Rinehart v Welker - [2012] NSWCA 95 - NSWCA 2012 case summary — Zoe

NSWNSWCA

Rinehart v Welker

[2012] NSWCA 95

Court of Appeal (NSW)|2012-02-08|Before: Bathurst CJ, McColl JA, Young JA

View original source

At a glance

Source facts

Court

Court of Appeal (NSW)

Decision date

2012-02-08

Before

Bathurst CJ, McColl JA, Young JA

Catchwords

PRACTICE AND PROCEDURE - Stay of proceedings - Referral to arbitration - Arbitration clause - Construction of arbitration clauses.

Source

Original judgment source is linked above.

Catchwords

PRACTICE AND PROCEDURE - Stay of proceedings - Referral to arbitration - Arbitration clause - Construction of arbitration clauses.

Judgment (26 paragraphs)

[1]

Background 3The appellant GHR is presently the trustee of a trust ("the Trust") created by a deed of settlement dated 27 December 1988 by Mr Langley George Hancock ("the Trust Deed"). The principal assets of the Trust are shares in a company Hancock Prospecting Pty Limited ("HPPL"). 4The Trust Deed provided that on the death of Mr Hancock, GHR became absolutely entitled to a proportion of the shares in HPPL, which constituted part of the Trust fund. The balance of the shares in the fund were to be held by the trustee on trust until the date on which the youngest of the surviving children of GHR attained the age of 25 years, described as the vesting date. Thereafter the shares were to be held by the trustee on trust for the survivors as tenants in common in equal shares. 5Clause 7 of the Trust Deed gave power to the trustee prior to the vesting date to alter or vary any of the trusts provided in the Trust Deed, subject to the provisos that any such variation shall not alter the entitlements or benefits of GHR in the Trust, and shall be solely for the benefit of all or any one or more of the children of GHR. 6The Trust Deed was amended by a deed of amendment dated 24 August 1995. The only amendment of significance for present purposes was the insertion of cl 7H, a "Governing Law" clause. It provided that the Trust Deed and Trust were to be governed by the laws of Western Australia, but also sought to exclude the operation of certain provisions of the Trustee Act 1962 (WA). The provisions are not material for present purposes. 7By 2005, disputes had arisen between various parties to the Trust Deed. The nature of the disputes is not relevant for present purposes. However, resolution of the disputes resulted in GHR, JLH, GHFR, HRW, BHR and various other parties entering into a deed described as a "Deed of Obligation and Release". In that deed, JLH, described as the Covenantor, gave extensive releases to the other parties to the deed in consideration of certain payments and other benefits being conferred on him by HPPL and other companies related to the Rinehart family. Of relevance to the present proceedings are recitals D and E to, and cll 2 and 3 of, the Deed of Obligation and Release, which provide as follows: "D.Having particular regard to the commercial interests and the commercial sensitivities of the Hancock Group (and the potential for the Covenantor to negatively seek exposure with the public or with the media particularly during periods of negotiation of large commercial projects such as the Hope Downs Project currently under complex negotiation by HPPL at the date of execution of this Deed), HPPL and the Hancock Group are desirous of obtaining the undertakings of the Covenantor to wholly retract, cease and desist from any such activities now and in the future. E.The parties hereto by their execution hereof acknowledge that the primary nature of the HPPL business, is very long-term, complex, large-scale mining projects. The HPPL business necessitates long term consistent business plans, and many dealings with third parties on a strictly confidential basis, and the contrary, short-term and time consuming demands of the Covenantor, linked to his use of sensationalist media to publicise his contrary views, are opposed to the careful focus required and successful achievement and attainment of HPPL's interests. Accordingly, the Board of HPPL, having considered the matter in depth, has resolved that the making of the payments to the Covenantor under this Deed is necessary in order to enable the required focus and to protect the confidential nature of information, including with third parties, the business, prosperity and the future profitability of HPPL." "2.Release of the Releasees by Covenantor The Covenantor hereby wholly releases and discharges all and singular the Releasees and each of them and all of the successors in time and title of them and each of them from all and any obligations they and each of them may have to him in any manner and in any capacity whatsoever as at the date of execution hereof. 3.Further Releases by Covenantor Without limiting or derogating from the provisions of clause 2 herein, the Covenantor additionally: (a)hereby releases and forever discharges all and singular the Releasees from all and any liability, claims, demands, suits and actions of any nature whatsoever and any loss, injury or damage that might be caused to the Covenantor therefrom, and the liability of the Releasees in respect of any such claim is hereby absolutely extinguished, discharged and in all respects ended; (b)abandons any claims against all and singular the Releasees which he may, but for this provision, at the date of executing this Deed have had on any account whatsoever; (c)will not bring or make any other claim or proceeding against all and singular the Releasees or any one or more of them that is in any way connected with or incidental to the matters the subject of this Deed or any earlier claims; (d)acknowledges that this Deed may be pleaded in bar against any claim or proceeding by him against all and singular the Releasees; and (e)releases and forever discharges all and singular the Sisters from all and any liability, claims, demands, suits and actions of any nature whatsoever and any loss, injury or damage that might be caused to the Covenantor therefrom, and the liability of the Releasees in respect of any such claim is hereby absolutely extinguished, discharged and in all respects ended." 8Further disputes arose between the parties to the Trust Deed which led to the execution in August 2006 of the Settlement Deed. The parties to this deed included GHR, JLH, GHFR, BHR, HRW and HPPL. The construction and effect of the Settlement Deed, and particularly cl 20 thereof, is the subject of the present proceedings. 9It is convenient to set out the relevant portions of the Settlement Deed in full. 10The recitals so far as relevant provide as follows: "(B)JLH and BHR, HGRW, GHFR are the natural children of GHR and with GHR they constitute the total present class of capital and income beneficiaries of the HMH Trust. (C)GHR, the Trustee, JLH, BHR, HGRW, GHFR, HMHTI and 150 together constitute one hundred per cent (100%) of the legal and beneficial owners of all of the issued share capital of HPPL. (D)Those of the parties hereto who are parties to the Porteous Settlement Deed and who are parties to the Deed of Obligation and Release desire by their execution hereof to reaffirm and ratify the same." The entity HMHTI is a company, HMHT Investments Pty Limited. The entity 150 is a company, 150 Investments Pty Limited. The Porteous Settlement Deed refers to a deed dated 15 September 2003. These companies and the Porteous Settlement Deed do not have any bearing on these proceedings. 11Clause 1.1(a) of the Settlement Deed defines the expressions "Claim" and "Proceedings" in the following terms: "Claim means: (a)any claim, demand, action, suit or proceeding whether existing or discontinued, whether at law, under statute, in equity or otherwise: (i)for damages, injunctions, debt, restitution or other remedy including, without limitation, breach of fiduciary duty of whatever nature and howsoever arising with respect to events or matters arising or actions taken prior to the date of this deed but not including any claim, demand, action, suit or proceedings arising as a consequence of the obligations and releases which any of the parties to this deed have agreed to in the Deed of Obligation and Release or the Deed of Loan or the Porteous Settlement Deed; (ii)with respect to any attempt to remove or vary the Trustee or any subsequent Hancock Family Group Member as trustee of the HMH Trust and replace the trustee with a person or entity who or which is not a Hancock Family Group Member; and (iii)any damage, loss, liability, costs, charge, expense, outgoing or payment; (iv)any action against any of the Directors of any company within the Hancock Group, including without limitation, the Other Directors; and (b)without limitation of clause (a) includes any claim made in the Proceedings; (c)any damage, loss, liability, costs, charge, expense, outgoing or payment; and (d)without limitation of sub-clause (a) includes any claim made in the Proceedings; and (d)without limitation of sub-clauses (a) and (b) includes any claim made in any proceeding or any discontinued proceeding and any documents to support such claim and without limitation and for clarity in the case of the Proceedings includes the unsigned draft affidavit of JLH; ... Proceedings (whether existing or discontinued or the subject of disputed discontinuance) mean Supreme Court of Western Australia action numbered CIV 1327 of 2005 of the parties to which are the HMH Trust and GHR and to which JLH is seeking to be joined." 12Clause 3 of the Settlement Deed so far as relevant, contains the following affirmations and acknowledgment: "3(ii)All parties to this deed which or who were parties to the Deed of Obligation and Release reaffirm and ratify the Deed of Obligation and Release and all their obligations and releases thereunder. 3(iii)The parties acknowledge that the obligations of the Hancock Group, due to HDIO's ownership and interest in the Hope Downs Tenements and pursuant to the HDJVA and HDIO's obligations under financing arrangements for its interest in the HDJV may include the following: (a)as a result of the HDJV transaction a Capital gains tax of $36,856,597.00; (c)no repayment of or contribution by the HMH Trust for all expenditure by HDIO to date on the Hope Downs Tenements, overheads and HDJV costs, and including without limitation the financing costs for HDIO's interest in the HDJV; and (d)HDIO, and where relevant HPPL, will continue to finalise and maintain to the best of its endeavours, the required financing for HDIO's interest in the Hope Downs Joint Venture." 13HDIO is a wholly owned subsidiary company of HPPL, and HDJV refers to the unincorporated joint venture between members of the Hancock Group and the Rio Tinto Group. 14Clause 5 of the Settlement Deed contains various distribution covenants by HPPL and the trustee. It is not necessary to set them out in detail. However, the beneficiaries' entitlements to distributions under this clause are conditional upon them not breaching any obligations under the Settlement Deed. In that context cl 5(d) provided as follows: "any default by a Beneficiary under the Deed of Obligation and Release dated 1 April 2005 (or as such is amended in writing by mutual agreement of all parties thereto) shall be deemed to be a default by that Beneficiary under this deed for the purpose of this clause;" 15Clause 6 contains what are, on their face, extremely wide mutual releases. That clause provides as follows: "6RELEASES Each party hereto both in its own right and in any representative capacity hereby: (a)releases and discharges each of the other parties hereto now and in the future from any Claims, (b)Irrevocably covenants not to take any proceedings against any of the other parties to this deed in relation to any matter arising in any jurisdiction, in respect of the Claims; (c)Withdraws and forever abandons any and all allegations made against any of the other parties to this deed in respect of or arising (in whole or in part) directly or indirectly out of: (i)the Proceedings and any of the other Claims; (ii)the subject matter of the Proceedings; (iii)any claim relating to an undertaking given or costs orders made in the Proceedings, wherever and whenever arising, whether; (iv)known or unknown at the time of execution of this deed; (v)presently in contemplation of such parties; or (vi)arising under common law, equity, statute or otherwise." 16The various appellants in support of their contentions place considerable reliance on cll 7, 8 and 9 of the Settlement Deed. In these circumstances, it is necessary to set them out in full: "7UNDERTAKINGS Each of the parties to this deed undertakes with each of the other parties to this deed (a)that they will not at any time do, nor attempt to do nor encourage, nor assist in any way any other party or third party to do anything which could have an adverse impact on the Hancock Group's rights under: the Services and Commingling Agreement entered into or which may subsequently be entered into between Hamersley Iron Pty Ltd and members of the Hancock Group; or any of the documents entered into by the Rio Tinto Group and the Hancock Group in respect of the Hope Downs Joint Venture; or under any of the financing arrangements entered into by members of the Hancock Group in respect of the Hope Downs Joint Venture; (b)not to challenge the right of any member of the Hancock Group to any of the Hancock Group interests at any time. (c)not to take any steps at any time which would result in HPPL ceasing to be wholly owned and controlled by Hancock Family Group Members, including without limitation any change to the Trustee in contravention of the provisions of this Deed; and (d)not to Disparage at any time. (e)subject to the rights of HPPL under the Deed of Loan not to challenge the rights of any of GHR, JLH, BHR, HGRW or GHFR who execute this Deed to any of their right title or interest in any of the Hancock Group or in any trust in which they or any member of the Hancock Group is a beneficiary. 8GHR CONTROL OF HPPL The parties hereto acknowledge that GHR by her direct ownership of the share capital of and voting power in HPPL, has control of HPPL and without limiting in any way the legal and other rights of GHR in that regard whether at law or in equity or pursuant to the Constitution of HPPL, the parties hereto acknowledge that during her lifetime GHR shall maintain full ongoing control and management of HPPL and that GHR shall accordingly have the continuing right during her lifetime at her election from time to time to maintain or relinquish or re-establish herself as the chairman on an executive or non executive basis as she in her sole discretion shall decide of HPPL. 9VESTING OF HMH TRUST 9.1Subject to GHR's agreement at any time prior to 6 September 2011, the Beneficiaries agree to extend the vesting date of the HMH Trust to the maximum extent permitted by law or to any prior date after 6 September 2011 by agreement of the majority of Beneficiaries. 9.2Each of the Beneficiaries shall do all matters and things necessary to implement and facilitate any decision at any time by the Trustee to appoint any one or more of JLH, BHR, HGRW and GHFR as trustee of the HMH Trust and such appointment may be as an additional trustee together with the Trustee or to replace the Trustee permanently or temporarily or to succeed the Trustee when at some future time she may retire or otherwise cease to be trustee during her lifetime (which shall be deemed to be conditional upon the continuing right of GHR to decide to reassume the position of trustee by herself or with one or more of her children if and when she should subsequently so decide). 9.3Notwithstanding either of the provisions in clause 9.1 and 9.2, the Trustee and the beneficiaries agree that nothing in this Deed limits any of the powers of the Trustee of the HMH Trust." 17Clause 10 imposes obligations of confidentiality on the parties to the Settlement Deed in respect of its content and in respect of any correspondence or negotiation between the parties or their legal advisers in relation to its subject matters or matters relating to it. 18Clauses 11 and 13 of the Settlement Deed are covenants ancillary to the releases contained in cl 6. They provide as follows: "11.PLEA IN BAR On and from the Effective Date each party may plead this deed in bar to any Claim or proceeding the subject of a release in this deed PROVIDED HOWEVER that nothing in this clause shall prevent any party from enforcing the provisions of this deed, the Porteous Settlement Deed, the Deed of Obligation and Release or Deed of Loan. ... 13.PARTIES NOT TO ASSIST PROSECUTION OF CLAIMS Each party severally covenants with each of the other parties to this deed that he, she or it will not advance, cause, procure, finance, support, encourage or otherwise assist or facilitate in any way (except on compulsion of law including, but not limited to, service of a subpoena) directly or indirectly the advancement, institution or prosecution of any Claim the subject of a release in this deed." 19Clause 20 provides for certain disputes to be resolved by mediation or arbitration. That clause so far as relevant provides as follows: "20.CONFIDENTIAL MEDIATION/ARBITRATION In the event that there is any dispute under this deed then any party to his [sic] deed who has a dispute with any other party to this deed shall forthwith notify the other party or parties with whom there is the dispute and all other parties to this deed ('Notification') and the parties to this deed shall attempt to resolve such difference in the following manner. 20.1Confidential Mediation (a)the disputing parties shall first attempt to resolve their dispute by confidential mediation subject to Western Australian law to be conducted by a mediator agreed to by each of the disputing parties and GHR (or after her death or non-capacity, HPPL); (b)each of the disputing parties must attempt to agree upon a suitably qualified and independent person to undertake the mediation; (c)the mediation will be conducted with a view to: (i)identifying the dispute; (ii)developing alternatives for resolving the dispute; (iii)exploring these alternatives; and (iv)seeking to find a solution that is acceptable to the disputing parties. (d)any mediation will not impose an outcome on the disputing parties. Any outcome must be agreed to by the disputing parties; (e)any mediation will be abandoned if: (i)the disputing parties agree; (ii)any of the disputing parties request the abandonment. 20.2Confidential Arbitration (a)Where the disputing parties are unable to agree to an appointment of a mediator for the purposes of this clause within fourteen (14) days of the date of the Notification or in the event any mediation is abandoned then the dispute shall on that date be automatically referred to arbitration for resolution ('Referral Date') and the following provisions of this clause shall apply; (i)in the event that no agreement on the arbitrator can be reached within three (3) weeks of the Referral Date, the arbitrator will be Mr Tony Fitzgerald QC (provided he is willing to perform this function and has not reached 74 years of age at that time), or in the event Mr Tony Fitzgerald QC is unwilling or unable to act, the Honourable Justice John Middleton (provided he is no longer a Judge of the Federal or other Australian Court and provided he has not reached 74 years of age at that time), and irrespective of whether either of these persons have carried out the mediation referred to above, or in the event that neither is willing or able to act, (ii)subject to paragraph (iv) below by confidential arbitration with one (1) party to the dispute nominating one (1) arbitrator, and the other party to the dispute nominating another arbitrator and the two (2) arbitrators selecting a third arbitrator within a further three (3) weeks, who shall together resolve the matter pursuant to the Commercial Arbitration Act of Western Australia and whose decision shall be final and binding on the parties; (iii)if the arbitrators nominated pursuant to paragraph 2(a)(ii) are unable to agree in the selection of a third arbitrator within the time provided in paragraph 2(a)(iii), the third arbitrator will be designated by the President of the Law Society of Western Australia and shall be a legal practitioner qualified to practise in the State of Western Australia of not less than twenty (20) years standing. (iv)in the event that a disputing party does not nominate an arbitrator pursuant to Clause 2(a)(ii) within twenty-one (21) days from being required to do so it will be deemed to have agreed to the appointment of the arbitrator appointed by the other disputing party. (b)The dispute shall be resolved by confidential arbitration by the arbitrator agreed to by each of the disputing parties or appointed pursuant to paragraph 2(a)(i) above (or if more than one is appointed pursuant to paragraph 2(a)(ii) then as decided by not less than a majority of them) who shall resolve the matter pursuant to the Commercial Arbitration Act of Western Australia and whose decision shall be final and binding on the parties. (c)The arbitration will take place at a location outside of a Court and chosen to endeavour to maintain confidentiality and mutually agreed to by the disputing parties and failing agreement in Western Australia and the single Arbitrator or the Chairman of the Arbitral Tribunal as the case may be will fix the time and place outside of a Court for the purposes of the confidential hearing of such evidence and representations as any of the disputing parties may present. If any of the parties request wheelchair access, this will be taken into account in the selection of the premises and parking needs. Except as otherwise provided, the decision of the single arbitrator or, if three arbitrators, the decision of any two of them in writing will be binding on the disputing parties both in respect of procedure and the final determination of the issues. (d)The arbitrators will not be obliged to have regard to any particular information or evidence in reaching his/their determination and in his/their discretion procure and consider such information and evidence and in such form as he/they sees fit; (e)The award of the arbitrator(s) will be to the extent allowed by law non-appealable, conclusive and binding on the parties and will be specifically enforceable by any Court having jurisdiction. ... 20.8Confidentiality of Proceedings The dispute the subject of the mediation/arbitration, the mediation and arbitration hearing and submissions thereto and the decision of the mediation and/or arbitration shall be kept confidential." 20Clause 21 provides that the Settlement Deed should be governed by and interpreted according to the laws of the State of Western Australia.

