Wright Prospecting Pty Ltd v Hancock Prospecting Pty Ltd [No 9]

[2018] WASC 122

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION:   WRIGHT PROSPECTING PTY LTD -v- HANCOCK PROSPECTING PTY LTD [No 9] [2018] WASC 122

CORAM:   LE MIERE J

HEARD:   27 MARCH 2018

DELIVERED          :   20 APRIL 2018

FILE NO/S:   CIV 3041 of 2010

(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

HAMERSLEY WA PTY LTD

Third Party

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 Defendants 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 AND DOROTHEA MARGARET CAMPBELL by chain of Executors, the Executors 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

HAMERSLEY WA PTY LTD

Third Party

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 THE ESTATE OF DONOVAN FRANCES DUNCAN RHODES

Eighteenth Defendants by Counterclaim

Catchwords:

Procedure - Interlocutory application - Application for referral to arbitration and stay of proceedings - Application to not determine findings of fact going to voidability or voidness of deed at stay application hearing

Procedure - Application for interlocutory orders restraining parties from relying on deed that is the subject of the dispute during the proceedings

Legislation:

Commercial Arbitration Act 2010 (NSW), s 8(1)
Commercial Arbitration Act 2012 (WA), s 8(1)

Result:

No order that findings of fact not be made at stay application hearing
Application for interlocutory relief will not be heard at stay application hearing

Category:    B

Representation:

CIV 3041 of 2010

Original Action
(Consolidated with CIV 2617 of 2012 by Orders dated 9 September 2014)

Original Action

Counsel:

Plaintiff	:	Mr T Mehigan
First Defendant	:	Mr C Colquhoun SC & Mr J Hutton
Second Defendant	:	Mr C Colquhoun SC & Mr J Hutton
Third Defendant	:	Mr C Withers & Mr C Tam
Fourth Defendant	:	Mr C Withers & Mr C Tam
Fifth Defendant	:	No appearance
Sixth Defendant	:	Ms V Magee
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 C Withers & Mr C Tam
Second Plaintiff by Counterclaim	:	Mr C Withers & Mr C Tam
First Defendant by Counterclaim	:	Mr C Bova
Second Defendant by Counterclaim	:	Mr C Colquhoun SC & Mr J Hutton
Third Defendant by Counterclaim	:	Mr C Colquhoun SC & Mr J Hutton
Fourth Defendant by Counterclaim	:	No appearance
Fifth Defendant by Counterclaim	:	Mr C Colquhoun SC & Mr J Hutton
Sixth Defendant by Counterclaim	:	Mr C Colquhoun SC & Mr J Hutton
Seventh Defendant by Counterclaim	:	Mr C Colquhoun SC & Mr J Hutton
Eighth Defendant by Counterclaim	:	Mr C Bova
Ninth Defendant by Counterclaim	:	No appearance
Tenth Defendant by Counterclaim	:	Ms V Magee
Eleventh Defendant by Counterclaim	:	No appearance
Twelfth Defendant by Counterclaim	:	Mr C Colquhoun SC & Mr J Hutton
Thirteenth Defendant by Counterclaim	:	Mr C Colquhoun SC & Mr J Hutton
Fourteenth Defendant by Counterclaim	:	Mr C Colquhoun SC & Mr J Hutton
Fifteenth Defendant by Counterclaim	:	Mr C Colquhoun SC & Mr J Hutton
Sixteenth Defendant by Counterclaim	:	Mr T Mehigan
Seventeenth Defendant by Counterclaim	:	Mr D Ryan SC
Eighteenth Defendants by Counterclaim	:	Mr D Ryan SC

Solicitors:

First Plaintiff by Counterclaim	:	Yeldham Price O'Brien Lusk
Second Plaintiff by Counterclaim	:	Yeldham Price O'Brien Lusk
First Defendant by Counterclaim	:	Speed & Stracey Lawyers
Second Defendant by Counterclaim	:	Corrs Chambers Westgarth
Third Defendant by Counterclaim	:	Corrs Chambers Westgarth
Fourth Defendant by Counterclaim	:	No appearance
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	:	Speed & Stracey Lawyers
Ninth Defendant by Counterclaim	:	No appearance
Tenth Defendant by Counterclaim	:	Dentons
Eleventh Defendant by Counterclaim	:	No appearance
Twelfth Defendant by Counterclaim	:	Corrs Chambers Westgarth
Thirteenth Defendant by Counterclaim	:	Corrs Chambers Westgarth
Fourteenth Defendant by Counterclaim	:	Corrs Chambers Westgarth
Fifteenth Defendant by Counterclaim	:	Corrs Chambers Westgarth
Sixteenth Defendant by Counterclaim	:	Clayton Utz
Seventeenth Defendant by Counterclaim	:	GE Taylor & Associates
Eighteenth Defendants by Counterclaim	:	GE Taylor & Associates

CIV 2617 of 2012

Counsel:

Plaintiff	:	Mr T Mehigan
First Defendant	:	Mr C Colquhoun SC & Mr J Hutton
Second Defendant	:	Mr C Colquhoun SC & Mr J Hutton
Third Defendant	:	Mr C Withers & Mr C Tam
Fourth Defendant	:	Mr C Withers & Mr C Tam
Fifth Defendant	:	No appearance
Sixth Defendant	:	Ms V Magee
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

