Wright Prospecting Pty Ltd v Hancock Prospecting Pty Ltd [No 15] - [2021] WASC 307

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   WRIGHT PROSPECTING PTY LTD -v- HANCOCK PROSPECTING PTY LTD [No 15] [2021] WASC 307
CORAM:   LE MIERE J
HEARD:   28 JULY 2021
DELIVERED          :   8 SEPTEMBER 2021
FILE NO/S:   CIV 3041 of 2010
MATTER:   (Consolidated with CIV 2617 of 2012 by Orders dated 9 September 2014)
BETWEEN:   WRIGHT PROSPECTING PTY LTD
Plaintiff
AND
HANCOCK PROSPECTING PTY LTD
First Defendant
HOPE DOWNS IRON ORE PTY LTD
Second Defendant
BIANCA HOPE RINEHART
Third Defendant
JOHN LANGLEY HANCOCK
Fourth Defendant
HOPE RINEHART WELKER
Fifth Defendant
GINIA HOPE FRANCIS RINEHART
Sixth Defendant
(BY ORIGINAL ACTION)
BIANCA HOPE RINEHART
First Plaintiff by Counterclaim
JOHN LANGLEY HANCOCK
Second Plaintiff by Counterclaim
AND
GEORGINA HOPE RINEHART
First Defendant by Counterclaim
HANCOCK PROSPECTING PTY LTD
Second Defendant by Counterclaim
HANCOCK MINERALS PTY LTD
Third Defendant by Counterclaim
THE HANCOCK FAMILY MEMORIAL FOUNDATION LTD
Fourth Defendant by Counterclaim
TADEUSZ JOZEF WATROBA
Fifth Defendant by Counterclaim
WESTRAINT RESOURCES PTY LTD
Sixth Defendant by Counterclaim
HMHT INVESTMENTS PTY LTD
Seventh Defendant by Counterclaim
150 INVESTMENTS PTY LTD
Eighth Defendant by Counterclaim
HOPE RINEHART WELKER
Ninth Defendant by Counterclaim
GINIA HOPE FRANCIS RINEHART
Tenth Defendant by Counterclaim
MAX CHRISTOPHER DONNELLY AS TRUSTEE IN BANKRUPTCY OF LANGLEY GEORGE HANCOCK
Eleventh Defendant by Counterclaim
HOPE DOWNS IRON ORE PTY LTD
Twelfth Defendant by Counterclaim
ROY HILL IRON ORE PTY LTD
Thirteenth Defendant by Counterclaim
MULGA DOWNS INVESTMENTS PTY LTD
Fourteenth Defendant by Counterclaim
MULGA DOWNS IRON ORE PTY LTD
Fifteenth Defendant by Counterclaim
WRIGHT PROSPECTING PTY LTD
Sixteenth Defendant by Counterclaim
DFD RHODES PTY LTD
Seventeenth Defendant by Counterclaim
MATTHEW JOHN KEADY AND DOROTHEA MARGARET CAMPBELL AS EXECUTORS OF DONOVAN FRANCES DUNCAN RHODES
Eighteenth Defendant by Counterclaim
HAMERSLEY WA PTY LTD
Third Party
(BY COUNTERCLAIM)

FILE NO/S: CIV 2617 of 2012
BETWEEN: WRIGHT PROSPECTING PTY LTD
Plaintiff
AND
HANCOCK PROSPECTING PTY LTD
First Defendant
HOPE DOWNS IRON ORE PTY LTD
Second Defendant
BIANCA HOPE RINEHART
Third Defendant
JOHN LANGLEY HANCOCK
Fourth Defendant
HOPE RINEHART WELKER
Fifth Defendant
GINIA HOPE FRANCIS RINEHART
Sixth Defendant
HAMERSLEY WA PTY LTD
Third Party