[2]

Appeals of GHR and GHFR: Procedural history and pleadings 21Further disputes arose between the parties which led to the filing of a summons on 5 September 2011 by HRW, JLH, BHR and GHFR, in respect of GHR's conduct as trustee of the Trust. 22On 17 October 2011 an amended summons was filed by HRW, JLH and BHR. GHFR had by that time determined not to seek the relief sought by her brothers and sisters and joined with GHR in opposing it. As a consequence, she was named as a defendant. 23By the amended summons the respondents thereto sought an order that GHR as trustee of the Trust provide accounts for the Trust for the years 1992 to date and the accounts of HPPL for the same period. They also sought certain orders pursuant to s 90 of the Trustees Act or in the court's equitable jurisdiction varying the Trust Deed. What was sought in effect was that the Trust fund be split into two portions to be held on separate trusts, the first relating to that portion of the fund to which GHR was beneficially entitled and the second relating to the funds to which the respondents and GHFR were beneficially entitled. The amended summons sought a consequential order that GHR be removed as trustee of the second trust to be established. 24The amended summons also sought declarations that GHR had misconducted herself in the administration of the Trust and an order appointing such of the children of GHR who consent as the trustees of the new trust in favour of the children of GHR. 25As an alternative to the orders sought above, the respondents sought an order that GHR be removed as trustee of the Trust and such of her children who consent be appointed as trustee in substitution. 26Particulars of misconduct were supplied. It is unnecessary to set out the particulars in any detail but it should be noted that the conduct complained of was conduct which occurred in the period between 3 September 2011 and 8 September 2011. However, cl 12 of the Schedule of Particulars sought to reserve the right to add further particulars after discovery. 27By notices of motion dated 16 September 2011 and 6 October 2011 respectively, GHR and GHFR moved the Court under s 67 of the Civil Procedure Act 2005 seeking orders that the proceedings be stayed. They contended that the dispute was one arising under the Settlement Deed and that cl 20 required the parties to resolve their dispute by confidential mediation and arbitration. 28The motions for stays were dismissed by Brereton J on 7 October 2011: Welker & Ors v Rinehart & Anor (No. 2) [2011] NSWSC 1238. GHR and GHFR sought leave to appeal from that decision. Directions were made for the concurrent hearing of the leave application and the appeal and at the outset of the hearing of the appeal the Court indicated without objection from the parties that leave would be granted. 29Subsequent to the decision of Brereton J, each of HRW, JLH and BHR filed statements of claim in the proceedings. On 20 January 2012, GHR filed a defence. A defence was filed by GHFR on 8 February 2012. Notwithstanding the fact that the statements of claim and defences were not before Brereton J, none of the parties objected to the Court referring to them for the purpose of the appeal. 30The statements of claim, which are in identical form, make similar allegations to those set out in the summons and in the particulars, but also make a substantive broader claim in respect of failure to supply information. 31In par [55] of the statements of claim the respondents plead that in their capacities as beneficiaries of the Trust they requested copies of various documents from the trustee, GHR, including copies of the accounts of the Trust since the date of death of Mr Hancock. In par [56], they plead that on 22 October 2011 they sought a large number of other documents from GHR in their capacity as beneficiaries. In par [58] they claim that as beneficiaries of the Trust they are entitled to such documents and in par [59] that GHR has refused to supply these documents to them. They assert (pars [73] and [74]) that by reason of the failure to supply the accounts and other documents along with the other allegations of misconduct in the statement of claim, GHR is unfit to act as trustee of the Trust and has misconducted herself in its administration. It is further alleged (par [76]) that the failure to supply the accounts and other documents along with the other allegations demonstrated a want of honesty on behalf of GHR in the execution of her duties and a want of reasonable fidelity with respect to her obligations as trustee. 32The defence filed on behalf of GHR puts the allegations of misconduct in issue. In addition, it expressly pleads cll 1.1(b), (d) and (d) [sic], 5, 6, 7, 9 and 13 of the Settlement Deed in answer to the various allegations made by the respondents (see pars [17], [19], [22], [23], [24], [30], [31], [38], [40], [42], [43], [44], [63], [64] and [65] of the statements of claim). Attached to this judgment is a schedule setting out the particular allegations made in the statement of claim and the response in the defence where reliance is placed on the Settlement Deed (referred to in the defence as the Hope Downs Deed). 33The defence filed by GHFR pleads that by cl 7(e) of the Settlement Deed the respondents are estopped from contending that GHR ought be removed as trustee of the Trust. It pleads that by cl 7(d) of the Settlement Deed the respondents are estopped from making and prosecuting the allegations in the statement of claim and it pleads that by cl 8 of the Settlement Deed the respondents are estopped from seeking to remove the GHR as trustee of the Trust.