Original Action

Counsel:

First Plaintiff	:	Mr D Ryan SC
Second Plaintiffs	:	Mr D Ryan SC
First Defendant	:	Mr C Colquhoun SC & Mr J Hutton
Second Defendant	:	Mr T Mehigan
Third Defendant	:	Mr C Colquhoun SC & Mr J Hutton
Fourth Defendant	:	Mr C Withers & Mr C Tam
Fifth Defendant	:	Mr C Withers & Mr C Tam
Sixth Defendant	:	No appearance
Seventh Defendant	:	Ms V Magee
Third Party	:	Ms C Wren

Solicitors:

First Plaintiff	:	GE Taylor & Associates
Second Plaintiffs	:	GE Taylor & Associates
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

Counterclaim

Counsel:

First Plaintiff by Counterclaim	:	Mr C Withers & Mr C Tam
Second Plaintiff by Counterclaim	:	Mr C Withers & Mr C Tam
First Defendant by Counterclaim	:	Mr C Bova
Second Defendant by Counterclaim	:	Mr C Colquhoun SC & Mr J Hutton
Third Defendant by Counterclaim	:	Mr C Colquhoun SC & Mr J Hutton
Fourth Defendant by Counterclaim	:	No appearance
Fifth Defendant by Counterclaim	:	Mr C Colquhoun SC & Mr J Hutton
Sixth Defendant by Counterclaim	:	Mr C Colquhoun SC & Mr J Hutton
Seventh Defendant by Counterclaim	:	Mr C Colquhoun SC & Mr J Hutton
Eighth Defendant by Counterclaim	:	Mr C Bova
Ninth Defendant by Counterclaim	:	No appearance
Tenth Defendant by Counterclaim	:	Ms V Magee
Eleventh Defendant by Counterclaim	:	No appearance
Twelfth Defendant by Counterclaim	:	Mr C Colquhoun SC & Mr J Hutton
Thirteenth Defendant by Counterclaim	:	Mr C Colquhoun SC & Mr J Hutton
Fourteenth Defendant by Counterclaim	:	No appearance
Fifteenth Defendant by Counterclaim	:	Mr C Colquhoun SC & Mr J Hutton
Sixteenth Defendant by Counterclaim	:	Mr T Mehigan
Seventeenth Defendant by Counterclaim	:	Mr D Ryan SC
Eighteenth Defendants by Counterclaim	:	Mr D Ryan SC

Solicitors:

First Plaintiff by Counterclaim	:	Yeldham Price O'Brien Lusk
Second Plaintiff by Counterclaim	:	Yeldham Price O'Brien Lusk
First Defendant by Counterclaim	:	Speed & Stracey Lawyers
Second Defendant by Counterclaim	:	Corrs Chambers Westgarth
Third Defendant by Counterclaim	:	Corrs Chambers Westgarth
Fourth Defendant by Counterclaim	:	No appearance
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	:	Speed & Stracey Lawyers
Ninth Defendant by Counterclaim	:	No appearance
Tenth Defendant by Counterclaim	:	Dentons
Eleventh Defendant by Counterclaim	:	No appearance
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	:	GE Taylor & Associates
Eighteenth Defendants by Counterclaim	:	GE Taylor & Associates

Case(s) referred to in decision(s):

Farah Constructions Pty Ltd v Say‑Dee Pty Ltd (2007) 230 CLR 89

Hancock Prospecting Pty Ltd v Rinehart (2017) 350 ALR 658

Rinehart v Rinehart (No 3) [2016] FCA 539

Wright Prospecting Pty Ltd v Hancock Prospecting Pty Ltd [No 7] [2016] WASC 305

LE MIERE J:

Summary

1. These proceedings involve a number of parties, claims and counterclaims. Parties, including Hancock Prospecting Pty Ltd (HPPL), Hope Downs Iron Ore Pty Ltd (HDIO) and Georgina Rinehart (Mrs Rinehart) have applied for orders that a number of parties be referred to arbitration pursuant to s 8(1) of the Commercial Arbitration Act 2012 (WA) and the proceedings be stayed pending the outcome of any arbitration. Those applications are opposed by parties including Bianca Rinehart (Bianca) and John Hancock (John). The applications for referral to arbitration and a stay of the proceedings are listed for a hearing commencing on 30 May 2018. I have made directions for the hearing of the applications, including an order that Bianca and John file and serve a statement of the issues of fact and law and the findings they will contend for on the hearing of the referral to arbitration and stay applications. Mrs Rinehart and a company associated with her (150 Investments Pty Ltd) have applied for an order that issues of undue influence, duress, fraudulent concealment or any other matter which is said to go to the voidness or voidability of any of the agreements that are identified in the counterclaim to the original action not be determined at the hearing of the referral to arbitration and stay applications and that the court not make the findings of fact sought by Bianca and John in their statement of issues.