FILE NO/S: CIV 2737 of 2013
BETWEEN: DFD RHODES PTY LTD
First Plaintiff
MATTHEW JOHN KEADY as executor of the estate of DONOVAN FRANCES DUNCAN RHODES
DOROTHEA MARGARET CAMPBELL as executor of the estate of DONOVAN FRANCES DUNCAN RHODES
Second Plaintiffs
AND
HANCOCK PROSPECTING PTY LTD
First Defendant
WRIGHT PROSPECTING PTY LTD
Second Defendant
HOPE DOWNS IRON ORE PTY LTD
Third Defendant
BIANCA HOPE RINEHART
Fourth Defendant
JOHN LANGLEY HANCOCK
Fifth Defendant
HOPE RINEHART WELKER
Sixth Defendant
GINIA HOPE FRANCIS RINEHART
Seventh Defendant
(BY ORIGINAL ACTION)
BIANCA HOPE RINEHART
First Plaintiff by Counterclaim
JOHN LANGLEY HANCOCK
Second Plaintiff by Counterclaim
GEORGINA HOPE RINEHART
First Defendant by Counterclaim
HANCOCK PROSPECTING PTY LTD
Second Defendant by Counterclaim
HANCOCK MINERALS PTY LTD
Third Defendant by Counterclaim
THE HANCOCK FAMILY MEMORIAL FOUNDATION LTD
Fourth Defendant by Counterclaim
TADEUSZ JOZEF WATROBA
Fifth Defendant by Counterclaim
WESTRAINT RESOURCES PTY LTD
Sixth Defendant by Counterclaim
HMHT INVESTMENTS PTY LTD
Seventh Defendant by Counterclaim
150 INVESTMENTS PTY LTD
Eighth Defendant by Counterclaim
HOPE RINEHART WELKER
Ninth Defendant by Counterclaim
GINIA HOPE FRANCIS RINEHART
Tenth Defendant by Counterclaim
MAX CHRISTOPHER DONNELLY AS TRUSTEE IN BANKRUPTCY OF LANGLEY GEORGE HANCOCK
Eleventh Defendant by Counterclaim
HOPE DOWNS IRON ORE PTY LTD
Twelfth Defendant by Counterclaim
ROY HILL IRON ORE PTY LTD
Thirteenth Defendant by Counterclaim
MULGA DOWNS INVESTMENTS PTY LTD
Fourteenth Defendant by Counterclaim
MULGA DOWNS IRON ORE PTY LTD
Fifteenth Defendant by Counterclaim
WRIGHT PROSPECTING PTY LTD
Sixteenth Defendant by Counterclaim
DFD RHODES PTY LTD
Seventeenth Defendant by Counterclaim
MATTHEW JOHN KEADY AND DOROTHEA MARGARET CAMPBELL AS EXECUTORS OF THE ESTATE OF DONOVAN FRANCES DUNCAN RHODES
Eighteenth Defendant by Counterclaim
HAMERSLEY WA PTY LTD
Third Party
(BY COUNTERCLAIM)

Catchwords:

Practice and procedure – Applications – Separate trial – Discretion

Legislation:

Rules of the Supreme Court 1971 (WA)

Result:

Separate trial of liability issues required
Application otherwise dismissed

Category: B

Representation:

CIV 3041 of 2010

Counsel:

Plaintiff	:	Ms K Stern SC & Ms L Coleman
First Defendant	:	Mr N Hutley SC, Mr C Bova SC, Mr J Hutton & Mr C Colquhoun
Second Defendant	:	Mr N Hutley SC, Mr C Bova SC, Mr J Hutton & Mr C Colquhoun
Third Defendant	:	Mr A Hochroth
Fourth Defendant	:	Mr A Hochroth
Fifth Defendant	:	No appearance
Sixth Defendant	:	Ms A Barwick
Third Party	:	Ms C Wren

Solicitors:

Plaintiff	:	Clayton Utz
First Defendant	:	Corrs Chambers Westgarth
Second Defendant	:	Corrs Chambers Westgarth
Third Defendant	:	Yeldham Price O'Brien Lusk
Fourth Defendant	:	Yeldham Price O'Brien Lusk
Fifth Defendant	:	No appearance
Sixth Defendant	:	Dentons
Third Party	:	Allens

Counterclaim

Counsel:

