[2015] NSWSC 646
Re a company [1994] 2 BCLC 146
Rinehart v Rinehart (No 3) (2016) 337 ALR 174
[2016] FCA 539
Rinehart v Welker [2012] NSWCA 95
Union Steamship Company of New Zealand Ltd v Ship "Caradale" (1937) 56 CLR 277
Source
Original judgment source is linked above.
Catchwords
[2015] NSWSC 646
Re a company [1994] 2 BCLC 146
Rinehart v Rinehart (No 3) (2016) 337 ALR 174[2016] FCA 539
Rinehart v Welker [2012] NSWCA 95
Union Steamship Company of New Zealand Ltd v Ship "Caradale" (1937) 56 CLR 277
Judgment (12 paragraphs)
[1]
Judgment
HER HONOUR: Referred to me from the duty list for hearing on 23 May 2017 was a dispute as to the order in which various interlocutory applications in these proceedings should be heard. It was not a hearing as to the merits of any of those applications. Rather, it was a contested dispute about the timetabling of the various matters that occupied the time of six barristers and their instructing solicitors, as well as that of the Court. That is perhaps not surprising in light of the history of dispute between the parties.
The substantive dispute between the parties in the present proceeding is the claim by the plaintiff (Bianca Rinehart) as trustee for The Hope Margaret Hancock Trust (the HMH Trust) against her mother (Georgina Rinehart - referred to as Gina) and others for declaratory and other relief in relation to alleged oppressive conduct, breach of directors' duties and breach of contract in relation to matters occurring with respect to, among other things, the payment (or non-payment) of dividends by Hancock Prospecting Pty Ltd (HPPL), the second defendant. (I refer to the family members by their first names without intending any disrespect.)
The proceeding was commenced by Bianca following the receipt by her of judicial advice given by Rein J (see Bianca Hope Rinehart as trustee of The Hope Margaret Hancock Trust [2017] NSWSC 282) to the effect that she would be justified in so doing. Insofar as relief is sought in the present proceeding on behalf of HPPL, in respect of claims by it against the directors of HPPL (those being Gina and the third and fourth defendants), Bianca is seeking leave under s 237 of the Corporations Act 2001 (Cth) to intervene on HPPL's behalf (see statement of claim filed 21 March 2017 and Bianca's notice of motion filed 27 April 2017).
The various interlocutory applications, the timetabling of which is now in issue, are as follows:
1. an application by HPPL, by notice of motion filed on 21 April 2017, seeking referral of the proceedings to arbitration and/or a stay of the proceedings (HPPL's referral/stay motion);
2. Bianca's application, by notice of motion filed on 27 April 2017, for leave to bring a derivative proceeding in the name of HPPL and to inspect its books (Bianca's leave motion);
3. Gina's application, by notice of motion filed on 11 May 2017, also seeking referral of the proceedings to arbitration and/or a stay of the proceeding (Gina's referral/stay motion); and
4. Bianca's application, by notice of motion filed on 12 May 2017, seeking to restrain Gina and the third and fourth defendants from, in effect, controlling or influencing HPPL's conduct of this proceeding (Bianca's conflict motion).
The parties broadly seemed to accept that, of the four motions, it would be appropriate for Bianca's leave motion to be heard after the hearing of the other motions (though Bianca nevertheless presses for the hearing of this motion not to be separated from the others - see [36] below). As a practical matter, it only arises for determination if the claims in the present proceeding continue to be prosecuted in this Court and not referred to arbitration.
The defendants' respective referral/stay motions seek the referral of the whole of the proceeding to arbitration, or in the alternative the referral to arbitration of particular issues in the proceeding; as well as a permanent stay (or the dismissal of the proceeding) if the referral applications succeed. The defendants also seek a temporary stay pending, among other things, the determination of appeal proceedings (the Appeal Proceeding) that were heard in February this year by the Full Court of the Federal Court relating to a decision of Gleeson J in Rinehart v Rinehart (No 3) (2016) 337 ALR 174; [2016] FCA 539. In the proceeding before Gleeson J (and in the Appeal Proceeding), issues were raised as to the ambit (and/or validity) of the arbitration clause on which reliance is placed in the respective referral/stay motions (cl 20 of an August 2006 deed referred to as the Hope Downs Deed).