[3]

Appeals of GHR and GHFR: Judgment of the primary judge 34The primary judge identified three issues for resolution on the application. First, whether the Settlement Deed was binding on HRW and BHR. He concluded that it was and his conclusion was not contested on appeal. 35The second issue was whether a proceeding in the court's equitable or statutory jurisdiction for removal of a trustee was susceptible to "private justice" by reference to arbitration. The primary judge held that there was no reason in his view why such a dispute could not be referred to arbitration and, "a fortiori, mediation". He held that this would not exclude the jurisdiction of the court and that if anything public policy encourages the private resolution of disputes concerning family matters. This conclusion is the subject of the notice of contention in the proceedings. 36The third issue was whether the subject proceedings were in respect of a dispute "under this deed", so as to be caught by cl 20 of the Settlement Deed. His Honour held that the dispute was not a dispute under the Settlement Deed. He concluded (at [27]) that it was necessary to focus on whether, "for the purposes of these proceedings, the plaintiffs have a dispute "under this deed" with any other party" (emphasis in original). His Honour held that the words "under this deed" are of narrower scope than phrases such as "with respect to" or "in respect of", relying in particular on the judgment of French J, as his Honour then was, in Paper Products Pty Limited v Tomlinsons (Rochdale) Ltd & Ors (1993) 43 FCR 439. He said in those circumstances the dispute must derive from or depend on the Settlement Deed, or involve enforcing or invoking some right created by the Settlement Deed. 37The primary judge rejected the argument that the provisions of cl 9 of the Settlement Deed, in particular cl 9.1, led to the conclusion that the claim by the respondents, so far as it related to a unilateral extension of the vesting date of the Trust by the trustee, was a dispute under the Settlement Deed. The primary judge expressed his views in the following terms (at [32]): "Even the original claim - for an order that the trustee exercise her discretion to extend the vesting date - did not involve enforcing or invoking any right given by clause 9.1 against the first defendant. Clause 9.1 was an agreement to agree, expressed to be 'subject to GHR's agreement'. A claim that she should do something that she has not agreed to do is not a claim that depends on or derives from clause 9.1. In any event the plaintiffs' present claim, for removal of the first defendant as trustee, does not invoke, involve, derive from or depend on clause 9.1 in any way." 38The primary judge also held that the releases in cl 6 of the Settlement Deed did not lead to the conclusion that the dispute was a dispute "under this deed". He reached this conclusion first because the respondents' application to replace the trustee with persons who were themselves Hancock Family Group Members was not within the definition of "Claim" (at [36]) and second because the definition of "Claim" was limited to claims existing or discontinued at the time of the Settlement Deed (at [37]). He reached the same conclusion in relation to cl 11 of the Settlement Deed. 39The primary judge also rejected the contention by GHFR that because she asserted as an alternative to GHR continuing as trustee that a non-family member be appointed as trustee, this was now a "Claim" as defined by cl 1.1(a)(ii) of the Settlement Deed. The primary judge held (at [42]) that just because such a claim may be within the definition of "Claim" it does not depend on or derive from the Settlement Deed; only such claims as existed or had been discontinued as at the date of the Settlement Deed are released. He further concluded that even if the alternative propounded by GHFR was a "Claim" "under this deed", it was not one advanced by the respondents and in those circumstances cl 20 had no operation. 40The primary judge also rejected arguments based on cl 7(d) and 7(e) of the Settlement Deed. The primary judge accepted that a dispute as to whether or not the respondents were engaging in "disparagement" in contravention of cl 7(d) would be a dispute under the Settlement Deed subject to it not being void as contrary to public policy (at [44]). However, he held that disparagement was not the subject matter of the proceedings, let alone the respondents' claim, and was, therefore, not a claim under the Settlement Deed. 41So far as cl 7(e) was concerned the primary judge again held that as the respondents did not invoke or rely on any right given by cl 7(e), their claim did not depend on or derive from it (at [46]). He rejected the argument by GHFR that the proceedings were a challenge to the rights of GHR under the Settlement Deed, stating that the expression "title or interest" in any trust in which they or any member of the Hancock Group is a beneficiary was a reference to title or interest as a beneficiary, and not as trustee. He reached this conclusion for the following reasons. First, that the clause identifies the relevant interest by reference to the beneficiaries, as distinct from the trustee. Second, that cl 1.1(a)(ii) evinced an intention not to preclude claims for removal of the trustee, so long as the proposed replacement was a family group member. Third, that the construction contended for would preclude any attempt to remove the trustee for breach of trust prospectively, before the breach had taken place. This would be void as contrary to public policy so far as it involved an inability to remove a trustee for breaches of core obligations to act honestly and in good faith. Fourth, he stated the reference to the Hancock Group in that clause did not affect the position, as the clause would operate harmoniously by applying to shareholders in respect of companies and beneficiaries in respect of trusts. Finally, he said the intention of cl 7(e) was that the parties accepted the rights of each other in the Hancock Group and any relevant trust as they then existed, not to prevent the recognition of future changes to the trust. 42The primary judge also held that cl 8 of the Settlement Deed did not bar the respondents' claim. He held that its ultimate purpose was to acknowledge that during the lifetime of GHR she was to have the continuing right to maintain her position as chairman on an executive or non-executive basis. He said that the proposed proceedings were not inconsistent with that right (at [48]). 43Finally his Honour concluded on the construction issue that even if the clauses invoked by GHFR involved a dispute under the Settlement Deed they were but aspects of a larger dispute which as a whole, was not accurately characterised as a "dispute under this deed" (at [49]). 44It will be seen that the conclusion reached by the primary judge on the question of construction primarily depended upon the proposition that for cl 20 to have effect, the dispute brought by the respondents must be a dispute under the Settlement Deed in the sense of enforcing or invoking some right created by it. It was not enough, in the view of the primary judge, that the Settlement Deed may in some way impact on the rights of the respondents to bring their claims or could constitute a defence to those claims. That approach is challenged on the appeal. 45Further, the primary judge in rejecting certain of the submissions made by GHR and GHFR, construed various provisions of the Settlement Deed as providing no answer to the claims of the respondents. Both his Honour's construction of the provisions and the fact that he sought to deal with these issues on the stay application rather than leaving them for an arbitrator to consider are also the subject matter of the appeal. 46The primary judge also declined to refer the proceedings to mediation. He stated (at [51]) that whilst it may well be desirable that they be referred to mediation, they were not yet ripe for that process. He took the view that further disclosure would have to be made before the proceedings could be so referred.

[5]

Appeal of HPPL: Judgment of the primary judge 52The primary judge rejected the contention by HPPL that an application for the removal of GHR as trustee was a "Claim" within the definition in cl 1.1(a)(ii) of the Settlement Deed and was therefore released. The primary judge rejected the submission that that definition was dealing with two separate issues: first, the removal of GHR as trustee and, second, the removal of any subsequent Hancock Family Group Member as trustee and the replacement with a person who is not a Family Group Member. He held that the clause, as a matter of construction, related to any attempt to remove GHR or any subsequent Hancock Family Group Member as trustee and to replace the trustee so removed with a person or entity not a Hancock Family Group Member (at [23]). He also repeated the views he expressed in his earlier judgment that the relevant definition of "Claim" related to claims "existing or discontinued" at the date of the Settlement Deed (at [24]). 53Further, he rejected the contention that the substantive proceedings related to a claim for the removal of GHR and her replacement by a non-Hancock Family Group Member. He repeated his view that the claim was limited to claims existing or discontinued at the date of the Settlement Deed and stated that the substantive proceedings did not seek that relief (at [26]). 54The primary judge also rejected the proposition that the proceedings were a Claim within the definition in cl 1.1(a)(iv) of the Settlement Deed. He said this was for two reasons. First, (and again) it was not a claim existing or discontinued at the date of the Settlement Deed and, secondly, the reference to "any action against any of the Directors" in the subclause was a reference to an action against them as directors, and not in some other capacity (at [27]). 55His Honour also rejected the contention that the proceedings were a Claim within the meaning of cl 1.1(d). He repeated his view that the definition of Claim did not relate to future proceedings (at [28]). 56The primary judge also rejected the contention that the proceedings were brought in breach of undertakings given in cl 7(c) of the Settlement Deed. He concluded that the prohibition in cl 7(c) was on taking steps which would result in the appointment of a non-Hancock Group Family Member as trustee, not proceedings which could have that result. He reiterated that that was not what the respondents sought (at [30]). 57His Honour also rejected the submission that the respondents' claims for accounts were contrary to the release and discharge given in cl 2 of the Deed of Obligation and Release which was incorporated into the Settlement Deed. His Honour concluded that cll 2 and 3 of the Deed of Obligation and Release were only incorporated into the Settlement Deed for the purpose of cl 5.1(d) and not for the purpose of cl 20 (at [38]). He also held that the claims for accounts were merely an aspect of, or incidental to, the substantive relief sought in the proceedings and would not result in the proceedings as a whole being characterised as a dispute "under this deed" (at [38]). He also pointed out that the releases given in the Deed of Obligation and Release were only given by JLH (at [39]). 58The other grounds raised by HPPL were similar to those raised by GHR and GHFR. The primary judge rejected them for the same reasons.

[7]