First Plaintiff by Counterclaim	:	Mr A Hochroth
Second Plaintiff by Counterclaim	:	Mr A Hochroth
First Defendant by Counterclaim	:	No appearance
Second Defendant by Counterclaim	:	Mr N Hutley SC, Mr C Bova SC, Mr J Hutton & Mr C Colqhoun
Third Defendant by Counterclaim	:	Mr N Hutley SC, Mr C Bova SC, Mr J Hutton & Mr C Colqhoun
Fourth Defendant by Counterclaim	:	Mr N Hutley SC, Mr C Bova SC, Mr J Hutton & Mr C Colqhoun
Fifth Defendant by Counterclaim	:	Mr N Hutley SC, Mr C Bova SC, Mr J Hutton & Mr C Colqhoun
Sixth Defendant by Counterclaim	:	Mr N Hutley SC, Mr C Bova SC, Mr J Hutton & MrC Colqhoun
Seventh Defendant by Counterclaim	:	Mr N Hutley SC, Mr C Bova SC, Mr J Hutton & Mr C Colqhoun
Eighth Defendant by Counterclaim	:	No appearance
Ninth Defendant by Counterclaim	:	No appearance
Tenth Defendant by Counterclaim	:	Mr J Dalzell & Ms A Barwick
Eleventh Defendant by Counterclaim	:	Mr N Hutley SC, Mr C Bova SC, Mr J Hutton & Mr C Colqhoun
Twelfth Defendant by Counterclaim	:	Mr N Hutley SC, Mr C Bova SC, Mr J Hutton & Mr C Colqhoun
Thirteenth Defendant by Counterclaim	:	Mr N Hutley SC, Mr C Bova SC, Mr J Hutton & Mr C Colqhoun
Fourteenth Defendant by Counterclaim	:	No appearance
Fifteenth Defendant by Counterclaim	:	Mr N Hutley SC, Mr C Bova SC, Mr J Hutton & Mr C Colquhoun
Sixteenth Defendant by Counterclaim	:	Ms K Stern SC & Ms L Coleman
Seventeenth Defendant by Counterclaim	:	Mr J Stoljar SC, Ms L Hulmes & Mr S Taylor
Eighteenth Defendant by Counterclaim	:	Mr J Stoljar SC, Ms L Hulmes & Mr S Taylor

Solicitors:

First Plaintiff by Counterclaim	:	Yeldham Price O'Brien Lusk
Second Plaintiff by Counterclaim	:	Yeldham Price O'Brien Lusk
First Defendant by Counterclaim	:	No appearance
Second Defendant by Counterclaim	:	Corrs Chambers Westgarth
Third Defendant by Counterclaim	:	Corrs Chambers Westgarth
Fourth Defendant by Counterclaim	:	Corrs Chambers Westgarth
Fifth Defendant by Counterclaim	:	Corrs Chambers Westgarth
Sixth Defendant by Counterclaim	:	Corrs Chambers Westgarth
Seventh Defendant by Counterclaim	:	Corrs Chambers Westgarth
Eighth Defendant by Counterclaim	:	No appearance
Ninth Defendant by Counterclaim	:	No appearance
Tenth Defendant by Counterclaim	:	Dentons
Eleventh Defendant by Counterclaim	:	Corrs Chambers Westgarth
Twelfth Defendant by Counterclaim	:	Corrs Chambers Westgarth
Thirteenth Defendant by Counterclaim	:	Corrs Chambers Westgarth
Fourteenth Defendant by Counterclaim	:	No appearance
Fifteenth Defendant by Counterclaim	:	Corrs Chambers Westgarth
Sixteenth Defendant by Counterclaim	:	Clayton Utz
Seventeenth Defendant by Counterclaim	:	Taylor and Taylor Lawyers Pty Ltd
Eighteenth Defendant by Counterclaim	:	Taylor and Taylor Lawyers Pty Ltd

CIV 2617 of 2012

Counsel:

Plaintiff	:	Ms K Stern SC & Ms L Coleman
First Defendant	:	Mr N Hutley SC, Mr C Bova SC, Mr J Hutton & Mr C Colquhoun
Second Defendant	:	Mr N Hutley SC, Mr C Bova, Mr J Hutton & Mr C Colquhoun
Third Defendant	:	Mr A Hochroth
Fourth Defendant	:	Mr A Hochroth
Fifth Defendant	:	No appearance
Sixth Defendant	:	Ms A Barwick
Third Party	:	Ms C Wren

Solicitors:

Plaintiff	:	Clayton Utz
First Defendant	:	Corrs Chambers Westgarth
Second Defendant	:	Corrs Chambers Westgarth
Third Defendant	:	Yeldham Price O'Brien Lusk
Fourth Defendant	:	Yeldham Price O'Brien Lusk
Fifth Defendant	:	No appearance
Sixth Defendant	:	Dentons
Third Party	:	Allens

