the validity of these two deeds.
Otherwise, in my view, the scope of clause 11 corresponds with the scope of clause 16 in relation to claims based on the “substantive claims”. Clause 11 also covers the discrete disputes between Mr Hancock, Mrs Rinehart and HPPL concerning the enforceability of clause 11 and concerning Mrs Rinehart’s conduct in the 2010 deed of variation.
AGREED QUESTION (11): SHOULD THE COURT DIRECT A TRIAL ON THE ARBITRABILITY ISSUE?
The precise question is “If the Court does have discretion, should the Court direct that there be a trial before this Court on the question whether the arbitration agreements applicable to those matter(s) identified in answer to question (9) are null and void, inoperative or incapable of being performed for the purposes of s 8(1), on any one or more of the following grounds:
(a)undue influence;
(b)duress;
(c)unconscionability;
(d)fraudulent concealment;
(e)mispresentation;
(f)misleading and deceptive conduct;
(g)fraud on a power?”
In my view, the various bases on which the applicants seek to impugn the various arbitration agreements could, if successful, lead to a finding that each arbitration agreement is void or inoperative for the purposes of s 8(1). In particular, I accept that the applicants’ respective cases are directed to impeaching the various arbitration agreements and not merely the broader agreements in which the arbitration agreements are contained. On the applicants’ cases, it is arguable that in the absence of the alleged misconduct, they would not have entered into an arbitration agreement with any of the respondents.
Mrs Rinehart and the HPPL respondents raised various matters casting doubt on the strength of the applicants’ contentions concerning the validity of the arbitration agreements. These include:
(1)The contention that the applicants have affirmed the arbitration agreement in the Hope Downs deed;
(2)The absence of evidence that the relevant transactions were disadvantageous or improvident: cf White v Wills [2014] NSWSC 1160 at [66] to [67];
(3)The various written acknowledgements that the agreements were not procured by undue influence, such as in clause 12 of the Hope Downs deed;
(4)Ms Rinehart’s participation in the events that led to the execution of the Hope Downs deed, through her employment with HPPL;
(5)Mr Hancock’s knowledge and beliefs concerning his mother’s alleged wrongdoings, set out in his unsworn affidavit; and
(6)Mr Hancock’s frequently acrimonious relationship with Mrs Rinehart which tends strongly against any suggestion that he was subject to undue influence or duress from her.
Although I am not in a position to reach any final conclusion about any of these points, at face value they raise serious challenges to the claims of undue influence, duress and other species of misconduct.
Taking these matters into account, the following considerations nevertheless favour a trial on the application of the proviso to the arbitration agreements in the Hope Downs deed and the 2007 HD deed:
(1)Ms Rinehart’s claims for relief impugning the validity of the Hope Downs deed and the 2007 HD deed do not fall within the scope of any arbitration agreement. Accordingly, she is entitled to have those claims determined by the Court, subject to whether the claims should be stayed pending an arbitral process. It is likely to be more efficient to have the applicants’ claims on these issues dealt with together, rather than separately.
(2)The history of litigation between the applicants, Mrs Rinehart and HPPL makes it highly likely that the issue of arbitrability under the two arbitration clauses will need to be resolved in any event, by reason of the parties’ rights under s 16(9) of the commercial arbitration legislation to request that the Court decide the matter.
(3)If I am wrong in concluding that Ms Rinehart’s claims mentioned in (1) do not fall within the arbitration agreements in the two deeds, the evidence strongly suggests that the deeds were not made on an arms’ length basis in relation to either of the applicants. On the currently available evidence, the deeds were not the product of a commercial negotiation. Nor were the deeds entered after a process of disclosure of information material to the financial consequences of the deeds for the applicants or an opportunity to obtain comprehensive legal and financial advice about the implications of the deeds. In my view, it is striking and troubling that there is no evidence of advice of this kind, except perhaps in relation to the 2005 deed of obligation and release and the absence of such evidence casts significant doubt as to whether the applicants consented to resolve disputes arising in this proceeding by arbitration. .
(4)This is not a case like Fiona Trust in which the commercial relationship between the parties meant that they could be expected to include an arbitration clause in any agreement which they made. In the absence of more evidence, the context of the deeds does not permit any conclusion about the applicants’ intention concerning commercial arbitration.
(5)It is necessary to balance the possible prejudice to the applicants of arbitral proceedings to which they are ultimately found not to have consented, against the possible prejudice to the respondents of Court proceedings on the application of the proviso which would undermine any right which they may ultimately be found to have had to resolution of the disputes by arbitration. In each case, the prejudice will be substantial. However, in my view, the possible prejudice to the respondents may be mitigated in Court proceedings, particularly by appropriate, confidentiality orders. On the other hand, the inherent prejudice involved in submitting to an inevitably lengthy non-consensual arbitration cannot be addressed.
(6)The Court would be able to determine the issues in the proceeding that do not fall within the scope of the arbitration agreements, but which raise questions about the validity of the Hope Downs deed and the 2007 HD deed, concurrently with the question of the applicability of the proviso.
(7)There is no evidence of ongoing business relationships or any other commercial imperative that would cause the Court to refrain from directing a hearing on the application of the proviso.
The position is different for clause 14 of the 2005 deed of obligation and release. The evidence suggests that this deed was the product of negotiation between Mr Hancock and Mrs Rinehart on behalf of the other parties to the deed, and that Mr Hancock had the benefit of legal representation in agreeing the terms of the deed. However, the grounds on which the validity of clause 14 is challenged are parallel to a significant complaint made by the applicants in relation to the validity of the arbitration agreements in the Hope Downs deed and the 2007 HD deed. That is, that the deeds were procured by Mrs Rinehart’s dishonest concealment of important facts about the manner in which she had conducted herself as trustee of the HMH Trust. In those circumstances, in my view, the Court’s discretion should be exercised to direct a trial on the arbitrability issue concerning clause 14 of the arbitration agreement.
It follows that the Court’s discretion should also be exercised to direct a trial on the arbitrability of clause 16 of the 2009 deed of further agreement and clause 11 of the 2010 deed of variation.
REMAINING QUESTIONS
As I have not determined that s 8(1) is engaged with respect to any matter in the proceeding, agreed question (13) is not necessary to answer. As to agreed question (16), it will be a matter for case management how those matters which are not the subject of an arbitration agreement proceed to trial. In the absence of any referral to arbitration, there is no case for a stay of any part of the proceeding. Agreed question (17) does not arise.
I certify that the preceding six hundred and sixty-nine (669) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gleeson. Associate:
Dated: 26 May 2016
SCHEDULE OF PARTIES
NSD 1124 of 2014 Respondents
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)
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