Appeals of GHR and GHFR: Submissions of GHR 62In her written submissions, GHR contended that the primary judge erred in four ways. (a)Failing to properly construe cl 20 of the Settlement Deed by affording too narrow an ambit to the concept of a dispute under it, especially by relying on the terms of the originating process alone and not properly appreciating the nature of the issues that would arise. (b)Failing to hold that the amended summons generated a dispute between the parties because of the terms of cll 5 and 9 of the Settlement Deed. (c)Alternatively, failing to hold that a dispute was generated because, by pursuing the relief, the respondents were breaching cl 7(d) of the Settlement Deed. (d)Alternatively, failing to hold that the amended summons generated a dispute because it involved a breach of the undertaking by the respondents recorded in cl 7(e) of the Settlement Deed. 63In addition to these grounds, GHR submitted that the primary judge erred in reaching a concluded view on the arguments of the appellants concerning the effect of the terms of the Settlement Deed, contending this was a matter which should have been left to arbitration. She submitted that the primary judge erred in holding that he would not have exercised the discretion to grant a stay even if he was satisfied that part of the dispute arose under the Settlement Deed. 64GHR submitted that the focus by the primary judge on the summons alone was wrong because the dispute was not within the sole province of the respondents, it was a dispute as between the parties. She submitted, relying on Miller v Cameron [1936] HCA 13; (1936) 54 CLR 572 at 580-581, that a court does not remove a trustee without considering all relevant circumstances of their tenure. She submitted that although the particulars of misconduct relied on in support of the claim that GHR be removed as trustee only related to conduct in September 2011, it would be artificial to consider the question of removal only by reference to what occurred in that month without regard to the nature of the Trust which "administers shareholding interests in one of Australia's most significant mining companies ... and the administration of which has been the subject of a number of compromises in deeds over the course of many years". She also pointed out that, notwithstanding the limited nature of misconduct alleged, the relief sought included seeking access to information relating to the Trust extending back over many years. 65In relation to the construction of the Settlement Deed, GHR submitted that the primary judge was incorrect in holding that the words "under this deed" had a much narrower compass than phrases such as "with respect to" or "in respect of". She emphasised that cases in this Court have stated that arbitration provisions required a liberal and flexible construction, reflecting the presumed intention of the parties that they did not intend their disputes to be bifurcated between different tribunals. In that regard she relied on decisions of this Court in Francis Travel Marketing Pty Limited v Virgin Atlantic Airways Ltd (1996) 39 NSWLR 160 and Global Partners Fund Limited v Babcock & Brown Limited (In liq) [2010] NSWCA 196; (2010) 79 ACSR 383 and the decision of the Full Court of the Federal Court in Comandate Marine Corp v Pan Australian Shipping Pty Limited [2006] FCAFC 192; (2006) 157 FCR 45. She reiterated her contention that a dispute linguistically requires an active contention, controversy or debate between two persons and not simply a consideration of whether the particular claims of the respondents seek to enforce a right under the Settlement Deed. 66In her submissions in reply, GHR submitted that the distinction between the expressions "under this Deed" and expressions such as "with respect to" or "in respect of" had been expressly abandoned by the House of Lords in the context of arbitration clauses, referring to Fiona Trust & Holding Corporation v Privalov [2007] UKHL 40; [2007] 4 All ER 951, which decision, it was submitted, was endorsed unanimously by this Court in Lipman Pty Limited v Emergency Services Superannuation Board [2011] NSWCA 163 at [6]. 67GHR also sought to draw an analogy between the expression "under this deed" and the phrases "arising out of this Constitution" and "arising under any laws made by the Parliament". She submitted that where the appellants relied on provisions of the Settlement Deed, whether by way of defence, cross-claim, as an immunity or in reply, then the whole dispute became one under the Settlement Deed. She referred in this context to LNC Industries Ltd v BMW (Aust) Ltd [1983] HCA 31; (1983) 151 CLR 575 at 581-582 and Agtrack (NT) Pty Ltd v Hatfield [2005] HCA 38; (2005) 223 CLR 251. 68GHR ultimately characterised the dispute in this way: (a)A claim by the respondents for the accounts of the Trust and the company going back 20 years, a splitting of the Trust and removal of GHR as trustee. (b)Claims by GHR, GHFR and HPPL that: (i)it was not legally open to the respondents to seek from the court the relief claimed as the Settlement Deed barred them from doing so; (ii)even if it was open, no such relief should be granted on the merits; (iii)by reason of the respondents agitating the claims barred by the Settlement Deed, the respondents had breached the Settlement Deed thereby relieving HPPL of the obligation to pay dividends on the A Class shares. She stated the dispute includes: "i.An examination of the entire conduct of the trustee beyond merely the 3 September letter, as might be relevant to whether the very serious step of removing her as trustee should occur; ii.An examination of whether the conduct of the trustee, in the 3 September letter or otherwise, set against a background of the relationship of the parties, as substantially modified by the deed, justifies the label of "misconduct" or requires a very substantial interference with the trustee's powers constituted by ordering of accounts for 20 years or splitting of the trust; iii.All matters of defence or immunity considered above; iv.The matters of counter-claim: whether the conduct of the plaintiffs in bringing the court proceedings is a breach of the deed, entitling the trustee and the company to suspend the distributions under cl 5 of the deed." 69GHR submitted that once the dispute involved the contention that it was not legally open to the respondents to pursue in court the claims made in the amended summons, there was a dispute under the Settlement Deed even giving these words their narrowest meaning. She submitted that once this part of the dispute was a dispute under the Settlement Deed, the whole dispute is a dispute under the Settlement Deed. 70Alternatively, she submitted that if there was a defence or immunity against the proceedings being brought in court, the court should uphold the contract and allow the mediation or arbitration to resolve it first and that no court proceedings on the substantive dispute should proceed unless or until it is determined the preliminary defence has failed. 71GHR submitted that a broader characterisation of the dispute is that the parties are in dispute as to whether the respondents have a legal entitlement to the relief claimed, such dispute including all matters the respondents would need to establish to obtain such relief and all matters of defence and counter-claim the parties resisting such relief can properly raise. She submitted such a dispute both grows out of the Settlement Deed and cannot be correctly resolved without a close examination of it. She submitted that the Settlement Deed forms the subject matter out of which the claims arise. 72GHR further contended that the provisions of cll 5 and 9 of the Settlement Deed demonstrated that the amended summons gave rise to a dispute under the Settlement Deed as the splitting of the Trust into two trusts would prevent the implementation of the distribution covenants by HPPL and the trustee contained in cl 5 of the Settlement Deed and be contrary to the fact that it was envisaged in cl 9.1 of the Settlement Deed that the Trust would be ongoing and extend beyond the vesting date of 6 September 2011. It was also contended that it was contrary to the collaborative arrangement in cl 9.2 relating to the appointment of new trustees and the right of GHR even if she retires to subsequently reassume the position of trustee. 73It was also contended by GHR that the attempt to remove her as trustee constituted a challenge to her property rights in contravention of the undertaking contained in cl 7(e) of the Settlement Deed and that the allegations in the summons contravene the non-disparagement provisions in cl 7(d). She submitted that the effect of cl 7(d) was that the ventilation of the issues raised in the amended summons was enough to generate a dispute under the Settlement Deed that enlivened the discretion for a stay. 74In her written submissions GHR also relied on the definition of "Claim" in cl 1.1 of the Settlement Deed, the releases in cl 6 and the covenant in cl 13 not to advance any claim the subject of a release in the Settlement Deed. She submitted that the definition of "Claim" related to prospective claims as well as claims existing as at the date of the Settlement Deed and that the advancing of such claims was a contravention of cl 13. 75GHR submitted that the primary judge was wrong to find that even if the defences arose under the Settlement Deed he would not exercise his discretion to grant a stay because they were aspects of a larger dispute. She submitted this would negate the bargain between the parties as reflected in the Settlement Deed and render nugatory its key provisions and that his Honour erred in forming a view as to the strength of the defences or claims of the appellants. 76Orally, senior counsel for GHR submitted that the connecting phrase "under this deed" seeks a link between the controversy and the provisions of the Settlement Deed. He submitted that an essential part of the defence raised by GHR is that what she did was reasonable in the context of the regime established by the Settlement Deed. He submitted in those circumstances the Settlement Deed would have to be considered in dealing with the merits of the respondents' claim, not merely in relation to specific defences. 77Senior counsel for GHR also submitted that fine distinctions between expressions such as "arising out of", "in connection with" or "arising under" should not be made in this field. In this regard, in addition to the cases relied on in the written submissions, he placed particular reliance on what was said by Lord Hoffmann in Fiona Corporation supra, that there should be a "fresh start" in the construction of arbitration clauses and that they should be construed with a presumption that the parties did not intend their disputes to be dealt with in two separate tribunals. 78It was submitted that having regard to the provisions of cl 8 and 9.2 of the Settlement Deed, a court or an arbitrator, in considering whether or not to remove the trustee, would have to consider whether there had been wrongful conduct, whether it was excusable or whether it went to the heart of the Settlement Deed, what "continuing life" would exist under the Settlement Deed after her removal and whether it is appropriate to radically alter the long term administration regime the Settlement Deed contemplated. It was submitted that that meant the merits of the claim arose under the Settlement Deed. Presumably this submission was referring to the fact that the appointment of a new trustee would affect GHR's entitlement to shares in HPPL and her power to appoint and remove trustees. 79In addition, reliance was placed on the choice of law clause contained in cl 21 of the Settlement Deed on two bases. First it was submitted that the use of the expression "for all purposes in respect of this deed" in cl 21 was an indication that the parties were using words like "under", "hereunder" and "in respect of" interchangeably. It was submitted that this told against a narrow reading of the words "under this deed" in cl 20. Further, reliance was placed on the provisions of s 37 of the Commercial Arbitration Act 1985 (WA), which obliges the parties to an arbitration agreement to "do all things which the arbitrator or umpire requires to enable a joint award to be made". It was submitted that this would involve bringing forward all matters of claim or defence which would allow a just award to resolve a controversy. 80Alternatively, it was submitted orally that even if this broad construction was not accepted, the reliance placed by GHR on the provisions of the Settlement Deed, referred to in the written submissions as a bar to the respondents' claims, led to the conclusion the matter arose under the Settlement Deed.

[9]

Appeal of HPPL: Submissions of HPPL 84HPPL adopted the submissions of the other appellants. In particular, it submitted that a liberal approach should be taken to the construction of the dispute resolution clause. It submitted such an approach did not depart from the meaning of the words chosen by the parties but gave effect to a coherent business purpose through an assumption commercial courts around the world will make, namely that parties are unlikely to have intended multiple venues or occasions for the resolution of their disputes unless they say so. In that context, it submitted the word "dispute" should be interpreted inclusively rather than restrictively and that whilst the mere making of a claim does not amount to a dispute, a dispute should be held to exist when it can be reasonably inferred that a claim is not admitted. 85HPPL also contended that, following the decision of the House of Lords in Fiona Corporation supra, "under" the Settlement Deed should not be construed less restrictively than words such as "arising out of". In that context it submitted that the phrase "any dispute under this deed" should not be limited to a dispute which derives from or depends on the Settlement Deed or involves enforcing or invoking some right created by the Settlement Deed. It contended that the words should be construed as extending to any dispute concerning GHR's position as trustee of the Trust even if such a dispute does not arise directly from the terms of the Settlement Deed. 86Alternatively, it submitted that even if the construction it contended for was not accepted, a number of disputes had arisen under the Settlement Deed. It contended that the proceedings constituted a Claim under cl 1.1(a)(ii). It repeated its submission, made in the Court below, that "Claim" in that context dealt firstly with any attempt to remove GHR as trustee and secondly, with the removal of any subsequent Hancock Family Group Member as trustee and a replacement by a non-Hancock Family Group Member. It contended that this was supported by the powers conferred on GHR to appoint any one of her children as trustee and her right to reclaim the position (cl 9.2). It also contended that the prohibition should be construed to extend to any attempt to remove GHR as trustee in the future. It pointed out that at the time of the execution of the Settlement Deed the first and third respondents, HLW and BHR, were not taking any action to replace the trustee and that the second respondent, JLH's, application against GHR as trustee was dismissed by consent. It contended the phrase "any attempt" in cl 1.1(a)(ii) was inconsistent with limiting the operation to only those claims which existed or had been discontinued at the time of the Settlement Deed, contending this construction was also supported by cl 6(b). 87HPPL also repeated its submission made in the Court below that even if its construction of cl 1.1(a)(ii) was not accepted the proceedings still constituted a "Claim" under that clause because it was inevitable that the respondents would be forced to seek to appoint a person or entity who is not a Hancock Family Group Member as trustee of the Trust. It submitted that is because none of the respondents are suitable trustees relying on the decision of the Court of Appeal of the Supreme Court of Western Australia in Scaffidi v Montevento Holdings Pty Limited [2011] WASCA 146 at [178]. 88In the alternative, HPPL relied on cl 1.1(a)(iv). It submitted that that clause applied irrespective of whether the claim was against GHR in her capacity as a director of HPPL, as trustee of the Trust or otherwise. It submitted that that construction was consistent with "the extensive and detailed provisions in the various deeds executed by the parties" that they would not make claims against each other and that disputes which might arise would be dealt with by confidential mediation or arbitration. 89In his oral submissions, senior counsel for HPPL seemed to suggest that the construction for which he contended did not give rise to the position that the effect of the releases in cl 6 of the Settlement Deed and the barring provisions in cll 11 and 13 of the Settlement Deed was that no claims could be made against GHR, but rather, that any claims must be made pursuant to the confidential mediation and arbitration provisions contained in cl 20. It is difficult with respect to see how the releases and barring provision can be construed in this way if HPPL's primary construction of the definition of Claim is correct. 90HPPL contended that his Honour erred in his construction of cl 7(c) of the Settlement Deed, submitting that the words in that clause "any steps at any time" meant that the clause should be construed so as any action or conduct that could have the consequence that HPPL will cease to be wholly owned and controlled by Hancock Family Group Members is caught by cl 7(c). 91HPPL also contended that irrespective of whether or not an application for a change in trustee would result in a non-Hancock Family Group Member being appointed trustee, cl 7(c) prohibited an application to remove GHR as trustee. 92HPPL also relied on cl 7(d), the anti-disparagement clause of the Settlement Deed. It submitted that any question of that clause being void on the grounds of public policy did not arise, because the respondents were not prevented from raising allegations of misconduct by GHR in the context of a confidential mediation or arbitration conducted "by lawyers of the highest standing". It submitted the clause was justified because the public profile of GHR was critical to the business interests and future of HPPL. 93HPPL reiterated its contention that the proceedings constituted a breach of cl 7(e) in that they amounted to a challenge to the right, title and interest of GHR in the Hancock Group. 94HPPL also repeated its submission, made in the Court below, that the proceedings constituted a breach of cl 8 of the Settlement Deed as they challenged GHR's right to "full" ongoing control and management of HPPL. It submitted that as GHR had a 76.55 per cent shareholding in HPPL outside the Trust, the provision would be unnecessary if a 75 per cent interest in HPPL was sufficient to give full ongoing control and management. 95HPPL also asserted that any claim to remove GHR as trustee would be ineffective by virtue of cl 9.2, as the clause gave GHR the right to be reappointed as trustee should she otherwise cease to be a trustee during her lifetime. HPPL further contended that the respondents' threatened disclosure of the Deed of Obligation and Release and the Settlement Deed to litigation funders was a breach of cl 9 of the Deed of Obligation and Release and cl 10.1 of the Deed. It contended that the seeking of an order to provide accounts for the Trust for the years 1992 to date and HPPL for the years 1992 to date, was a breach of the release and discharge given in cl 2 of the Deed of Obligation and Release which was reaffirmed and ratified by the Settlement Deed. It further submitted the beneficiaries are not shareholders of HPPL and so should not be entitled to HPPL accounts. HPPL did not explain why the respondents other than JLH were bound by cl 2 of the Deed of obligation and release or why the fact that they were not shareholders of HPPL in someway disentitled them to information not from HPPL but from the trustee. 96HPPL submitted that if the construction of cl 20 of the Settlement Deed for which it contended was accepted, the proceedings must be stayed pending the outcome of the mediation or arbitration proceedings or that they should be stayed because they constitute "'Claims' or disputes under the Deed". 97HPPL accepted that its submissions that the commencement of the proceedings by the respondents contravened cll 7(c), 7(d), 7(e), 8, 9.2 and 10.1 of the Settlement Deed and cl 2 and 3(c) of the Deed of Obligation and Release fell into a different category, but submitted that the Court should exercise its power to grant a stay because HPPL intended to seek to restrain such breaches through the confidential mediation and arbitration process and that the proceedings should be stayed to allow that to be determined.