CIV 2737 of 2013

Counsel:

First Plaintiff	:	Mr J Stoljar SC, Ms L Hulmes & Mr S Taylor
Second Plaintiffs	:	Mr J Stoljar SC, Ms L Hulmes & Mr S Taylor
First Defendant	:	Mr N Hutley SC, Mr C Bova SC, Mr J Hutton & Mr C Colquhoun
Second Defendant	:	Ms K Stern SC & Ms L Coleman
Third Defendant	:	Mr N Hutley SC, Mr C Bova SC, Mr J Hutton & Mr C Colquhoun
Fourth Defendant	:	Mr A Hochroth
Fifth Defendant	:	Mr A Hochroth
Sixth Defendant	:	No appearance
Seventh Defendant	:	Ms A Barwick
Third Party	:	Ms C Wren

Solicitors:

First Plaintiff	:	Taylor And Taylor Lawyers Pty Ltd
Second Plaintiffs	:	Taylor And Taylor Lawyers Pty Ltd
First Defendant	:	Corrs Chambers Westgarth
Second Defendant	:	Clayton Utz
Third Defendant	:	Corrs Chambers Westgarth
Fourth Defendant	:	Yeldham Price O'Brien Lusk
Fifth Defendant	:	Yeldham Price O'Brien Lusk
Sixth Defendant	:	No appearance
Seventh Defendant	:	Dentons
Third Party	:	Allens

Cases referred to in decision:

Tepko Pty Ltd v Water Board [2001] HCA 19
Frigger v Mervyn Jonathon Kitay in his capacity as liquidator of Computer Accounting & Tax Pty Ltd (in liq) [2013] WASC 229
Landsdale Pty Ltd v Moore [2009] WASCA 176
Wright Prospecting Pty Ltd v Hancock Prospecting Pty Ltd [No 13] [2021] WASC 214

LE MIERE J:

Summary

The first defendant, Hancock Prospecting Pty Ltd (HPPL), and the second defendant, Hope Downs Iron Ore Pty Ltd (HDIO), (together the HPPL parties) have applied in each of the WPPL proceedings (CIV 3041 of 2010 and CIV 2617 of 2012) and the Rhodes proceeding (CIV 2737 of 2013) for the separate trial of certain issues.
For the reasons which follow, I will order that the issues of liability should be tried separately and before issues of remedies in each of the proceedings but otherwise dismiss the HPPL parties' application.

The applications

In the WPPL proceedings by amended chambers summons of 13 April 2021, the HPPL parties sought a number of orders including orders in relation to the separate trial of issues. They now press for orders as follows:
Pursuant to Order 1 rule 4A or rule 4B, Order 18 rule 5(1) or Order 32 rule 4 of the Rules, or the inherent jurisdiction of the Court:
a.any question of quantum of the damages or equitable compensation or an account of profit claimed by the Plaintiff; and
…
c.… any question of:
i.the Third and Fourth Defendants' beneficial interest in the Hope Downs and East Angelas Tenements;
ii.any wrongdoing since 27 March 1992, as alleged by the Third and Fourth Defendants, of any of, or directors (including alleged shadow directors) of: Hancock prospecting Pty Ltd (HPPL), Hancock Family Memorial Foundation Ltd (HFMF), Hancock Resources Ltd (aka Westraint Resources Ltd (HRL), Hope Downs Ltd (HDL), Zamoever Pty Ltd (Zamoever) and/or HMHT Investments Pty Ltd (HMHT Investments);
iii.the validity of any transactions entered into, or resolutions made, between 27 March 1992 and present by any of HPPL, HFMF, HRL, HDL, Zamoever and/or HMHT Investments; and
iv.laches as raised in paragraphs 154, 155, 156.3, 156A, 159, 160.2 and 160.3 (the words 'the subject of the HFMF Trust'), 160.4(a) and (b), 160.4(d) of the FAD (but not as raised otherwise in the FAD or in the Defence of the First and Second Defendants).
be determined separately and after the hearing of all other issues arising on the claims made by the Plaintiff in its Sixth Further Amended Substituted Statement of Claim filed 15 February 2021 (WPPL 6FASSOC) (or such other Statement of Claim that the Plaintiff may file).
By amended chambers summons filed 13 April 2021 in the Rhodes proceeding, the HPPL parties seek an order that the same issues be determined separately and after the hearing of the other issues arising on the claims made by the plaintiffs in their third further amended substituted statement of claim (Rhodes SOC) (or such other statement of claim as the plaintiffs may file).