Relevantly, Bianca's conflict motion proceeds on the basis that, insofar as Gina (the majority shareholder and one of the three directors of HPPL) is controlling HPPL's defence of the present proceeding (including the making of HPPL's referral/stay motion), Gina has a conflict of interest. In part, Bianca relies, for the conclusion that Gina is controlling HPPL's conduct of the litigation, on the lack of a response to queries raised of HPPL in relation to Gina's role in relation to the proceedings. It was made clear by HPPL in the course of argument before me that Gina's alleged controlling role is not common ground. In any event, there is no such conflict of interest allegation in relation to the same application brought by Gina in her own right for the referral/stay of the whole (or part) of the proceeding.
For the reasons that follow, I am of the view that the hearing of the interlocutory applications should be deferred until the decision of the Full Court of the Federal Court in the Appeal Proceeding and that, subject to anything that may emerge following the Full Court's decision, it would be in the interests of the just, quick and cheap resolution of the issues arising in these four interlocutory applications for them then all to be listed for hearing at the same time. It will be for the judge hearing those applications to determine the order in which argument on the respective motions would most conveniently be addressed and, ultimately, the order in which the applications should be determined.
[2]
Background
An asset of the HMH Trust is a minority shareholding (about 24%) of the shares in HPPL. Gina, the majority shareholder, was formerly the trustee of the HMH Trust. She ceased to be trustee in the circumstances recounted by Brereton J in Hancock v Rinehart (2015) 106 ACSR 207; [2015] NSWSC 646 (at [32]-[38]; [43]; [223]-[232]) and was replaced as trustee, by order of Brereton J, by Bianca.
[3]
The present proceeding
In the present proceeding, Bianca makes allegations in relation, variously, to: alleged oppressive conduct on the part of HPPL in failing to pay any, or any "provided-for", discretionary dividends; alleged breach of contract by HPPL in failing properly to calculate mandatory dividends required to be paid on certain Cumulative Special Shares; alleged oppressive conduct and misuse by HPPL of corporate funds (in relation to the making of payments for Gina's benefit in relation to the earlier proceedings commenced by Bianca and her brother (John Hancock) for the removal of Gina as trustee of the HMH Trust); and further claims of oppressive conduct by HPPL in respect of the making of particular members' resolutions. It is alleged that Gina and the third defendant breached their duties as directors of HPPL in relation to the conduct of HPPL about which complaint is made in the proceeding (and it is further alleged that Gina was also in breach of her duties as trustee of the HMH Trust in relation to those matters).
Irrespective of whether Bianca obtains leave under s 237 of the Corporations Act to intervene in the proceeding on behalf of HPPL to seek the relief claimed against the directors (see [669]-[671] of the statement of claim), she will pursue the allegations as to breach of directors' duties (pleaded at [626]-[636]) on the basis that these are relevant matters for the relief from oppression that she seeks against the directors and HPPL (see [673]-[675]; [679]-[680]). She also seeks leave under s 247A of the Corporations Act to inspect HPPL's books and records, indicating in her submissions that she will narrow the scope of this relief to particular categories of documents "in due course".
[4]
Federal Court proceeding commenced in October 2014
Earlier, in October 2014, Bianca and John had brought claims in the Federal Court of Australia (NSD 1124 of 2014) against Gina, HPPL and various other parties (the Federal Court Proceeding). In that proceeding it is alleged that, in the mid 1990's, Gina and HPPL engaged in a fraudulent transaction (a debt reconstruction) which had the effect of removing from the Hancock Family Memorial Foundation (the HFMF Trust) valuable mining assets that had been held for the benefit of Gina's children and transferring those assets to HPPL. Bianca and John assert that those mining assets are now held by HPPL on constructive trust for the benefit of Gina's four children (who are also the beneficiaries of the HMH Trust). They also allege that Gina used the debt reconstruction as a way to increase her shareholding in HPPL from 51% to 76% when there was an agreement between Gina and her late father (Lang Hancock) that the shareholding in HPPL would be held as to 51% by Gina and as to 49% cent by the children.