2. Bianca and John have filed a chamber summons seeking interlocutory orders that HPPL, HDIO, Mrs Rinehart and others be restrained from relying upon, invoking or otherwise taking steps in furtherance of the arbitration agreement in the Hope Downs deed in these proceedings and Mrs Rinehart be restrained from causing any party to the Hope Downs deed from relying upon, invoking or otherwise taking steps in furtherance of the arbitration agreement in the Hope Downs deed in these proceedings.  Mrs Rinehart, HPPL and HDIO have sought orders that those interlocutory claims by Bianca and John be referred to arbitration and their interlocutory application to this court be stayed pending the outcome of any arbitration.

3. For the reasons which follow I will not make an order that the issues of undue influence, duress, fraudulent concealment or any other matter which is said to go to the voidness or voidability of any of the agreements identified in the counterclaim will not be determined at the hearing of the referral to arbitration and stay applications.  It is not necessary or appropriate to do so.  At the hearing of those applications I will follow the reasoning of the Full Court of the Federal Court in Hancock Prospecting Pty Ltd v Rinehart (2017) 350 ALR 658 (Hancock Prospecting v Rinehart) and accordingly will not determine issues of undue influence, duress, fraudulent concealment or any other matter which is said to go to the voidness or voidability of any of the arbitration agreements in question and will not make any findings of fact in relation to those issues.  I will not hear the applications by Bianca and John for interlocutory relief at the hearing commencing on 30 May.  Those applications will be heard after I have determined the referral to arbitration and stay applications brought by HPPL, HDIO, Mrs Rinehart and others.

These actions

1. Wright Prospecting Pty Ltd (WPPL) commenced proceedings in this court ‑ CIV 3041 of 2010 and CIV 2617 of 2012 ‑ which were subsequently consolidated.  I will refer to these actions as the consolidated proceedings.  The defendants when the actions were commenced were HPPL and HDIO, a subsidiary of HPPL.  Hamersley (WA) Pty Ltd is a third party.  The consolidated proceedings concern ownership rights and royalties in relation to mining interests known as the Hope Downs and East Angelas.

2. DFD Rhodes Pty Ltd and Mathew Keady and Dorothea Campbell, the executors of the estate of Donovan Frances Duncan Rhodes (collectively the Rhodes parties) are the plaintiffs in CIV 2737 of 2013 (the Rhodes proceeding).  The defendants when the action was commenced were HPPL, WPPL and HDIO.  Hamersley is a third party.  The Rhodes parties claim that HPPL and HDIO and WPPL hold any interest they have in the East Angelas and Hope Downs on trust for the Rhodes parties to the extent of the Rhodes parties entitlement to royalties.  They also claim payment of royalties from the East Angelas and Hope Downs projects.

Federal Court proceeding

1. In October 2014 Bianca and her brother John commenced proceedings in the Federal Court of Australia (the Federal Court proceeding) against 15 respondents, including their mother Mrs Rinehart in her personal capacity and as the trustee of two trusts, HPPL, companies in the HPPL group, 150 Investments (a company controlled by Mrs Rinehart) and Hope Welker (Hope) and Ginia Rinehart (Ginia) who are Mrs Rinehart's other children.  Bianca and John allege that, following the death of her father, Lang Hancock, Mrs Rinehart controlled the entities in the Hancock Group, including the Hancock Family Memorial Foundation Ltd (HFMF).  They further allege that, having assumed the position of control, Mrs Rinehart breached her duties as a fiduciary and a trustee by using her position to remove all the valuable mining assets from HFMF to a company in which she held shares.  Mrs Rinehart had no financial interest in HFMF.  They also allege that Mrs Rinehart circumvented an agreement reached between herself and Lang Hancock in 1988 to effectively increase her shareholding in one of the Hancock Group companies and diminish that of her children (the Children).  They also make allegations in relation to certain deeds made by Mrs Rinehart and other parties to the proceeding, including the Hope Downs deed.  The respondents have not filed a defence but the case has so far proceeded on the assumption that the respondents deny every material allegation of wrongdoing.

2. Mrs Rinehart and the HPPL respondents contend that the applicants are disentitled from seeking relief because they are contractually bound by arbitration agreements in the Hope Downs deed and other deeds to resolve the disputes that are the subject of the Federal Court proceeding by arbitration. Bianca and John allege that the execution of those deeds, which contain acknowledgements, releases, covenants not to sue and arbitration agreements, was procured by misconduct of one sort or another by Mrs Rinehart and HPPL. The causes of action pleaded are false and misleading conduct, fraudulent concealment, misleading and deceptive conduct in contravention of s 52 of the Trade Practices Act 1974 (Cth) (the TPA) and sch 2 to the Competition and Consumer Act 2010 (Cth) (the ACL), material non‑disclosure, unconscionable conduct, undue influence, duress, breach of trust and fraud on a power. Bianca and John plead that they are entitled to rescind, and by their pleading, do rescind, the various deeds to which they are a party. They also seek declarations that the deeds and the arbitration agreements are void.