Separate trial of questions of remedies

The court made orders on 10 March 2014 to the effect that issues of liability should be tried separately and before issues of remedies. That was before the third to sixth defendants in the Wright proceedings and the fourth to seventh defendants in the Rhodes proceeding had been joined as defendants. Much has happened and many procedural steps have been taken in both proceedings since then. The HPPL parties move for a new order to similar effect to make the position clear. No party opposes such an order. There will be an order, as sought by the HPPL parties, that any question of quantum of the damages or equitable compensation or on account of profit claim by the plaintiff be determined separately and after the hearing of all other issues arising on the claims made by the plaintiff in its sixth further amended substituted statement of claim filed 15 February 2021 or such other statement of claim that the plaintiff may file.

Rhodes proceeding – the threshold question

The proposed separate trial of issues is to determine separately aspects of the defence of Bianca and John. In effect the HPPL parties seek to carve out from the first trial the issue of Bianca and John's entitlement to the tenements, whether by way of wrongdoing or otherwise since 27 March 1992.
The HPPL parties submit that there is a question concerning the effect of order 1 of the orders of 2 July 2021 in the Rhodes proceeding (the July stay order) which should be determined as a threshold question before determining whether to order the separate trial of the issues proposed by the HPPL parties.
The July stay order provides that:
Pursuant to s 8(1) of the Commercial Arbitration Act 2012 (WA), the proceedings be stayed to the extent that they concern the matters in [3.3.2], [3.4] and [4] and [5] (to the extent [4] and [5] rely on the allegations in [3.3.2] and [3.4]) of the plaintiffs Amended Reply in the Original Action (to the fourth and fifth defendants defence, the sixth defendants defence and the seventh defendants defence) filed 26 March 2021.