I pause to note that Gina contends that various allegations made by Bianca in the Federal Court Proceeding are inconsistent with allegations made by her in the present proceeding, referring by way of example to an allegation by Bianca in the Federal Court Proceeding to the effect that certain petroleum titles (the Hope Downs tenements) are beneficially owned by Gina's children and are held on trust for them by HPPL; whereas in the present proceeding Bianca alleges that the Hope Downs tenements are beneficially owned by HPPL.
Be that as it may, for present purposes what is of relevance is that Gina applied under s 8(1) of the Commercial Arbitration Act 2010 (NSW) for the claims made in the Federal Court Proceeding to be referred to arbitration, relying principally on cl 20 of the Hope Downs Deed. That application for referral to arbitration (together with a similar application by HPPL in the same proceeding) was heard by Gleeson J in 2015.
After an eight day hearing, Gleeson J concluded that there was a sustainable argument that some (though not all) of the claims in the Federal Court Proceeding fell within the scope of the arbitration agreement contained in cl 20.2 of the Hope Downs Deed (see [634]-[636]; cf [645]). Her Honour ordered that there be a separate trial of the question whether, among other agreements, cl 20.2 of the Hope Downs Deed was null and void, inoperative or incapable of being performed within the meaning of s 8(1) of the NSW Commercial Arbitration Act or the Commercial Arbitration Act 2012 (WA) (see Rinehart v Rinehart (No 3)).
Again, I pause to note that, in resisting Gina's applications for a referral to arbitration of the claims made in the Federal Court Proceeding, Bianca and John argued that the arbitration clause in the Hope Downs Deed was invalid. Gina, among other arguments, contended that Bianca and John had affirmed the arbitration agreement in the Hope Downs Deed. (Presumably this is a reference to the fact that Bianca and John had earlier asserted an entitlement under the Hope Downs Deed in separate arbitral proceedings - see [23] below.)
In the course of her Honour's reasons, Gleeson J commented by way of obiter that the evidence strongly suggested that the two deeds there in question (one of which being the Hope Downs Deed) were not made on an arms' length basis in relation to either of the applicants (Bianca and John) and that the absence of evidence that the deeds were the product of commercial negotiation, entered into 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, was something that cast significant doubt as to whether the applicants consented to resolve disputes arising in the Federal Court Proceeding by arbitration (see [666(3)]). (Bianca points to this observation on the present applications but ultimately it goes to the merit of the applications not to the order in which they should be determined.)
As adverted to above, her Honour's orders were the subject of applications for leave to appeal and cross-appeal that were heard by the Full Court of the Federal Court over five days in February this year (the Appeal Proceeding). The Full Court's decision is currently reserved.
The potential outcomes of the Appeal Proceeding were identified by Bianca's Counsel as including: that all the claims in the Federal Court Proceeding be referred to arbitration; that Bianca's claim as to the validity of the Hope Downs Deed and John's allegation as to the invalidity of the arbitration clause will be heard in the Federal Court; that there will be a hearing in the Federal Court as to whether other deeds signed by John containing arbitration agreements are null and void, inoperative or incapable of being performed; and that Bianca's argument that the commercial arbitration legislation does not apply is successful but that there might then be a hearing as to whether there should be a discretionary stay of the proceedings in favour of arbitration (see T 13-14).
[5]
Proceedings in the Supreme Court of Western Australia
The second set of proceedings to which reference has been made are proceedings commenced in the Supreme Court of Western Australia, before the Federal Court Proceeding was commenced, by Wright Prospecting Pty Ltd (Wright Prospecting) (CIV 3041 of 2010 consolidated with CIV 2617 of 2012) and by DFD Rhodes Pty Ltd (CIV 2737 of 2013), in relation to disputes as to the ownership of interests in the Hope Downs tenements operated by HPPL in the Pilbara region of Western Australia.
As I understand it, the claims made in those proceedings relate to an alleged partnership agreement with the late Lang Hancock, through which it is said that the respective plaintiffs (Wright Prospecting and the "Rhodes Parties" - DFD Rhodes Pty Ltd and executors of the estate of the late Donovan Rhodes) own a share in the Hope Downs tenements or that those tenements are assets of a partnership between the plaintiff(s) and HPPL. Bianca and John were joined as defendants to those proceedings in September 2016. Wright Prospecting has, I am told by Bianca's Counsel, amended its pleading to assert, in the alternative, that if its allegation that it holds an interest in those mining tenements as against Bianca and John is wrong, and the allegations that Bianca and John make in the Federal Court Proceeding are correct, then Wright Prospecting holds its interest in the Hope Downs tenements together with Bianca and John (see T 11). Bianca and John have filed a defence and counter-claim replicating, in essence, the claims they make in the Federal Court Proceeding.