HPPL applies for stay of Federal Court proceeding and referral to arbitration

1. HPPL applied under s 8(1) of the Commercial Arbitration Act 2010 (NSW) (the CA Act NSW) and s 8(1) of the Commercial Arbitration Act 2012 (WA) (the CA Act WA) seeking orders, among others, that the parties to the proceeding be referred to arbitration in respect of the matters the subject of the various arbitration agreements contained in the deeds, and staying the proceeding. The CA Act NSW and the CA Act WA were each enacted as part of national uniform legislation. Section 8(1) of each Act is:

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

2. On 15 April 2015 the applications came before Gleeson J to address the issue of evidence to be relied upon at the hearing of those applications which was scheduled to commence on 24 April.  Gleeson J made orders giving the applicants leave to rely on certain affidavit evidence and directing the parties to agree on joint issues for determination at the hearing commencing on 24 April.  The order includes the following:

   THE COURT NOTES THAT:

   1.Issues of undue influence, duress, fraudulent concealment or any other matter which is said to go to the voidness or voidability of any of the agreements that are identified in the Statement of Claim will not be determined at the hearing commencing 24 April 2015.

3. The hearing of the application commenced before Gleeson J on 24 April 2015 and proceeded over eight days.  On 26 May 2016 Gleeson J delivered judgment.  Her Honour ordered that there be a trial of the question whether any of the specified agreements is null and void, inoperative or incapable of being performed within the meaning of s 8(1) of the CA Act NSW or the CA Act WA:  Rinehart v Rinehart (No 3) [2016] FCA 539 (Rinehart v Rinehart).  The parties refer to the trial of that question as the proviso hearing.

4. On 9 June 2016 Mrs Rinehart, HPPL, HDIO and others sought leave to appeal from the decision of Gleeson J.  Bianca and John subsequently served a cross‑appeal.  The Full Court of the Federal Court subsequently granted leave to appeal on both applications.

Children joined

1. On 23 September 2016 in each of the consolidated proceedings and the Rhodes proceeding I ordered that the Children be joined as parties:  Wright Prospecting Pty Ltd v Hancock Prospecting Pty Ltd [No 7] [2016] WASC 305.

Defendants apply for stay and referral to arbitration

1. On 1 November 2016 HPPL and HDIO filed a chamber summons seeking orders, amongst others, that HPPL, HDIO, Mrs Rinehart, Bianca, John and Ginia and other parties be referred to arbitration pursuant to s 8(1) of the CA Act WA and the proceedings be stayed pending the outcome of any arbitration.

2. On 15 December 2016 I ordered that Bianca and John file and serve their defences by 3 March 2017 and the matter be adjourned for directions to 15 March 2017.  On 14 March, by consent, the directions hearing listed for 15 March was adjourned to 13 April and the time for Bianca and John to file their defences was extended to 5 April.  On 12 April and 19 April Bianca and John filed a defence and counterclaim in the consolidated proceedings and the Rhodes proceeding respectively.

3. The chamber summons filed by HPPL and HDIO was amended on 19 April 2017.  The chamber summons seeks the following relief:

   1.The First to Sixth Defendants to the Original Claim and the Plaintiffs and the First to Fifteenth Defendants to the Counterclaim, be referred to arbitration pursuant to s 8(1) of the Commercial Arbitration Act 2012 (WA).

   2.Alternatively to Order 1, pursuant to the inherent power of the Court, s 25(9) of the Supreme Court Act 1935 (WA) and/or s 17J of the Commercial Arbitration Act 2012 (WA), the Third and Fourth Defendants to the Original Action/Plaintiffs to the Counterclaim be restrained from making any claim in this proceeding in respect of the Hope Downs Tenements, Roy Hill Tenements, Nicholas Downs Tenements and Mulga Downs Tenement (as those terms are defined in the Counterclaim) until further order of the Court.

   3.The proceeding be stayed pending the outcome of any arbitration the subject of any order for referral pursuant to Order 1, or alternatively, until further order of the Court.

4. Also on 19 April 2017 Mrs Rinehart and 150 Investments and a number of defendants to the counterclaim filed a chamber summons to the same effect.  I will sometimes refer to the applications brought by those chamber summonses collectively as the referral to arbitration and stay applications.

5. On 20 April 2017 I directed that pending the determination of the appeal to the Full Court of the Federal Court, the proceedings be adjourned to 2 August on which date I further adjourned the proceedings to 13 September.  On 11 September the proceeding was adjourned by consent to 25 October 2017.

Full Federal Court appeal decision

1. On 27 October 2017 the Full Court of the Federal Court delivered judgment on the appeal from the orders of Gleeson J:  Hancock Prospecting Pty Ltd v Rinehart.  The court allowed the appeal and dismissed the cross‑appeal.  The court set aside the orders made by Gleeson J and in lieu thereof ordered that the Federal Court proceeding be stayed under s 8(1) of the CA Act pending any arbitral reference between the parties or until further order, save and except for those claims made against those entities that are not parties to the arbitration agreement and the various deeds.  The court further ordered that the claims made by the applicants against the parties that are not parties to the arbitration agreement also be stayed.

Directions for hearing of stay and referral to arbitration applications

1. On 12 December 2017 I made orders listing the stay and referral to arbitration applications for a special appointment on 23 February 2018 for the purpose of determining whether they should be programmed for hearing.

2. On 19 December Bianca and John applied for special leave to appeal the whole of the orders of the Full Federal Court to the High Court.