The HPPL parties submit that the matters referred to arbitration and stayed are the controversies or differences constituted by the contentions of Rhodes in the paragraphs of Rhodes' amended reply filed 26 March 2021 (Amended Reply), identified by the order and the contentions of Bianca and John in the paragraphs of their defence to which those paragraphs respond.
Relevantly, the HPPL parties submit that the matters falling within the scope of the July stay order are the controversies or disputes between Rhodes and John and Bianca as to whether:
(a)HML and HRL acquired and held the relevant tenements:
(i)on constructive trust for HPPL by reason of those tenements being acquired by HML and HRL through Lang Hancock's (Lang) breaches of fiduciary duties owed to HPPL;[1] or
[1] See Wright Prospecting Pty Ltd v Hancock Prospecting Pty Ltd [No 13] [2021] WASC 214 [90].
(ii)beneficially, with the tenements forming part of the property of the so-called 'HFMF Trust' (John and Bianca's claim);
(b)HPPL and/or HDIO hold the relevant tenements:
(i)legally and beneficially, because the transfer of the tenements to HPPL and HDIO after 1992:
A.was undoing the earlier improper transfer of assets at the direction of Lang:[2] or
B.formed part of bona fide transactions for value in which HPPL provided funds to, and forgave debts of, HRL and/or HFMF in exchange for the tenements and thereby saving HRL and HFMF from insolvency:[3] see J[91]; or
(ii)on constructive trust for John and Bianca (and other beneficiaries of the so-called 'HFMF Trust') by reason of alleged wrongdoing since 1992, including as part of the so-called 'debt reconstructions' (John and Bianca's claim). (footnotes omitted)
[2] Wright Prospecting Pty Ltd v Hancock Prospecting Pty Ltd [No 13] [2021] WASC 214 [90].
[3] See Wright Prospecting Pty Ltd v Hancock Prospecting Pty Ltd [No 13] [2021] WASC 214 [91].
The HPPL parties submit that those matters, having been stayed, are no longer issues to be determined at the trial of the Rhodes proceeding. The HPPL parties submit that if that submission is correct, there is no need for the order for a separate trial of issues sought by the HPPL parties in their chamber summons in the Rhodes proceeding because those matters, referred to by the HPPL parties as the 'acquisition issue' and the 'debt reconstruction issue', are not to be determined at the trial of the Rhodes proceeding. At [19] of their written submissions filed 22 July 2021, the HPPL parties submitted:
In light of the stay that has been granted, much of HPPL's application for certain issues to be determined separately from the other issues, or for there to be a hearing on separate questions, falls away in the Rhodes Proceedings. Those issues that jeopardised the ability for a hearing to take place by late April 2022, including the matters on which John and Bianca seek discovery in their Discovery Summons, fall within the matters referred to arbitration.
The Rhodes parties submit that the July stay order does not have the effect submitted by the HPPL parties. The Rhodes parties submit that the matters stayed by the July stay order are the controversies or differences constituted by the contentions raised by Rhodes in the paragraph of the Amended Reply referred to in the July stay order and the implied rejoinder by Bianca and John which operates as a denial of those contentions.
The Rhodes parties submit, in effect, that the first matters stayed are the controversy constituted by Rhodes' contention at [3.3.2] of their Amended Reply – that if the Hope Downs ELs and the East Angelas ELs were held by HML, HRL and then HDL, other than on trust for HPPL and WPPL or HPPL, then Lang and/or HPPL caused the acquisition, transfer or gift of the beneficial interest in the Hope Downs ELs and the East Angelas ELs to be held other than for HPPL and/or HPPL and WPPL (the Alleged Transmission Away), then the Alleged Transmission Away was:
(a)a breach of Lang's fiduciary duty and his equitable and statutory duties as a director owed to HPPL;
(b)further or alternatively, a breach of HPPL's fiduciary duty to WPPL.
The Rhodes parties submit, in effect, that the further matters stayed are the controversy constituted by Rhodes' contention at [3.4] of their amended reply – that HPPL acquired or reacquired the Hope Downs ELs and the East Angelas ELs from HRL and HML in a bona fide transaction for value.
It is undesirable that I should state the reasons I made the July stay order or explain those reasons. The July stay order is the subject of an appeal. It is the reasons for judgment to which the July stay order gave effect[4] which the Court of Appeal will consider in determining the appeal. It is not appropriate that I should give further reasons for making the July stay order or explain the reasons I gave for making the order. However, I will state the scope or effect of the order to the extent that it is necessary to determine the present application – the HPPL parties' application for the separate trial of issues.
[4] Wright Prospecting Pty Ltd v Hancock Prospecting Pty Ltd [No 13] [2021] WASC 214.