[10]

Appeal of GHR and GHFR: Respondents' submissions 98The respondents submitted that the primary judge was correct to find that the expression "under this deed" was narrower than phrases such as "with respect to" or "in respect of". They submitted that his Honour was correct in holding that a dispute under the Settlement Deed meant a dispute which derived from or depended on the Deed or involved enforcing or invoking some right created by the Deed. They submitted this analysis was supported by what was said by French J, as his Honour then was, in Paper Products supra. 99The respondents submitted that the subject matter of the proceedings is demonstrated by the relief sought by the moving party, and the allegations made in support of that relief. They contended that if the conduct in bringing the proceedings was not in breach of the arbitration clause in the Settlement Deed, it was not open to a court to stay proceedings permanently on the basis that the appellants might make allegations by way of defence that would raise provisions of the Settlement Deed. They relied in that regard on the fact that applications for stays are generally concluded before the close of pleadings. They submitted that even if the defendants' arguments were likely to raise matters within the scope of the arbitration clause, that would not justify a stay, having regard to the fact the principal dispute was outside the terms of the agreement. 100The respondents submitted that Brereton J was correct in considering the merits of the defences raised because it was said that in seeking a stay of proceedings an applicant is required to demonstrate that the conduct of the plaintiff in commencing those proceedings was in breach of a valid and enforceable arbitration agreement and that it was incumbent on the applicant for a stay to demonstrate that the arbitration clause was engaged. In relation to the particular provisions of the Settlement Deed relied upon by the appellant, the respondents' submissions may be summarised as follows: (a)The application for removal of GHR as trustee did not give rise to a dispute under cl 8 because cl 8 proceeds on the basis that GHR in her personal capacity has control of HPPL by direct ownership of share capital and voting power in HPPL, which will remain the case even if the respondents are successful in the proceedings. (b)The application for removal was not inconsistent with the terms of either cl 9.1 or 9.2. (c)Brereton J was correct in holding that the respondents' application did not give rise to a dispute as to whether cl 7(d) of the Settlement Deed had been breached. The respondents submitted that no reason had been proffered as to why Brereton J erred in his conclusion and that it would be perverse to contend that the proceedings brought by the respondents could be stayed in reliance on cl 7(d) because the grounds which the respondents put forward in support of the application may be embarrassing. They submitted that if cl 7(d) had that operation it would "to that extent be void as contrary to public policy" because it would prohibit an application being made to a court in respect of any alleged misconduct by GHR as trustee. (d)In relation to cl 7(e), the respondents submitted that Brereton J was correct in saying the clause was confined to the parties' right, title or interest as beneficiaries, and submitted if cl 7(e) had a wider operation it would be void as contrary to public policy to the extent it protected the trustee from the obligations to act honestly and in good faith, each of which obligation was put in issue. (e)So far as cll 1.1, 11 and 13 were concerned the respondents submitted that the definition of Claim and the releases related to claims in existence at the date of the Settlement Deed and not future claims which may arise. 101It is evident from the respondents' submissions referred to in the immediately preceding paragraph that there are at least issues between the parties as to the meaning of various provisions of the Settlement Deed. 102The respondents also submitted that Brereton J was correct in concluding that even if the defences potentially raised by GHR gave rise to disputes under the Settlement Deed, he would have declined to grant a stay in the exercise of his discretion. They submitted that Brereton J was correct in concluding that the prospective defences were but aspects of a larger dispute not properly characterised as a dispute "under this deed", and that a number of defences foreshadowed by the appellants were objectionable for reasons of public policy as they sought to use provisions of the Settlement Deed as means of foreclosing the application, notwithstanding the fact that the beneficiaries, when they entered into the Settlement Deed, could not have known of, or consented to on a fully informed basis, the breaches of trust. They submitted that these latter issues raised important policy questions for the administration of trust estates, which should be decided by the court rather than in private arbitration.

[11]

Appeal of HPPL: Respondents' submissions 103In response to the submissions of HPPL, the respondents, whilst recognising that as a general proposition a liberal approach should be taken to the construction of arbitration clauses, submitted it was important to recognise the limits of this proposition. They submitted that the principle did not require all arbitration clauses be given an identically broad meaning, and did not entitle the words to be given a meaning which they do not have. They stated that there was no presumption as to the interpretation of such clauses nor legal rule that a dispute falls within an arbitration clause unless a court can be persuaded with positive assurance that the clause is not susceptible to any meaning that would include the dispute. 104The respondents also submitted that different considerations may apply in respect of an arbitration clause relating to a dispute between beneficiaries of a trust and a clause in relation to an international commercial agreement. They submitted that if the parties did in fact intend cl 20 to apply to every dispute concerning GHR's position as trustee of a trust irrespective of its nature, subject matter or timing, the court's inherent supervisory jurisdiction over the trust would be fully denuded. 105So far as the particular clauses relied upon by HPPL were concerned, the respondents submitted that cl 1.1 only related to claims in existence at the time of the entry into the Settlement Deed. They submitted further, that cl 1.1(a)(ii) did not apply because it only related to attempts to replace GHR with a non-Hancock Family Group Member. They stated that cl 7(c) had no operation for the same reason. 106The respondents further submitted that cl 1.1(a)(iv) had no operation for the additional reason that GHR was not being sued as a director but rather in her capacity as trustee. 107The respondents otherwise relied on what they had said in answer to the written submissions of GHR and GHFR, and in respect of HPPL's reliance on cll 10.1 and 13 of the Settlement Deed and cl 2 of the Deed of Obligation and Release adopted the reasoning of Brereton J. 108On the hearing of the appeal senior counsel for the respondents pointed to the fact that there was no arbitration clause in the Trust Deed. He submitted that to the extent that cases such as Fiona Corporation supra and Comandate Marine Corp supra mandated a liberal approach to the construction of arbitration agreements, they were concerned with international commercial arbitration principles, and such an approach should not be adopted in construing a deed which it was suggested imposed significant limitations on the rights of beneficiaries of a trust. 109Senior counsel for the respondents emphasised that the events said to amount to misconduct arose in September 2011, five years after the execution of the Settlement Deed. He submitted that GHR's refusal to provide accounts and other information concerning the Trust was unreasonable and the accounts were something which the trustee was obliged to provide. 110So far as the ambit of the dispute was concerned, senior counsel for the respondents emphasised that it was necessary to characterise the dispute. He submitted that the respondents' dispute involved a breach of the trustee's obligations which, irrespective of the defences raised, was not a dispute under the Settlement Deed. In those circumstances it was submitted that the Court had no power to stay the respondents' dispute and that it was not an incorrect exercise of discretion to decline to send that part of the dispute (the defences) which may arise under the Settlement Deed to arbitration. He submitted that each side may have different disputes but the respondents' dispute fell outside the Settlement Deed. 111In response to the reliance by GHR on cl 21 of the Settlement Deed, senior counsel for the respondents submitted that the use of different language in cl 21 served to emphasise the narrow construction which should be given to the words "under this deed" in cl 20. He submitted that the parties were careful to use different words to apply to the different circumstances envisaged by the clause. 112So far as the demands for accounts were concerned, it was submitted that there was no release from the provision of such information in the Settlement Deed and to the extent that there was one in the earlier Deed of Obligation and Release such a release was only given by one of the respondents, JLH. 113So far as the exercise of discretion was concerned, it was submitted that this was a matter of practice and procedure and that this Court should be wary of interfering with the exercise of discretion by a primary judge in this area.