3. On 23 February 2018 I made directions that the referral to arbitration and stay applications be listed for a special appointment for two days commencing on 30 May 2018.  I made directions programming the hearing of the applications including an order that Bianca and John file and serve by 8 March a statement of the issues of fact and law and the findings they will contend for on the hearing of the applications.

4. On 8 March 2018 the solicitors for Bianca and John sent a letter (8 March letter) to the other parties setting out their clients' position as required by the direction of 23 February.  Annexed to the letter is a schedule (Schedule A) described as 'Outline of findings of fact sought by Bianca and John at the hearing commencing 30 May 2018'.  Also annexed to the letter was a draft chamber summons by which Bianca and John sought interlocutory orders that the HPPL parties, Mrs Rinehart and 150 Investments be restrained from relying upon, invoking or otherwise taking steps in furtherance of cl 7(b) and cl 20 of the Hope Downs deed until further order and that Mrs Rinehart be restrained from taking any steps to cause, encourage or assist any party to the Hope Downs deed from relying upon, invoking or otherwise taking steps in furtherance of cl 7(b) and cl 20 of the Hope Downs deed until further order.  Clause 7(b) of the Hope Downs deed provides that each of the parties to the deed undertakes not to challenge the right of any member of the Hancock Group (that is HPPL and any related body corporate) to any of the Hancock Group interests (which includes the Hancock Group's interests in the Hope Downs tenements and the Hope Downs joint venture) at any time.  Clause 20 includes an arbitration agreement.  It provides that the dispute shall be resolved by confidential arbitration by an arbitrator who shall resolve the matter pursuant to the CA Act WA.

5. At a directions hearing on 9 March 2018 senior counsel for HPPL, Mr Hutley SC, referred to Bianca and John's draft chamber summons and submitted that if it proceeded it must be stayed and sent to arbitration because it is a matter arising under the Hope Downs deed as explained by the Full Federal Court in Hancock Prospecting v Rinehart.  Mr Hutley submitted that seeking to have this court make the findings set out in Schedule A was contrary to the approach of the Full Federal Court and, further, if this court embarked upon a hearing to determine the facts asserted in Schedule A at the hearing to commence on 30 May, the hearing could not be concluded in two days and may potentially take months.

6. Counsel for Bianca and John, Mr Withers, referred to the facts asserted in Schedule A and submitted that those matters stand for this basic proposition:

   When [Mrs Rinehart] prevailed upon Bianca to sign that deed without disclosing that she had obtained advice that she would breach her duty as trustee if she entered into the deed, she acted in breach of her fiduciary duties.  She was a fiduciary at the time.  She was a trustee of one trust ‑ that's common ground ‑ and there's a dispute about whether she was a trustee of another trust.  But we only need her to be the trustee of the Hope Margaret Hancock Trust, which is agreed.

   So we say that she procured the execution of the deed in those circumstances.  And now what Mrs Rinehart wants to do is to rely upon the deed to say two things:  first of all, in reliance on clause 7(b), that my clients can't actually run any of the defences that they want to run in response to the Rhodes case and the WPPL proceedings, and, secondly, they have to be referred to arbitration.

   Now, our sure point is we say, well, that's unconscionable conduct, and the court has a power to restrain it.  But more to the point, there is an application for a stay … by Mrs Rinehart and the Hancock Prospecting parties.  My clients are entitled to put on evidence along the lines of what I've just described …  to oppose that stay application and make the submission that your Honour ought not to stay it because the stay application itself involves the unconscionable exercise of legal rights …

7. Mr Withers said that the parameters of the dispute are quite narrow, that the evidence to be adduced by Bianca and John would consist of two or three folders of documents and no oral evidence.  Mr Withers said that the evidence to be adduced by his clients, the findings of fact they seek and the arguments they propose to put will not cause the hearing to blow out.

8. Counsel for Mrs Rinehart and 150 Investments, Mr Bova, referred to the judgment of the Full Federal Court in Hancock Prospecting v Rinehart where the court said:

   Secondly, [the primary judge concluded that] the existence of any relevant arbitration agreement was satisfied by finding an apparently valid agreement; it was not appropriate to make findings on the stay application whether the deeds were entered into in the circumstances alleged by [John] and [Bianca]. We agree with that approach [108].

9. Mr Bova also referred to the note by Gleeson J on 15 April 2015 that issues of undue influence, duress, fraudulent concealment or any other matter which is said to go to voidness or voidability of any of the agreements would not be determined at the hearing commencing on 24 April 2015.  Mr Bova said that on the hearing of the referral to arbitration and stay applications I should take the same approach as Gleeson J and the Full Federal Court and whether or not I was to take that approach would have a fundamental bearing on the scope of the evidence that Mr Bova's clients would put on.  Mr Bova submitted that his clients could not be expected to put on their evidence by 6 April in circumstances where they did not know the basis upon which the application was to proceed and if the application was going to proceed without a direction of the sort made by Gleeson J there would be a need for interlocutory steps such as discovery on the motion.

10. I directed that after receiving the evidence put on by Bianca and John, if any party sought directions of the sort foreshadowed by Mr Bova then they should formulate those directions and I would hear any such application on 27 March.