Gina has brought applications under s 8(1) of the WA Commercial Arbitration Act for the referral of the Western Australian Supreme Court proceedings to arbitration. Those applications have been stood over for hearing to a date to be fixed after the delivery of judgment of the Full Court of the Federal Court in respect of the appeal from Gleeson J's decision in the Federal Court Proceeding (see Wright Prospecting Pty Ltd v Hancock Prospecting Pty Ltd [No 8] [2016] WASC 361). At a hearing on 20 April 2017, Le Miere J made it clear that the Court would not require her to take any positive step in those proceedings (such as filing a defence to Bianca and John's counter-claims) pending the hearing of her application to refer the proceedings to arbitration (see transcript of 20 April 2017). HPPL's Senior Counsel further informed me that Wright Prospecting and the Rhodes Parties have applied to cross-vest the Western Australian Supreme Court proceedings to the Federal Court. As I understand it, that cross-vesting application has not yet been heard.
[6]
Arbitration proceeding before The Hon Tony Fitzgerald AC QC
The third proceeding (as to the status of which there may be some doubt though Bianca maintains that it has been wholly abandoned) is an arbitration that was on foot before The Hon Tony Fitzgerald AC QC in around 2012. That arbitration was initiated at around the time of the application (in proceedings in this Court - 2011/285907) by Bianca and John to remove Gina as trustee of the HMH Trust (the Removal Proceeding), which culminated in the judgment of Brereton J in Hancock v Rinehart. The relevance, if any, of this proceeding seems to be that Bianca and John there apparently sought a declaration that they were entitled to distributions under cl 5 of the Hope Downs Deed. I am told that nothing has happened in the arbitration since around 2012.
[7]
Federal Court proceedings commenced in 2015
The fourth proceeding to which reference was made is one that was commenced by HPPL against Bianca (as trustee of the HMH Trust) and others in the Federal Court of Australia (NSD 1625 of 2015), as to the issue whether HPPL is obliged to pay certain dividends under its constitution. As I understand it, HPPL alleges in that proceeding (which was commenced before the proceeding presently before me) that the amount of dividends payable on the Cumulative Special Shares has been incorrectly calculated. That proceeding has since been transferred to this Court (see Hancock Prospecting Pty Ltd v 150 Investments Pty Ltd [2017] FCA 520).
[8]
Further matters
Finally, there remain consequential matters to be dealt with in the Removal Proceeding, namely the taking of an account (on the ordinary basis) in respect of Gina's dealings as trustee of the HMH Trust in the period after execution of the Hope Downs Deed. There is an allegation by Bianca that Gina has failed to comply with orders for the production of trust documents, which was the subject of a contested hearing before Brereton J. Bianca also says that there remains a potential issue as to whether she should be permitted to examine Gina on the account that Gina was ordered to provide in common form. Gina contends that insofar as Bianca, in the present proceeding, seeks in effect a variation of Brereton J's orders so as to obtain an account from Gina on a wilful default basis (referring to prayer 5 in the prayers for relief contained in the statement of claim), this is an abuse of process.
[9]
Opposing contentions as to order in which interlocutory applications should be heard and as to timing
Bianca maintains that her conflict motion must be determined before the other motions because the orders she seeks (namely, orders restraining the directors from controlling HPPL's conduct of this proceeding) would apply to HPPL's prosecution of its referral/stay motion and to the stance taken by it in relation to her leave motion. It is submitted that HPPL's strategy has been dictated by directors (and primarily Gina) in a position of conflict; and hence that, logically, the conflict motion should be heard before HPPL takes any further step in these proceedings.
Bianca argues that, ordinarily, a company such as HPPL would not take an active role in an oppression dispute between two shareholders (the court starting from a position of "rebuttable distaste" for such involvement - see Re a company [1994] 2 BCLC 146 at 156). She argues that the directors of HPPL have a duty to cause HPPL to take a role in the proceeding only to the extent and in the manner that they consider to be in the best interests of the shareholders as a whole.