[12]

Consideration: Construction and scope of cl 20 of the Settlement Deed 114Because of the competing submissions of the parties it is necessary to say something about the correct approach to the construction of arbitration clauses generally. 115The approach to be adopted in relation to the construction of such clauses is, in my opinion, no different to the construction of any other contractual provisions. The clause, like any other clause in a contract, is to be construed objectively. The principles were stated by the High Court in Toll (FGCT) Pty Limited v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165 in the following terms (at [40]): "[40]This Court, in Pacific Carriers Ltd v BNP Paribas, has recently reaffirmed the principle of objectivity by which the rights and liabilities of the parties to a contract are determined. It is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern their contractual relations. What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe. References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement. The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean. That, normally, requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction." 116That does not mean that the court is entitled to disregard clear and unambiguous language used by the parties to produce results which the surrounding circumstances may indicate are more commercial or business-like: Western Export Services Inc v Jireh International Pty Limited [2011] HCA 45; (2011) 86 ALJR 1. Resort may only be had to surrounding circumstance where the words in question exhibit uncertainty or ambiguity: Codelfa Constructions Pty Ltd v State Rail Authority of New South Wales [1982] HCA 24; (1982) 149 CLR 337 at 352. 117It has frequently been stated that arbitration clauses should not be construed narrowly. In Francis Travel supra, Gleeson CJ made the following remarks (at 165): "When the parties to a commercial contract agree, at the time of making the contract, and before any disputes have yet arisen, to refer to arbitration any dispute or difference arising out of the agreement, their agreement should not be construed narrowly. They are unlikely to have intended that different disputes should be resolved before different tribunals, or that the appropriate tribunal should be determined by fine shades of difference in the legal character of individual issues, or by the ingenuity of lawyers in developing points of argument." 118Similar remarks were made by Allsop J (as his Honour then was) in Comandate Marine Corp supra at [164], Finn and Finklestein JJ agreeing: "[164]Relevant to the above process, as part of the surrounding circumstances, is the fact that this is a standard form international contract, often used in the commercial time chartering of working ships. The parties did not refer us to any authorities on the scope of clause 45. That is not to say, however, that that international context does not remain relevant. Regard should be had in construing clause 45 to the clear tenor of approach internationally in construing arbitration clauses in international agreements. The authorities (to which I will refer shortly) are clear that a liberal approach should be taken. That is not to say that all clauses are the same or that the language used is not determinative. The court should, however, construe the contract giving meaning to the words chosen by the parties and giving liberal width and flexibility to elastic and general words of the contractual submission to arbitration." 119See also Walter Rau Neusser Oel und Fett AG v Cross Pacific Trading Ltd [2005] FCA 1102 at [41]-[42]; Global Partners Fund Ltd supra at [60]-[65] per Spigelman CJ, Giles and Tobias JJA agreeing; Lipman Pty Limited supra at [6]-[8]. 120That is not to say that the words of the clause can be given a meaning they do not have to satisfy a perceived commercial purpose. Such an approach would be inconsistent with the approach to construction of contracts to which I have referred above. As stated by French J in Paper Products supra at 444 the scope of disputes covered by an arbitration clause must depend on the language of the clause. Similar statements were made by Allsop P whilst a judge of the Federal Court, in Walter Rau supra at [41] and Comandate Marine Corp supra at [164] and in this Court in Lipman Pty Limited supra at [6]-[8]. Rather, the words of an arbitration clause should be, to the extent possible, consistent with the ordinary meaning of the words, liberally construed. 121It follows that it is not appropriate for this Court to adopt what Lord Hoffman described in Fiona Corporation supra at [12] as a "fresh start" and construe clauses irrespective of the language in accordance with the presumption that the parties are likely to have intended any dispute arising out of the relationship into which they have entered to be decided by the same tribunal unless the language makes it clear certain questions were intended to be excluded: Fiona Corporation supra at [13]. Whilst the presumption that parties intended the same tribunal to resolve all their disputes may justify a liberal approach consistent with the plain meaning of the words in question, the approach suggested by Lord Hoffman is contrary, in my opinion, to the approach laid down by the High Court as to the construction of commercial contracts. 122In reaching this conclusion I am conscious that the Court of Appeal in Western Australia in Paharpur Cooling Towers Ltd v Paramount (WA) Ltd [2008] WASCA 110, cited the speech of Lord Hoffman in Fiona Corporation supra with approval, stating at [39] that: "It was consistent with the approach taken in Australia". To the extent their Honours were stating that the approach was reflective of the liberal approach to which I have referred above, that is uncontroversial. However, to the extent their Honours were suggesting a particular rule of construction be applied irrespective of the plain meaning of the words, I am unable to agree. 123So far as the clause in question is concerned the phrase "under this deed" has consistently been given a narrower construction than phrases such as "arising out of the deed" or "in connection with the deed". In Samick Lines Co Ltd v Owners of the Antonis P Lemos [1985] AC 711, Lord Brandon, with whom the other of their Lordships agreed, made the point in the following fashion (at 727): "I would readily accept that in certain contexts the expression 'arising out of' may, on the ordinary and natural meaning of the words used, be the equivalent of the expression 'arising under' and not that of the wider expression 'connected with'. In my view however, the expression 'arising out of' is, on the ordinary and natural meaning of the words used, capable, in other contexts, of being equivalent of the wider expression 'connected with'. Whether the expression 'arising out of' has the narrower or the wider meaning in any particular case must depend on the context in which it is used." 124In Paper Products supra, French J considered the meaning of the phrase "any dispute between the parties hereto arising under this agreement". His Honour made the following comments (at 448): "Case citations and examples could be multiplied but there is little point. When the language of the arbitration clause in question is sufficiently elastic, then the more liberal approach of the courts to which Kirby P and others have referred can have some purchase. A wide construction of such clauses can be supported on the basis advanced by Clarke JA that it is unlikely to have been the intention of the parties to artificially divide their disputes into contractual matters which could be dealt with by an arbitrator and non-contractual matters which would fall to be dealt with in the courts. When, as here, the parties have agreed upon a restricted form of words which in their terms, and as construed in the courts, limit the reference to matters arising ex contractu, there is little room for movement. I am satisfied that neither the trade practices claim, nor the claims for breach of warranty and negligent misstatement can be said to arise out of the agreement. They all arise out of matters which are antecedent to the contract even though they may involve questions which also go to its performance. No authority has been cited to me which would support the wide construction of the clause contended for by Tomlinsons and certainly the natural meaning of the words does not support their extension to disputes arising out of matters antecedent to the agreement. I come to this conclusion with some regret because I have no doubt, having regard to the various provisions of the agreement which have been set out, that much of the evidence in this case would go to the actual performance of the machines and would be evidence of the kind that one would expect to hear in an action for breach of contract. It may be that the resort to the Trade Practices Act, negligent misstatement and breach of collateral warranty is made necessary because of the limiting provisions of the agreement. It is of course possible that the parties may consent to have their dispute referred to arbitration. However, there is nothing in the language of the agreement which would justify an order for the stay of these proceedings. In the circumstances, the motion will be dismissed." 125In BTR Engineering (Australia) Ltd v Dana Corporation [2000] VSC 246, Warren J (as her Honour then was) interpreted the word "under" to mean "governed, controlled or bound by; in accordance with", at [27]. A similar construction was given to the word by Hargrave J in TCL Airconditioner (Zhongshan) Co Ltd v Castel Electronics Pty Limited [2009] VSC 553 at [34], his Honour describing himself as "adopting a broad meaning". As I indicated earlier (at [36]) the primary judge took the view that the words "under this deed" in the present case involved enforcing or invoking some right created by the Settlement Deed. It seems to me that consistent with the authorities to which I have referred, if the outcome of the dispute was governed or controlled by the Settlement Deed, then there would be a dispute under the Settlement Deed irrespective of whether the claimant was invoking or enforcing some right created by the Settlement Deed. It may be that that was what the primary judge was referring to when he said the dispute must derive from or depend on the Settlement Deed. 126In the present case the respondents by their respective statements of claim seek orders that GHR provide information concerning the Trust, relying on their entitlements as beneficiaries. The other orders which they seek are first, orders pursuant to the various provisions of s 90 of the Trustee Act or the court's inherent jurisdiction varying the Trust, and orders under the Trustee Act or the court's inherent or equitable jurisdiction appointing one or more of the respondents as trustee of that part of the split Trust of which the respondents and GHFR were proposed beneficiaries; second, a declaration that GHR has misconducted herself as trustee within the meaning of s 77(2)(b) of the Trustee Act (misconduct in the administration of the Trust) and third, an order pursuant to the Trustee Act or the equitable jurisdiction of the court removing GHR as trustee of the Trust. 127None of these matters, viewed in isolation from the defences, involve invoking or enforcing any rights created by the Settlement Deed nor is their outcome generated or controlled by the Settlement Deed. As GHR submitted (see par [64] above), a court does not remove a trustee without looking at the whole of the circumstances; that would include the Settlement Deed but it would not lead to the conclusion that the outcome was governed or controlled by the Settlement Deed. Similarly, whilst it may be that it would be open to GHR to argue that what was done was reasonable in the context of the regime established by the Settlement Deed, this would not of itself lead to the conclusion that the outcome was governed or controlled by the Settlement Deed as distinct from the proper application of the statutory and inherent jurisdiction of the court. 128Thus far I have dealt with the position without regard to the defences. As I have indicated, the appellants contend that it is not correct to look at the respondents' claim in isolation, but rather that regard must be had to the defences foreshadowed and in fact ultimately raised. GHR submitted that once it was contended that it was not legally open for the respondents to pursue the claims made by virtue of the provisions of the Settlement Deed, then the whole dispute was a dispute under the Settlement Deed. As I indicated, she sought to draw an analogy between the expression "under this deed" and the expression "arising under this Constitution" or "arising under any laws made by the Parliament" submitting that once reliance was placed on any provision of the Settlement Deed, the whole dispute was governed by the Settlement Deed. 129I do not believe the analogy with the expressions "under this Constitution" or "under any laws made by the Parliament" provide particular assistance in the present case. It is well established that once a matter arises under the Constitution or under the laws of the (Federal) Parliament, the court has full authority to deal with all matters necessary for the complete adjudication of the matter whether Federal or non-Federal, unless the non-Federal matters are severable and distinct from the matter which attracted Federal jurisdiction: Felton v Mulligan [1971] HCA 39; (1971) 124 CLR 367 at 402-403; Moorgate Tobacco Co Ltd v Philip Morris Ltd (1980) 145 CLR 457 at 471-472. It is unnecessary to deal in any detail with the origin of this principle, which was ultimately derived from a decision of the United States Supreme Court interpreting s 25 of the Judiciary Act 1789 (see Cohens v Virginia 19 US (6 Wheat.) 264 (1821) at 379 relied upon in Osborne v Bank of the United States (9 Wheat.) 737 (1824) at 824, cited in Miller v Haweis [1907] HCA 44; (1907) 5 CLR 89 at 93 cited with approval in Felton v Mulligan supra). Suffice to say this principle does not, in my opinion, provide any real assistance to the construction of a private arbitration clause. 130The opening words of cl 20 require any party to the Settlement Deed who has a dispute with any other party to notify the other party of the dispute. For this obligation to arise the dispute is required to be one under the Settlement Deed. The reference to the party who has a dispute and the requirement of that party to notify tends to suggest that the focus of the clause is on the claim raised by the party asserting the dispute. The dispute in the present case was whether GHR was entitled to engage in the conduct complained of and whether as a consequence the Trust should be split and/or GHR removed as trustee. Although at that time GHR had not formally responded to the claim, it could be reasonably anticipated she would deny the allegations and in that sense there was a dispute: AMEC Civil Engineering Ltd v Secretary of State for Transport [2005] 1 WLR 2339 at [30]-[31]; Collins (Contractors) Ltd v Baltic Quay Management (1994) Ltd [2004] EWCA Civ 1757 at [62]-[63]. 131As appears from the schedule attached to this judgment the defence of GHR utilises the Settlement Deed in three ways. First, by justifying the conduct of seeking the releases sought by GHR in a draft deed of 3 September 2011 sent to the respondents as seeking no more than the releases which had already been given (see pars [17], [19], [38], [40], [42], [44], [58], [64] and [65] of the statement of claim and defence); second, by pleading the Settlement Deed as a bar to the claim for accounts (see pars [23], [24], [30], [31], [55] and [56] of the statement of claim and defence); and third, by pleading other clauses of the Settlement Deed as justification for the conduct, for example, par [17] of the statement of claim and defence (cll 9.1 and 9.7), par [40] of the statement of claim and defence (cll 7 and 13), and par [64] of the statement of claim and defence (cl 9.1). 132The defences raise disputes under the Settlement Deed as they rely on provisions of the Deed in answer to the respondents' claims. However, those defences will not necessarily determine the outcome of the proceedings. 133GHFR in her defence relies on cll 7(d), 7(e) and 8 of the Settlement Deed as constituting either a representational or conventional estoppel against the respondents making the claims in the proceedings. These pleadings, on their face, do not demonstrate that the claims of the respondents will be governed by or controlled by the Settlement Deed. As the pleading recognises they will depend in part on whether GHFR relied on representations said to have been made by other parties to the Settlement Deed in entering into it or whether she relied on the mutual assumptions said to arise from the entry into the Settlement Deed. It will also involve the question of whether GHFR will suffer detriment as a result of a departure from these assumptions. Whilst it is inappropriate to express a final view on these issues, the pleading ignores the fact that JHL only became a party to the Settlement Deed sometime after the other respondents and GHFR bound themselves to the Settlement Deed. It is difficult to see how GHFR in those circumstances could have relied on any representations made by JHL contained in the Settlement Deed. However, what is of importance is that to the extent that the respondents are bound from pursuing their claim as a result of the estoppels alleged by GHFR, that is not a matter governed or controlled by the Settlement Deed, although the representations and assumptions said to arise from the Settlement Deed will be relevant to the determination of the claim. 134Neither GHR nor GHFR plead in terms that the effect of the Settlement Deed is to absolutely bar any claim by the respondents to remove GHR as trustee or to make claims against her for breach of trust. GHR, however, does at least implicitly suggest this, in her defence that the releases sought by her in the draft deed of 3 September 2011 were not different from the releases granted in the Settlement Deed. GHR does assert that the claim for accounts was absolutely barred by the Settlement Deed. HPPL however contends that the effect of cl 1.1 of the Settlement Deed coupled with the releases given in cl 6 and the provisions of cl 13, is that the claims brought against GHR are barred. As stated above, in their submissions GHR and GHFR adopted the same position. 135If the Settlement Deed had the effect of barring the claims of the respondents, then it would follow that the dispute in question was governed or controlled by the Settlement Deed as the outcome would be regulated by its terms. However, the mere fact that these assertions were made does not mean that it automatically follows that the whole claim is a dispute under the Settlement Deed. The primary judge, in my opinion, was entitled to examine the claim to form a view as to whether he could properly conclude, in the light of the evidence available, that the assertion that the claim was barred by the Settlement Deed was sustainable: see Channel Tunnel Group Limited v Balfour Beatty Construction Ltd [1993] AC 334 at 356. This was particularly the case when each party made extensive submissions on the issue and none suggested there was any further material which may become available which would be of assistance to the Court on the issue of construction of the clause in question. It was also relevant, in my opinion, to look at the strength of the assertion to determine whether, as a matter of discretion, a stay of the whole or any part of the proceedings should be granted. 136I have set out the definition of "Claim" above. Clause 1.1(a) is widely expressed to include any claim whether existing or discontinued, whether at law, under statute, equity or otherwise. Clause 1.1(a)(i) limits its operation to any matters prior to the date of the Settlement Deed, although cl 1.1(a)(ii)-(iv) do not contain any such limitation. Clauses 1.1(c) and 1.1(d) are not on their face limited to existing or discontinued proceedings. 137In my opinion, however, the clause is limited to claims existing or discontinued or claims which were in existence at the time the Settlement Deed was entered into. 138In Grant v John Grant & Sons Pty Limited [1954] HCA 23; (1954) 91 CLR 112, the High Court held that general words of a release should be restrained by the particular occasion (at 123). In that case the plurality (Dixon CJ, Fullagar, Kitto and Taylor JJ) also made the following remarks (at 129-130): "From the authorities which have already been cited it will be seen that equity proceeded upon the principle that a releasee must not use the general words of a release as a means of escaping the fulfilment of obligations falling outside the true purpose of the transaction as ascertained from the nature of the instrument and the surrounding circumstances including the state of knowledge of the respective parties concerning the existence, character and extent of the liability in question and the actual intention of the releasor." See also Marinchek v Cabport Pty Limited [2010] NSWCA 334 at [47]. 139Further, a construction of the nature of that contended for by the appellants would in effect render the trustee immune from any liability for breach of trust, whenever or however occurring. This would in effect destroy the trust. In Jacobs Law of Trusts in Australia 7th ed (2006) LexisNexis Butterworths, the authors, JD Heydon and MJ Leeming describe the personal obligation of the trustee to deal with the trust property for the benefit of the beneficiaries as an essential element of a trust (at [110]). Citing Armitage v Nurse [1998] Ch 241 at 253-254 the learned authors make the following comments: "It has been held that there is an irreducible core of obligations owed by the trustees to the beneficiaries and enforceable by the beneficiaries which is fundamental to the concept of a trust. If these do not exist, or if the beneficiaries have no rights to enforce them, there is no trust. The minimum duty is the duty to perform the trusts 'honestly and in good faith' for the benefit of the beneficiaries; it does not include the trustee's duties of skill, care and diligence." (at [1620]) 140That passage was cited with approval by the Court of Appeal of Western Australia in Scaffidi v Montevenda Holdings supra at [149]. Whether a provision in an instrument separate to the trust deed exonerating a trustee for the breach of any obligation to act honestly and in good faith would be void as against public policy need not be decided, although it could well be held to be void as ousting the beneficiaries' right to due administration of the trust: Permanent Trustee Company v Dougall (1931) 34 SR (NSW) 83; Leerac Pty Limited v Fay [2008] NSWSC 1082. What is clear in the present case is that it would require clear words to achieve that result. 141HPPL in its submissions sought to overcome this difficulty by suggesting the releases only extended to claims made in court as distinct from claims utilising the provisions of cl 20 of the Settlement Deed. There is no justification in the language for this limitation. 142It does not seem to me that the word "otherwise" in the opening words of cl 1.1(a) of the Settlement Deed produces the result that any claim against GHR, whether existing or otherwise at the date of the Settlement Deed, cannot be brought. The words "or otherwise" refer to the nature of the claim and do not extend the operation of the provision to claims which had not arisen at the time of entry into the Settlement Deed. If there was any doubt about this it is made clear, in my opinion, by the use of the same expression in cl 6(vi) of the Settlement Deed. 143As the releases in cl 6 of the Settlement Deed are limited to the defined Claims and the defined Proceedings (1327 at 2005 in the Supreme Court of Western Australia), it would follow that the releases would not extend to the present claim. As cll 11 and 13 are also limited to defined Claims, they also do not extend to the present claims. 144Clause 7(c) also does not bar the proceedings. The claims made by the respondents do not seek to replace GHR with a non-Hancock Family Group Member, nor can it be said that it is inevitable this will occur, particularly when it is not sought by the respondents. 145It follows that the provisions of cll 6, 7(c), 11 and 13 of the Settlement Deed do not lead to the conclusion that the claims of the respondents are governed or controlled by the Settlement Deed in the sense that their outcome will be determined by its provisions. 146The other provisions of the Settlement Deed raised in answer to the claims of the respondents, whilst relevant to the outcome of the proceedings, do not of themselves govern or control the outcome of those claims. As HPPL correctly submitted, if established, they amount to breaches of various undertakings under the Settlement Deed. Such breaches may be relevant to a tribunal determining whether to grant the relief sought, but would not necessarily be determinative of the outcome. That can be demonstrated by a consideration of each of the provisions relied upon as a defence: (a)Clause 5 - This is a covenant between HPPL, "the trustee" and the other parties to the Settlement Deed. The benefit of the covenant would be assignable to a new trustee on his or her appointment. Clauses 5(c) and 5(d) vary HPPL's obligations to make distributions if the beneficiaries breach provisions of the Settlement Deed. Assuming that the institution of the proceedings amounted to a breach of the Settlement Deed, that would not bar a court or arbitrator from granting the relief sought. It would only mean that HPPL was relieved of its obligation under cl 5(a), and the trustee of its obligation under cl 5(b). (b)Clause 7(d) - Assuming that the institution of the proceedings amounted to a breach of the non-disparagement clause, whilst that may give rise to remedies under the Settlement Deed, it would not in my opinion mean that a court would decline to remove a trustee for proven misconduct. (c) Clause 7(e) - assuming cl 7(e) is not limited to beneficial interests in the entities referred to in that subclause, it does not seem to me that the clause would absolutely bar a claim to remove the trustee even if such a claim was in breach of the provision. If the clause absolutely precluded the right to remove GHR as trustee it would be void as ousting the beneficiaries' right to due administration of the trust (see [139]-[140]). (d)Clause 8 - Clause 8 contains an acknowledgement by the parties that GHR has control of HPPL by her direct ownership of the share capital and voting power. Her removal as trustee would result in the reduction of her legal ownership of the share capital and her voting power from 100 percent to 76.55 per cent. Whether that would prevent her from retaining full ongoing control and management may well be open to doubt. She would certainly be left with sufficient voting power to control the board of directors and pass any special resolution. However, even if it did diminish her ownership or control to some extent, that would not in my opinion prevent a court from removing her as trustee if it found that she was unfit to carry out that function. (e)Clause 9 - The operation of cl 9.1 may be frustrated by a splitting of the Trust. It would not be frustrated by the appointment of a new trustee. So far as cl 9.2 is concerned, the power of a court to remove a trustee for misconduct is not excluded by the conferral of a power on an existing trustee to appoint new trustees. 147In these circumstances, particularly as this is an interlocutory judgment, it is neither necessary nor desirable to express any concluded view on the likelihood of the success of any of these particular defences. 148It follows that Brereton J was correct to the extent he found that the defences raised under the Settlement Deed were part of a larger dispute. The question remains whether these defences having been made, the Court should, in the exercise of its discretion, stay the whole or any part of the proceedings. It is convenient to deal with that issue after I have dealt with the contention that the claims made by the respondents are not capable of arbitration.