The chambers summonses now being heard

1. On 26 March Mrs Rinehart and 150 Investments filed a chamber summons in the consolidated proceedings and the Rhodes proceeding seeking orders that:

   1.Issues of undue influence, duress, fraudulent concealment or any other matter which is said to go to the voidness or voidability of any of the agreements that are identified in the Counterclaim filed by the Fourth and Fifth Defendants to the Original Action (being the First and Second Plaintiffs to the Counterclaim) on 19 April 2017 will not be determined at the hearing of the applications listed for special appointment commencing 30 May 2018 and that the Court will not be making the findings of fact sought in 'Schedule A' to the Yeldham Price O'Brien Lusk letter dated 8 March 2018.

2. On 26 March John and Bianca filed in the consolidated proceedings and the Rhodes proceeding a chamber summons seeking orders that:

   1.Pursuant to the court's inherent power, in equity or ss 232 or 234 of Schedule 2 to the Competition and Consumer Act 2010 (Cth), the HPPL Parties and the GHR Parties be restrained, from relying upon, invoking or otherwise taking steps in furtherance of clause 7(b) and clause 20 of the Hope Downs Deed in these proceedings, until further or other order of this Court.

   2.Georgina Hope Rinehart be restrained from taking any steps to cause, encourage or assist, either directly or indirectly, any party to the Hope Downs Deed from relying upon, invoking or otherwise taking steps in furtherance of clause 7(b) and clause 20 of the Hope Downs Deed in these proceedings, until further or other order of this Court.

   3.The HPPL Parties and GHR Parties pay the remaining parties' costs of the Chambers Summons referred above.

3. On 26 March Mrs Rinehart and 150 Investments filed in the consolidated proceedings a chamber summons seeking orders that:

   1.An order pursuant to section 8(1) of the Commercial Arbitration Act 2012 (WA) that the Third and Fourth Defendants to the Original Action (First and Second Plaintiffs to the Counterclaim), the First and Eight Defendants to the Counterclaim, the First Defendant to the Original Action (The Second Defendant to the Counterclaim), the Third, Fourth, Fifth Sixth and Seventh Defendants to the Counterclaim and the Fifth and Sixth Defendants to the Original Action (Ninth and Tenth Defendants to the Counterclaim) be referred to arbitration in respect of the claims made by the Third and Fourth Defendants' (First and Second Plaintiff to the Counterclaim's) in the Chamber Summons filed 26 March 2018.

   2.The Third and Fourth Defendants' Chamber Summons filed 26 March 2018 be stayed pending the outcome of any arbitration the subject of any order for referral pursuant to Order 1, or alternatively, until further order of the Court.

   3.Alternatively to orders 1 and 2, an order pursuant to the inherent power of the Court, s 25(9) of the Supreme Court Act 1935 (WA) and/or s 17J of the Commercial Arbitration Act 2012 (WA), that the Third and fourth Defendants to the Original Action (First and Second Plaintiffs to the Counterclaim) be restrained from bringing or maintaining the Chamber Summons filed 26 March 2018.

   4.Alternatively to orders 1, 2 and 3, an order pursuant to the inherent power of the Court and/or s 25(9) of the Supreme Court Act 1935 (WA), that the Chamber Summons filed 26 March 2018 be summarily dismissed or struck out on the grounds that:

   (a)It discloses not reasonable cause of action;

   (b)it is scandalous, frivolous or vexatious;

   (c)it may prejudice, embarrass or delay the fair trial of the action; or

   (d)it is an abuse of the process of the Court.

4. On the same day Mrs Rinehart and 150 Investments filed a chamber summons in the Rhodes Proceeding to the same effect.

5. On 26 March HPPL and HDIO filed in the consolidated proceedings and the Rhodes proceeding a chamber summons seeking orders to the same effect.

Hearing on 27 March 2018

1. Those chamber summonses came before me on 27 March 2018.  Counsel for Mrs Rinehart and 150 Investments, Mr Bova, sought to read an affidavit sworn on 26 March 2018 by Peter Speed, the solicitor on record for Mrs Rinehart and 150 Investments.  Counsel for Bianca and John, Mr Withers, objected to the affidavit being read on the grounds of late service and that it contained argumentative and irrelevant material.  I allowed Mr Bova to read and rely upon the affidavit on the basis that to the extent that it contained irrelevant material I would not have regard to it and to the extent that it contained argumentative material I would treat the material in the same way that I would treat it if it had been advanced by counsel from the bar table.  In so far as Mr Withers was prejudiced by late service of the affidavit I gave Mr Withers an opportunity to put on any answering evidence if he wished to do so.  Mr Withers did not apply for leave to adduce any evidence in response.