As to the timing issue, Bianca maintains that there is no need for the conflict motion to await the determination of the appeal from Gleeson J's judgment. Bianca argues that HPPL's referral/stay motion could not require that the conflict motion itself be referred to arbitration because the conflict motion is logically anterior to HPPL's prosecution of HPPL's referral/stay motion; and says that, as the conflict motion will have to be heard whatever happens, it need not be delayed. Bianca says that, in circumstances where the Federal Court Proceeding does not raise the corporate governance issues raised in the present proceeding, the Full Court decision is not likely to have any significant impact on the outcome of the present case (see T 14). She also argues that the dispute raised by the conflict motion could not be a claim under the Hope Downs Deed enlivening the arbitration agreement even if that agreement be valid.
Gina (with the third and fourth defendants), on the other hand, argues that the logical course is for her referral/stay motion to be heard first, on the basis that it would defeat the purpose of the arbitration agreement (on which she relies for her motion) if this Court were to hear Bianca's conflict motion before deciding whether the whole proceeding (including the conflict motion) should be referred to arbitration. It is submitted that if this Court were to hear the conflict motion before deciding Gina's referral/stay motion then this would amount to the Court acting on the assumption that that motion had already been heard and dismissed and would render her motion futile.
One of the bases on which Gina asserts that the proceeding is required to be referred to arbitration is the allegation that it has been commenced by Bianca in breach of various covenants contained in the Hope Downs Deed, referring in particular to cll 7(a), 7(c), 7(e) and (8). Gina submits in this regard that if the principal relief sought by Bianca in this proceeding were to be made (namely that Gina be prevented from having any involvement in the management of HPPL - see prayers 10.2 and 10.3) and this resulted in HPPL being controlled not by members of the Hancock family but by three directors at least two of whom would not be family members (prayers 10.3, 10.4, 10.8), this would be in breach of cll 7(c) and 8 of the Hope Downs Deed and would potentially trigger rights of pre-emption under cl 13.3 of the Hope Downs Joint Venture Agreement (and thus that by commencing and prosecuting this proceeding, Bianca is in breach of cl 7(a) of the Hope Downs Deed). That said, such arguments essentially go to the merits of the referral/stay motions not the case management/timing issues here being considered.
As to timing, Gina argues that the hearing of the referral/stay motions should be deferred at least until after the determination of the Appeal Proceeding (the referral/stay motions in terms seek a stay pending the determination of various of the other proceedings - which is part of Bianca's complaint as to the lengthy delay that would involve). It is submitted that the determination by the Full Court of the Federal Court of issues as to the validity of the Hope Downs Deed (and in particular cl 20.2) may centrally affect a determination as to whether or not Gina's referral/stay motion (which is dependent on cl 20.2) should be heard. Gina points to the risk that would otherwise arise of inconsistent decisions in relation to the validity of the arbitration clause in question.
HPPL's position, consistent with that of Gina, is that the referral/stay motions should be heard prior to the conflict motion; and that they should be deferred until after the determination of the appeal from Gleeson J's decision. Like Gina, HPPL argues that the Full Court's judgment is likely to raise issues relevant to the determination of its referral/stay application in this Court, including as to whether the validity and enforceability of the Hope Downs Deed is arbitrable or whether (as Gleeson J held) there should be a separate determination of Bianca and John's claims that the arbitration agreements are valid and unenforceable. It is submitted that if the conflict motion were to be determined in advance of the HPPL referral/stay motion, then HPPL would be deprived of its contractual right to have disputes with Bianca and John referred to arbitration.
HPPL argues that Bianca's conflict motion is, at least in part, contingent on HPPL invoking its referral/stay application, which it says is dependent on the Full Court's judgment. HPPL also submits that it requires further time to consider Bianca's conflict motion, that having been filed only on 12 May 2017 and not previously having been foreshadowed. It is submitted that there can be no prejudice caused by deferring the conflict motion until after determination of the referral/stay motions since HPPL will not be taking any substantive steps in relation to the referral/stay motion in the intervening period (that being what Bianca seeks to restrain by the conflict motion).