The scope or effect of the July stay order should be understood in the context of Amended Reply [3.3.2] and [3.4] and the pleadings in Bianca and John's amended defence filed 29 January 2021 (Amended Defence) and Rhodes' third further amended substituted statement of claim (3FASSOC) to which those pleas relate.
In 3FASSOC Rhodes plead in effect that HML and HRL acquired the Hope Downs ELs and the East Angelas ELs on trust for HPPL and WPPL. Rhodes plead that through a chain of applications for the grant of, and transfer of, mining tenements, the ground comprised in the ELs is now included in the ground comprised in Mining Lease 282SA (ML 282SA), which is held by HDIO on trust for HPPL and WPPL and for royalties payable to Rhodes under its agreement with HPPL and WPPL.
At Amended Defence [23] Bianca and John plead to the following effect. First, ML 282SA was granted over land which was formerly the subject of the ELs which was held by HML and HRL, and as of 6 October 1992, were beneficially owned by the beneficiaries of the HFMF Trust – Bianca, John, Hope and Ginia. Secondly, Bianca and John plead that as part of a fraudulent and dishonest design, by transactions described by HPPL as the debt reconstruction transactions, Gina, in breach of her fiduciary duties, amongst others, as trustee of the HFMF Trust, caused the ELs, through a chain of transfers, to be transferred to HDIO and subsequently the ELs to be surrendered in connection with the grant of ML 282SA. Thirdly, they plead that as a consequence, HDIO holds its interest in ML 282SA on constructive trust for the beneficiaries of the HFMF Trust.
Amended Reply [3.3.1] pleads that the ELs were held by HML, HRL and then HDL on trust for HPPL and WPPL or alternatively on trust for HPPL. The July stay order does not stay the matter or controversy arising from that plea, that is whether the ELs were held by HML, HRL and then HDL on trust for HPPL and WPPL.
In Amended Reply [3.3.2] Rhodes plead an alternative case to the case they plead in [3.3.1]. Amended Reply [3.3.2] pleads Rhodes' alternative case if it is held that Lang and HPPL caused the acquisition, transfer or gift of the beneficial interest in the ELs to be held other than for HPPL.
In WPPL v HPPL [No 13],[5] I summarised Rhodes' affirmative case as follows:
[T]he acquisition of the tenements by HML and HRL, then subsidiaries of HFMF, was in breach of Lang's fiduciary and other duties owed to HPPL and had the consequence that HML and HRL held the tenements on constructive trust for HPPL [90].
[5] Wright Prospecting Pty Ltd v Hancock Prospecting Pty Ltd [No 13] [2021] WASC 214.
I found that the disputes between Rhodes and Bianca and John arising from that part of Rhodes' amended reply concern subject matters that are the subject of the relevant arbitration agreement. That is the matter which is stayed by the order that the proceedings be stayed to the extent that they concern the matters in Amended Reply [3.3.2]. The matter stayed is whether or not the acquisition of the tenements by HML and HRL was in breach of Lang's fiduciary and other duties owed to HPPL and for that reason HML and HRL held the tenements on constructive trust for HPPL.
Rhodes plead at Amended Reply [3.4] in response to Bianca and John's plea at Amended Defence [23(l)] - [23(n)] that as part of a fraudulent and dishonest design, Gina, in breach of her fiduciary duties, amongst others, as trustee of the HFMF Trust, caused the ELs, through a chain of transfers, to be transferred to HDIO and subsequently the ELs to be surrendered in connection with the grounds of ML 282SA.
In WPPL v HPPL [No 13],[6] I summarised Rhodes' plea as follows:
[I]f HML and HRL held the beneficial interest in the tenements, those tenements were validly transferred to HPPL, and all claims to the tenements validly relinquished by HRL and HFMF either because of the breach of fiduciary duty by Lang or as a result of bona fide transactions for value as part of the debt reconstruction transactions in which HPPL provided funds to, and forgave debts of, HRL and/or HFMF in exchange for the tenements [91].
[6] Wright Prospecting Pty Ltd v Hancock Prospecting Pty Ltd [No 13] [2021] WASC 214.
I found that the disputes between Rhodes and Bianca and John arising from that part of Rhodes' amended reply concern subject matters that are the subject of the relevant arbitration agreement. That is the matter which is stayed by the order that the proceedings be stayed to the extent that they concern the matters in Amended Reply [3.4]. The matter stayed is whether or not the tenements were validly transferred to HPPL and all claims to the tenements validly relinquished by HRL and HFMF either because of the breach of fiduciary duty by Lang or as a result of bona fide transactions for value as part of the debt reconstruction transactions in which HPPL provided funds to, and forgave debts of, HRL and/or HFMF in exchange for the tenements.
In substance I accept the submissions of the HPPL parties in relation to the scope or effect of the July stay order. I do not accept the contention that the controversy between Rhodes and Bianca and John arising as a consequence of Amended Reply [3.3.2] and [3.4] does not require a determination by the court whether the acquisition of the tenements by HML and HRL was in breach of Lang's fiduciary and other duties owed to HPPL and had the consequence that HML and HRL held the tenements on constructive trust for HPPL or whether the tenements were validly transferred to HPPL and all claims to the tenements validly relinquished by HRL and HFMF either because of the breach of fiduciary duty by Lang or as a result of bona fide transactions for value as part of the debt reconstruction transactions.
The HPPL parties submit that if I accept that the effect of the July stay order is as they contend, which in substance I do, the July stay order has effectively excised from the Rhodes proceeding the issues that the HPPL parties seek to be determined separately and after the hearing of the other issues in the proceeding, and hence I would not order the separate trial of issues sought by the HPPL parties in the Rhodes proceeding.
Accordingly, the HPPL parties' application for the separate trial of issues in the Rhodes proceeding should be dismissed.
In any event, I would not have ordered a separate trial of the issues sought by the HPPL parties.