Approach to determining whether to refer parties to arbitration

1. In Hancock Prospecting v Rinehart the Full Federal Court considered how a court should approach the task of deciding whether an action before it 'is brought in a matter which is the subject of an arbitration agreement' for the purposes of CA Act s 8(1).  At [141] the court said that broadly, there have been said to be two approaches.  The first approach is the prima facie approach.  Under this approach, the court does not reach a final view of the balance of probabilities in respect of the matters in s 8(1), including the scope of the arbitration agreement.  If there appears to be a valid arbitration agreement which prima facie covers the matters in dispute, the matter should be referred to the arbitrator to deal with questions of jurisdiction, including the scope of the arbitration agreement.  The second approach is the merits approach.  Under this approach a full merits hearing will be undertaken as to the existence and scope of the arbitration agreement and that the disputes fall within it.  The court said that 'any rigid taxonomy of approach is unhelpful, as are the labels "prima facie" and "merits" approach'.  The court continued:

   How a judge deals with an application under s 8 of the CA Act will depend significantly upon the issues and the context.  Broadly speaking, however, and with some qualification, aspects of the prima facie approach have much to commend them as an approach that gives support to the jurisdiction of the arbitrator and his or her competence, as recognised by the common law and by s 16 of the CA Act, whilst preserving the role of the Court as the ultimate arbiter on questions of jurisdiction conferred by ss 16(9) and (10), 34(2)(a)(iii) and 36(1)(a)(iii) of the CA Act. Broadly, the approach is consonant with the structure of the CA Act and the Model Law. However, it is difficult to see how the Court can exercise its power under s 8 without forming a view as to the meaning of the arbitration agreement. Further, it may be that if there is a question of law otherwise affecting the answer to the question of jurisdiction, especially one that is confined, which might be dispositive, it might be less than useful for the Court not to deal with it [145].

2. The court said that to understand whether a body of disputes being the 'matter', assessed and characterised, is the subject of an arbitration agreement, will generally require the court to form a view as to the legal meaning of the arbitration agreement.  However, where it is not possible fully to delineate the metes and bounds of a dispute without fully hearing the dispute, the court should not do so.

1. The court referred to the proviso to s 8(1) of the CA Act.  The court said that the word 'finds' in the proviso should not be read as requiring that the matters in the proviso cannot be part of the reference to the arbitrator.  The court disagreed with the approach of Gleeson J in making an assessment as to whether there was a sustainable argument that the matter falls within the arbitration agreement.  The court said at [149] that it would generally be wrong for the court to examine an argument in a form of summary disposal application, and, if it were thought that an asserted case, in terms otherwise falling within the scope of the agreement, was sufficiently weak not to be 'sustainable', not to refer the matter to arbitration.  That would be to usurp the role of the arbitrator.  The court's role in s 8 is not to act as a court of summary disposal filtering the matters that are suitable for arbitration.

2. At [150] the court agreed with the approach of Gleeson J as to whether there is an apparently valid arbitration agreement against which one undertakes a process of characterisation of the matters in dispute.  The court agreed with the approach of not deciding on a final basis the wide ranging factual matters said to give rise to a right to set aside the deeds in question and the particular issues of the interpretation of releases, covenants and acknowledgements which make up the rights of the parties from the deeds, and precisely how these questions affect the wide‑ranging facts in dispute.  In their cross‑appeal Bianca and John complained that Gleeson J failed, in light of the evidence available, to make an assessment of the sustainability of the utilisation of provisions of the deed as a defence, given the likelihood of the validity claims being successful.  They said that admissible evidence was required to rebut the presumption of undue influence.  Gleeson J, in reference to the evidence concerning the circumstances in which the deeds were made, said that the circumstances favour a trial on the application of the proviso to the arbitration agreements in the Hope Downs deed.  Her Honour made observations about the evidence.  Mrs Rinehart and the HPPL parties complained about those findings.  The court agreed with those complaints.  The court said:

   These conclusions go beyond the limits of the proceedings bound by the orders made as to conduct of the hearing and the proper approach to an application under s 8 of the CA Act [240]. (emphasis added)

   The court said:

   Further, if the proper approach to the construction of the arbitration clause is taken, all these matters raised by the cross‑appellants can be seen as part of the fabric of the overall dispute under the deed [242].

3. The court considered the validity claims and the Hope Downs deed.  The validity claims were in large part directed towards preventing the respondents from relying on releases, bars, covenants not to sue and arbitration clauses contained in the Hope Downs deed and another deed.  In substantive effect, they are an answer to Mrs Rinehart's and HPPL's reliance on the deeds.  Mrs Rinehart and the HPPL parties argued before Gleeson J that the validity claims should be viewed as part of the dispute made up of the releases, bars and covenants not to sue, such that the whole dispute (not merely that part of it constituted by the pleas based on the provision of the deeds) came within the arbitration agreement.  Gleeson J rejected that argument.  Her Honour did not accept that the characterisation of the validity claims formed part of a dispute 'under' the Hope Downs deed.  Her Honour said that the existence of a dispute 'under' the Hope Downs deed depends upon the existence of the deed itself and the deed cannot govern or control the outcome of the dispute about its validity.  The Full Court disagreed for three reasons.  First, a construction of 'under the deed' as limited to governed and controlled by the deed itself is overly narrow and the product of an incorrect interpretation of the phrase 'under the deed'.  Secondly, the validity claims do not amount to separate 'disputes' for the purposes of cl 20.2 or cl 9.  They are part of the one dispute or controversy.  Thirdly, arguably the claims to set the deeds aside are challenges to the rights of Hancock Group members to Hancock Group interests and so can be seen to be themselves in breach of and controlled by the Hope Downs deed.  At least, there is a sustainable argument that they can be so characterised.  Therefore, the court held that all the validity claims fall within cl 20.2 of the Hope Downs deed.