[13]

Notice of Contention of JLH, HRW, BHR: Respondents' submissions 149The respondents by their notice of contention contended that the dispute was not one capable of resolution by arbitration. 150In support of this submission, they relied in particular on the fact that s 77(2)(b) of the Trustee Act empowers the court to remove a trustee if the trustee "has been held by the Court to have misconducted himself in the administration of the trust" (emphasis added). They submitted that this augmented the inherent jurisdiction of the court of equity to remove a trustee on grounds assessed and adjudicated upon by the court. They emphasised that a trust is a creature of the courts of equity, which retain an inherent supervisory jurisdiction over their administration. In that context they submitted that the case fell within that category of case identified in Mustill and Boyd, Commercial Arbitration, 2nd ed (1989) Butterworths at 149 and Siemens Ltd v Origin Energy Uranquinty Power Pty Ltd [2011] NSWSC 195; (2011) 279 ALR 759 as being one where it is "apparent from the nature of the subject matter or the way that it is dealt with by the legislature that it is appropriate for disputes concerning that subject matter to be resolved by the courts, or specialist tribunals established for that purpose" (Siemens supra at [38]). 151In submissions on the hearing of the appeal, senior counsel for the respondents emphasised that the power under s 77(2)(b) of the Trustee Act and the power to make a vesting order under s 79(1) of the Trustee Act were derived from statute. He submitted that an arbitrator's power and authority does not derive from statute but from a private agreement between the parties 152Senior counsel for the respondents also pointed to the fact that ss 85(4), (5), (6) and (7) demonstrate that vesting orders made under the Trustee Act can affect the rights of third parties. He submitted, consistent with what was decided by Santow J in Andco Nominees Pty Limited v Lestato Pty Limited [1995] 126 FLR 404; (1995) 17 ACSR 239 that a vesting order of itself vests ownership in the person in whose favour it is made by operation of law and gives the person named in the vesting order the right to compel a transfer in the person's own favour (see Andco Nominees supra at 258-259). In those circumstances, it was submitted, the orders would effect the rights of third parties, in this case HPPL, which would be required to register a transfer of shares, as a vesting order will prevent any conduct by the directors preventing the registration of share transfers (see Andco Nominees supra at 259-260). It was said that as third party rights were affected this was another reason that the dispute was not capable of settlement by arbitration. Reliance was placed in this context on the decision of Austin J in ACD Tridon Inc v Tridon Australia Pty Limited [2002] NSWSC 896 at [189] and Mustill and Boyd supra at 149.