Legal principles concerning separate trial of issues

Order 32 r 4 of the Rules of the Supreme Court 1971 (WA) (RSC) provides that the court may order that any question or issue whether of law or fact or partly of law and partly of fact and whether raised by the pleadings or by agreement of the parties or otherwise may be tried separately from any other question or issue.
The starting point is that ordinarily the trial of an action should include all issues arising in the action. The determination of an application for separate trials requires a careful balancing of the prospective advantages and disadvantages involved in separating the issues, bearing in mind the uncertainties inherent in litigation, and that, once embarked upon, it is a course from which it may be difficult and even impossible to retreat. It should only be embarked upon where its utility, economy and fairness to the parties is clearly made out.[7]
[7] Landsdale Pty Ltd v Moore [2009] WASCA 176; Tepko Pty Ltd v Water Board [2001] HCA 19; (2001) 206 CLR 1 [52], [168] ‑ [170].
The separate trial of issues is a procedure which frequently adds to the difficulties of courts of appeal and tends to increase the cost and time of legal proceedings and is not an appropriate procedure when the findings of fact could only be made after trial.[8]
[8] Tepko Pty Ltd v Water Board [2001] HCA 19; (2001) 206 CLR 1; Landsdale Pty Ltd v Moore [2009] WASCA 176 [19] ‑ [20].
In deciding whether to order the trial of a preliminary issue the court must have regard to RSC O 1 r 4A and 4B and follow the course that best ensures the attainment of the object set out in those rules.[9]
[9] Frigger v Mervyn Jonathon Kitay in his capacity as liquidator of Computer Accounting & Tax Pty Ltd (in liq) [2013] WASC 229 [16] (Allanson J).

Separate trial not appropriate

The separate trial of the issues proposed by the HPPL parties will not resolve WPPL's claims, or indeed Rhodes' claims. It is sufficient to refer to the WPPL proceedings.
WPPL submits that the separate trial of issues proposed by the HPPL parties would preclude the question of WPPL's entitlement to the relief claimed being determined at the first trial. WPPL's entitlement to relief requires consideration of all defences relied upon against WPPL, including all of the defences advanced by Bianca and John.
WPPL submits that the HPPL parties are wrong in their assertion that WPPL's case depends on establishing that the Hope Downs ELs and East Angelas ELs were acquired by HML and HRL on trust for HPPL or the partnership and that such a finding would make the separate issues raised by Bianca and John irrelevant and unnecessary to determine.
At [111] of its sixth further amended substituted statement of claim (6FASSOC), WPPL claims a breach of fiduciary duty in relation to the East Angelas ELs if and to the extent they were not acquired as partnership property or held on trust for the partnership or for WPPL. WPPL also advances claims of breach of fiduciary duty at 6FASSOC [109]. The relief claimed in respect of the East Angelas tenements at [146] includes a declaration that HDIO holds its interest on trust for the partnership or alternatively as to 50% for WPPL.
At 6FASSOC [53] - [53B] WPPL pleads that the East Angelas ELs are an asset of the Hancock and Wright partnership and/or held on trust for the partnership. Paragraph [53AA] pleads that the East Angelas ELs were acquired on account of and for the purposes of and held on trust for the partnership. Paragraph [53A] pleads alternatively that HML held the ELs on trust for HPPL. Paragraph [53B] pleads that HPPL held its interest in the ELs as an asset or interest of the partnership or alternatively on trust for the partnership. Paragraph [53C] then pleads an alternative case. The alternative case is that if HML did not hold the ELs on trust for HPPL or on trust for the partnership, then it held them on trust for itself and for WPPL in equal shares.
Determination of the question of proprietary interest in the tenements when first granted will not resolve WPPL's claims.
The separate trial of issues proposed by the HPPL parties will not contribute to the saving of time and cost by substantially narrowing the issues for trial. It will not dispose of the action.
The separate trial of issues will give rise to significant contested factual issues.
There is a significant chance, indeed likelihood, that the determination of the separate issues would be appealed and further prolong the resolution of litigation which has now been on foot for more than 10 years.
The utility, economy and fairness to the parties of the separate trial of the proposed issues is not made out.

I certify that the preceding paragraphs comprise the reasons for decision of the Supreme Court of Western Australia.
CR
Associate to the Honourable Justice Le Miere
8 SEPTEMBER 2021