Should the court hear the attack that the arbitration agreement is null and void?

1. The Full Federal Court said that the real issue in the case was whether the court should hear the separate attack [that the arbitration agreement was null and void] or permit the arbitral tribunal to hear it by staying its own proceeding.  The court said that the proper answer to this question will depend on the nature of the attack in all the circumstances.  The court continued:

   Thus, the words of Art 8 and s 8 should be read and given content against the background, first, that the Court is not required to decide the matters in the proviso; secondly, that the competence principle is wide enough to permit the arbitral tribunal to decide any question of jurisdiction, including whether the arbitration agreement came into existence; and, thirdly, that that decision by the arbitral tribunal is not final, the Court having the final say on the question. A further consideration is that s 8 should, conformably with its language, be construed to facilitate, not impede, the process of arbitration: s 1C(1) of the CA Act [378].

2. The court set out the proper approach to this task:

   The submission was put that the words 'null and void' should be construed so as to avoid the vice of a de facto determination of the substantive claims under the guise of a preliminary determination of the validity of the arbitration agreements. We agree wholeheartedly that this result is to be avoided, if it can be. It should be a powerful, indeed, likely overwhelming, consideration in any choice made by the court as to whether to hear a trial of the proviso issue or to leave it to the arbitral tribunal to deal with. But construing the words narrowly is not necessarily directly related to that sensible objective. There may, for instance, be an attack on the arbitration agreement properly distinct that satisfies the separability principle and that is founded on a mixture of fraud and unconscionability which may be seen to make voidable the agreement which has nothing to do with the main dispute. It may be entirely sensible for the court to hear such an attack. If the submission of Mrs Rinehart and the HPPL parties be correct, however, that circumstance would not fall within the proviso ‑ a consequence that would be surprising. It would answer the description of the Court finding that the agreement is void [383].

3. The Full Court referred to evidence led and sought to be led by Bianca and John in respect of their claims of undue influence, duress and other misconduct.  The court said:

   [I]t is simply not relevant to hear detailed evidence in order to engage in fine assessments of the strengths of particular allegations.

   The court rejected applications by Bianca and John to adduce fresh evidence and stated:

   [I]t is not relevant to the exercise of the discretion to hear detailed evidence in order to engage in fine assessments of the strengths of particular allegations [414].

Approach of this court

1. The doctrine of precedent requires that this court should follow the legal reasoning of the Full Federal Court in Hancock Prospecting v Rinehart:  Farah Constructions Pty Ltd v Say‑Dee Pty Ltd (2007) 230 CLR 89 where Gleeson CJ, Gummow, Callinan, Heydon and Crennan JJ said:

   [T]rial judges in Australia should not depart from decisions in intermediate appellate courts in another jurisdiction on the interpretation of … uniform national legislation unless they are convinced that the interpretation is plainly wrong. Since there is a common law of Australia rather than of each Australian jurisdiction, the same principle applies in relation to non‑statutory law [135].

2. I am not satisfied that the Full Federal Court's interpretation of s 8(1) of the CA Act or the approach taken by the Court to determining whether an action is brought in a matter which is the subject of an arbitration agreement is plainly wrong.  I am not satisfied that the approach taken by the Full Federal Court in determining whether it should refer the parties to arbitration to determine whether the arbitration agreement is null and void is plainly wrong.

Order sought by Mrs Rinehart and 150 Investments to restrict findings

1. Bianca and John have put on their evidence.  I must follow the legal reasoning of the Full Federal Court in Hancock Prospecting v Rinehart.  The court will not make findings of fact alleged by John and Bianca to support their claims of undue influence, duress, fraudulent concealment or any other matter which is said to go to the arbitration agreements being null and void.  The court will conduct the hearing commencing on 30 May 2018 on that basis in accordance with the reasoning of the Full Federal Court in Hancock Prospecting v Rinehart.  However, it is not necessary or appropriate to make an order to that effect.

Bianca and John's application for injunction and other orders

1. Bianca and John say that the evidence they will adduce at the hearing commencing on 30 May will show that Mrs Rinehart and the HPPL parties have engaged in unconscionable conduct, that the court has power to restrain it and that the court should exercise its power to restrain those parties from seeking that the parties be referred to arbitration.

2. I will not hear the application of Bianca and John at the hearing commencing on 30 May.  It has been brought too late.  There is no injustice to Bianca and John from not hearing their application at the hearing commencing on 30 May.  The reasoning of the Full Federal Court leads to the conclusion that if the substantive claims made by John and Bianca fall within the arbitration agreements then so will their claims directed towards preventing the respondents from relying on releases, bars, covenants not to sue and arbitration clauses contained in Hope Downs deed and the other deeds.  John and Bianca's application will not be listed for hearing at the hearing commencing on 30 May 2018.

   I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

   RK
   ASSOCIATE TO HIS HONOUR JUSTICE LE MIERE

   20 APRIL 2018