HPPL further argues that if the outcome of any separate determination in the Federal Court as to the validity of the arbitration agreements were to be that those agreements are null and void or inoperative within the meaning contained in s 8(1) of the Commercial Arbitration Act, then Bianca and John's claims in the Federal Court Proceeding will proceed in that Court. It says that in those circumstances HPPL would need to consider whether to apply to cross-vest the present proceeding from this Court to the Federal Court given the cross-over between the allegations in the respective proceedings (including the allegations in the Western Australian Supreme Court proceedings) - this being an additional reason given for the temporary stay sought by HPPL of the present proceeding pending determination of the Federal Court and Western Australian Supreme Court proceedings.
The response for Bianca is, in effect, that the HPPL referral/stay motion cannot be heard while there is in the background her assertion that, in invoking and deploying the Hope Downs Deed in that way, Gina is in a position of conflict; and that to refer the conflict motion to arbitration (i.e., without first considering the conflict motion) would be to facilitate "a fairly significant conflict of interest". She argues that allowing HPPL to obtain a de facto stay without hearing her conflict motion would undermine the judicial process in circumstances where, among other things, she says that as trustee she is not a party to the Federal Court Proceeding (and says she would not be bound by the Full Court's decision). (Gina's response to the suggestion by Bianca - see T 22 - that, as trustee, Bianca is not bound by the Hope Downs Deed which she signed in her personal capacity is to refer to what was said by Brooking J in Young v Murphy [1996] 1 VR 279 at 290-291.) Bianca maintains that if I were to order that all four motions await the outcome of the appeal in the Federal Court that would in substance resolve parts of the respective motions - which is not the Court's role on this occasion - and would result in partial vindication of an application by HPPL that (on Bianca's case) was brought as a result of the HPPL directors acting while in a position of conflict.
As to the position if she does not succeed on her argument that the conflict motion be heard first, Bianca argues against the separation of the hearing of the respective motions on the basis that the arguments on the relevant provisions of the Hope Downs Deed would need to be heard before the conflict motion could be referred to arbitration (because the Court would need to be persuaded that there is a dispute under the deed in relation to the conflict motion). Bianca also argues that the referral/stay motions would need to be heard together with her leave motion because the evidence on the latter will be relevant to the former. She points out that the fourth defendant (Jay Newby) is not a party to any arbitration agreement or to any other court proceeding and says that there is no basis to refer any matter relating to him to arbitration proceedings or to stay the proceedings against him; nor would a shareholder action under s 247A(1) of the Corporations Act for access to books and records of HPPL be a dispute arising under the Hope Downs Deed subject to the arbitration agreement. Thus it is submitted that her leave motion will need to be resolved in any event.
[10]
Determination
At the outset I should note that it was made clear by the defendants in the course of submissions on the present applications that there was contention between the parties as to the accuracy of the historical narrative of the disputes as recounted on behalf of Bianca. However, there can be no dispute that the merits of the respective applications are not presently before me; the matter simply being as to a determination of which motions should be heard first and as to whether the hearing of any of the motions should be deferred to await the determination of the appeal from Gleeson J's decision to order the separate determination of the question as to the validity of the arbitration agreement under cl 20.2 of the Hope Downs Deed. Thus, for the avoidance of doubt, I make clear that the summary set out above as to the litigious history between the parties is no more than a broad overview of the background against which the current timetabling issue has arisen. In those circumstances, the reliance placed by Bianca on the determination by the Court of Appeal in Rinehart v Welker [2012] NSWCA 95 (see in particular from [125]-[146] per Bathurst CJ), which goes to the merits of the referral/stay motions, is of no immediate import when what I am determining is how best from a case management perspective to schedule the hearing of the respective motions. Nor is it necessary to consider the argument raised by Bianca as to whether, as trustee, she is bound by a deed entered into by her in her personal capacity (though to which her predecessor as trustee agreed to be bound).
Both "sides" (treating the respective defendants as in effect in the same interest on the timetabling issue) invoke logic in support of their insistence that their particular motion(s) should be heard first. Bianca says that to refer the whole of the proceeding (including her conflict motion) to arbitration without first considering the merits of the conflict motion would be to render that application futile and to facilitate the very conflict of interest that she asserts as the basis for the conflict motion; the directors (including Gina) and HPPL, on the other hand, say that to determine the conflict motion first would be to operate on the basis of an assumption that their referral/stay motions had already been heard and had been unsuccessful and to deprive them of their contractual entitlement under the Hope Downs Deed.
In my opinion it is of significance that, irrespective of any conflict on the part of Gina as majority shareholder in influencing or controlling the decisions of HPPL in relation to this litigation (assuming without making any finding that she has such influence or control), that cannot prevent her from pressing her own referral/stay application. In circumstances where that potentially involves the referral of the whole of the proceedings, any order precluding HPPL from pursuing its own similar application at this stage because of the alleged conflict would be of little practical utility. Gina's application may or may not succeed, but if it does (and if it succeeds on the broadest of the bases on which it is put), then HPPL's referral/stay application would arguably be moot. Therefore, even if the conflict motion were to be heard first and were to succeed it is difficult to see how that would be an effective use of case management, since Gina's referral/stay motion would remain to be determined. The fact that someone acting independently of Gina (and the other directors of HPPL) might choose not to pursue HPPL's present referral/stay motion is not therefore to the point. Nor is the fact that someone arguing the matter independently of Gina might provide additional arguments in support of one or other of the opposing positions.
Secondly, in circumstances where the referral/stay motions depend fundamentally on the scope and validity of the arbitration agreement under cl 20.2 of the Hope Downs Deed, the fact that this clause is germane to the issues being considered by the Full Court of the Federal Court in the context of the appeal/cross-appeal from Gleeson J's orders points strongly in my opinion against this Court now embarking on a determination that may give rise to inconsistent judgments. As Dixon J (as his Honour then was) said in Union Steamship Company of New Zealand Ltd v Ship "Caradale" (1937) 56 CLR 277; [1937] HCA 1, "[t]he inconvenience and embarrassment of allowing two independent actions involving the same question of liability to proceed contemporaneously in different courts needs no elaboration". (See also Commonwealth of Australia v Cockatoo Dockyard Pty Ltd [2003] NSWCA 192 (at [32]; Hodgson JA.)
The appropriate course in my opinion, having regard to the nature of the applications and the case management principles mandated under the Civil Procedure Act 2005 (NSW), as well as to the undoubted desirability of avoiding the risk of inconsistent judgments, is to defer the hearing of the respective interlocutory applications until after the determination of the Appeal Proceeding but then to list all four applications to be heard at the same time (subject to anything that may emerge from the judgment in the appeal/cross-appeal). While Gina (and, by adoption of her Senior Counsel's submissions, HPPL) argued that hearing the other motions with the referral/stay motions would not involve any real saving of judicial time, it was clear, from the submissions made by Bianca's Counsel, that issues relating to the conflict motion will be relied upon by Bianca in resisting the referral/stay motions. I accept that this may in effect bring into the public arena issues that, on Gina/HPPL's arguments, should properly be dealt with in an arbitration. However, that is a consequence of the way in which Bianca seeks to resist the referral/stay motions and will arise whether or not they are heard first. Given the lengthy history of disputation between the parties, I see merit in doing what can be done (even if that be a small step and possibly forlorn hope in the overall context of the litigation) to avoid the cost of successive hearings on multiple interlocutory applications.
I will stand the matter over to directions before me on 16 August 2017 with liberty to the parties to apply in the interim if there is an earlier determination of the Appeal Proceeding. Costs of the present application should be reserved.
[11]
Orders
For the above reasons I make the following orders:
1. Stay the hearing of the four interlocutory applications presently on foot in this proceeding (namely those filed by the second defendant on 21 April 2017, by the plaintiff on 27 April and 12 May 2017, and by the first defendant on 11 May 2017) pending the determination by the Full Court of the Federal Court of the applications for leave to appeal/cross-appeal (and appeal/cross-appeal if leave be granted) from the orders made in Rinehart v Rinehart (No 3) (2016) 337 ALR 174; [2016] FCA 539.
2. Stand the matter over for further directions before me at 9.30am on 16 August 2017.
3. The parties have liberty to apply on 3 days' notice.
4. Costs reserved.
[12]
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 22 June 2017