[14]

Notice of Contention of JLH, HRW, BHR: Submissions of GHR 153In her written submissions GHR said the relevant principles applicable to whether a dispute was arbitrable were correctly summarised by Hammerschlag J in Larkden Pty Limited v Lloyd Energy Systems Pty Limited [2011] NSWSC 268; (2011) 279 ALR 772. She pointed out that in that case it was held that a dispute between parties as to their rights and entitlements to a patent application was capable of being arbitrated, as it did not impinge upon powers reserved to the Commissioner of Patents or the Federal Court. She pointed out that a similar approach was taken by the Supreme Court of Canada in Desputeaux v Editions Chouette (1987) Inc [2003] 1 SCR 178 at [38] in determining that a copyright dispute between the parties was arbitrable. 154She submitted that the fact that the statutory power to remove a trustee was reposed in the court did not render the dispute incapable of arbitration, referring by way of analogy to cases such as IBM Australia Ltd v National Distribution Services Ltd (1991) 22 NSWLR 466, where disputes involving claims under s 82 and s 87 of the Trade Practices Act 1974 (Cth) were held to be arbitrable. 155Orally, senior counsel for GHR submitted that just as an arbitrator could deal with claims under the Trade Practices Act, an arbitrator could exercise the statutory power conferred upon a court to remove a trustee. Senior counsel for GHR also referred to the fact that the court had defined degrees of control of the arbitration process by virtue of the provisions of ss 38, 39 and 40 of the Commercial Arbitration Act which led, he submitted, to the conclusion that the supervisory jurisdiction of the court over trustees was not entirely ousted. 156Senior counsel for GHR also pointed to the fact that a vesting order was not sought in the statement of claim and to the reluctance of courts to make vesting orders as a substitute for ordinary conveyancing practice: Re Purkiss [1999] 3 VR 223 at [18]. He submitted that there would be no need for a vesting order as an arbitrator could make an award removing GHR as trustee and requiring her to execute the deed of appointment of a new trustee. He submitted that this would be enforceable under s 33 of the Commercial Arbitration Act.

[17]

Notice of Contention of JLH, HRW, BHR: Respondents' submissions in reply 161In their submissions in reply the respondents emphasised that the narrowing of what has been considered to be non-arbitrable in recent times has been mainly in the area of international commercial arbitration. They referred in that regard to Tweeddale and Tweeddale, Arbitration of Commercial Disputes: International and English Law and Practice (2007) Oxford University Press at 4.32. They again emphasised the provisions of the Trustee Act in which powers to remove a trustee, make a vesting order and review the conduct of a trustee, were vested in the court. They referred to s 94(3) of the Trustee Act which confers on a court a power to direct that a person shall be made a party to the proceedings. They submitted that this avoided the problem which arose in arbitration that third parties could not be compelled to arbitrate: see Michael Wilson & Partners Ltd v Nicholls [2011] HCA 48; (2011) 86 ALJR 14 at [90]; Sun Life Assurance Company of Canada v Lincoln National Life Insurance Company [2005] 1 Lloyd's Rep 606 at [68]. 162So far as the reliance placed by GHFR on s 42(f) was concerned, the respondents pointed to the decision of Megarry VC in Re Earl of Strafford Deceased; Royal Bank of Scotland Ltd v Byng [1980] Ch 28 and that of Nettle J in Dowling & Ors v St Vincent de Paul Society Victoria Inc [2003] VSC 454 at [21] to the effect that s 42(f) and its equivalent provisions only related to claims by third parties against the trustee, and not to what Sir Robert Megarry described in Royal Bank of Scotland Ltd v Byng supra as "internal disputes" (at 32). 163The respondents submitted that what distinguished the present case from cases such as Comandate Marine Corp supra, Francis Travel supra and IBM Australia Ltd supra, which held that claims under s 82 and s 87 of the Trade Practices Act were arbitrable were the following features: (a)The dispute was not a commercial dispute. (b)The dispute involved fiduciary obligations the original province of the Court of Chancery. (c)The dispute concerned the status of GHR as a trustee. (d)The dispute would involve the vesting of property which affects the world and operates in rem. (e)The respondents' case involved allegations of a serious misconduct which the statute says are to be found "by the Court" (Trustee Act s 77(2)(b)).

[18]

Consideration: Arbitrability 164There do not seem to be any firm principles that determine whether a particular dispute is capable of being resolved by arbitration. The position was stated in Mustill and Boyd supra in the following terms (at 149-150, citations omitted): "In practice therefore, the question has not been whether a particular dispute is capable of settlement by arbitration, but whether it ought to be referred to arbitration or whether it has given rise to an enforceable award. No doubt for this reason, English law has never arrived at a general theory for distinguishing those disputes which may be settled by arbitration from those which may not. The general principle is, we submit, that any dispute or claim concerning legal rights which can be the subject of an enforceable award, is capable of being settled by arbitration. This principle must be understood, however, subject to certain reservations. First, certain types of dispute are resolved by methods which are not properly called arbitration. These are discussed in Chapter 2, ante. Second, the types of remedies which the arbitrator can award are limited by considerations of public policy and by the fact that he is appointed by the parties and not by the state. For example, he cannot impose a fine or a term of imprisonment, commit a person for contempt or issue a writ of subpoena; nor can he make an award which is binding on third parties or affects the public at large, such as a judgment in rem against a ship, an assessment of the rateable value of land, a divorce decree, a winding-up order or a decision that an agreement is exempt from the competition rules of the EEC under Article 85(3) of the Treaty of Rome. It would be wrong, however, to draw from this any general rule that criminal, admiralty, family or company matters cannot be referred to arbitration: indeed, examples of each of these types of dispute being referred to arbitration are to be found in the reported cases. Nor should one conclude that an arbitrator cannot effectively rule on a claim or defence raised under Articles 85 or 86 of the Treaty of Rome. Unless the nature of the question is such as to render the arbitration agreement itself void, or the European Commission has itself initiated proceedings on the question, the arbitrator can and should rule on it." 165Born, in International Commercial Arbitration (2009) Klewer at 768, states the position as follows (citations omitted): "Although the better view is that the Convention imposes limits on Contracting States' applications of the non-arbitrability doctrine, the types of claims that are non-arbitrable differ from nation to nation. Among other things, classic examples of non-arbitrable subjects include certain disputes concerning consumer claims; criminal offences; labour or employment grievances; intellectual property; and domestic relations. The types of disputes which are non-arbitrable nonetheless almost always arise from a common set of considerations. The non-arbitrability doctrine rests on the notion that some matters so pervasively involve public rights, or interests of third parties, which are the subjects of uniquely governmental authority, that agreements to resolve such disputes by 'private' arbitration should not be given effect." 166In Comandate Marine Corps supra, Allsop J (as his Honour then was) in discussing the issue in the context of international commercial arbitration made the following comment (at [200]): "First, the common element to the notion of non-arbitrability was that there was a sufficient element of legitimate public interest in these subject matters making the enforceable private resolution of disputes concerning them outside the national court system inappropriate. Secondly, the identification and control of these subjects was the legitimate domain of national legislatures and courts. Thirdly, in none of the travaux préparatoires was there discussion that the notion of a matter not being capable of settlement by arbitration was to be understood by reference to whether an otherwise arbitrable type of dispute or claim will be ventilated fully in the arbitral forum applying the laws chosen by the parties to govern the dispute in the same way and to the same extent as it would be ventilated in a national court applying national laws." 167The approach outlined above suggests that it is only in extremely limited circumstances that a dispute which the parties have agreed to refer to arbitration will held to be non-arbitrable. This expansive view has generally been accepted by the courts. It was reflected in the remarks of Mason J (as his Honour then was) in Government Insurance Office (NSW) v Atkinson-Leighton Joint Venture [1981] HCA 9; (1981) 146 CLR 206 (at 246-247): "For my part, I do not think that the answer to the question should depend on what was decided in Edwards over one hundred years ago when the basis of the Court's decision was not clearly elaborated in the judgment. The real question, as it seems to me, is whether there is to be implied in the parties' submission to arbitration a term that the arbitrator is to have authority to give the claimant such relief as would be available to him in a court of law having jurisdiction with respect to the subject matter. In the United States it is accepted that the parties to an arbitration are free to clothe the arbitrator with such powers as they may deem it proper to confer, provided that they do not violate any rule of law (5 Am. Jur. (2d), p. 539). There it has been held that the parties may authorize the arbitrator to grant equitable relief, even including relief by way of injunction (5 Am. Jur. (2d), p. 620; 70 A.L.R. (2d), p. 1058). I see no reason why the parties cannot authorize an arbitrator to decide whether interest is payable by one party to another, just as they can authorize him to decide whether damages should be awarded. It is to the submission that one looks to find the powers of the arbitrator, though the powers thereby conferred are supplemented by the Arbitration Act and by other relevant statutory provisions." 168This approach is also reflected in the fact that it has been held that parties can submit to arbitration issues involving rights conferred under statute and claims where the power to grant statutory remedies has been conferred on the court. 169I referred earlier to the decision of this Court in Francis Travel supra. In that case it was held that claims under the Trade Practices Act, including the granting of discretionary remedies under s 87 of that Act, could be settled by arbitration. In that case, Gleeson CJ, with whom the other members of the Court agreed, referred to the decision of the United States Supreme Court in Mitsubishi Motors Corporation v Soler-Chrysler Plymouth Inc 473 US 614 (1985), where it was held that anti-trust claims under the Sherman Act 1890 (US) were arbitrable under an agreement which provided for arbitration by the Japanese Commercial Arbitration Association and in which the proper law of the contract was Swiss. Gleeson CJ (at 167) cited the following passage from the judgment of Blackmun J in Mitsubishi Motors supra with approval: "There is no reason to assume at the outset of the dispute that international arbitration will not provide an adequate mechanism. To be sure, the international arbitral tribunal owes no particular allegiance to the legal norms of particular states; hence, it has no direct obligation to vindicate their statutory dictates. The tribunal, however, is bound to effectuate the intentions of the parties. Where the parties have agreed that the arbitral body is to decide a defined set of claims which includes, as in these cases, those arising from the application of American antitrust law, the tribunal therefore should be bound to decide that dispute in accord with the national law giving rise to the claim" (Mitsubishi Motors at 636-637). 170Further, the fact that an arbitrator cannot grant all the relief a court is empowered to grant does not mean the dispute is incapable of arbitration. In IBM Australia Ltd supra the majority held that an arbitrator could not make an award under s 87 of the Trade Practices Act to declare a contract void ab initio. However, it was held that that did not make the dispute incapable of arbitration. In that case Clarke JA, with whom Handley JA agreed, made the following comment (at 486): "But the fact that it is not open to an arbitrator to exercise all of the remedies set out in the relevant sections of the Act does not mean that he is not entitled to determine claims made under s 52 and to grant a successful party one or more of the remedies enumerated in s 82 and s 87 of the Act to the extent that it is appropriate that an arbitrator grants such a remedy." 171A similar approach has been taken by the Court of Appeal of England and Wales, in Fulham Football Club supra (permission to appeal to the Supreme Court refused by the Supreme Court). In that case Longmore LJ, with whom Rix LJ agreed, made the following comment (at [103]): "It is well settled that the fact that an arbitrator cannot give all the remedies which a court could does not afford any reason for treating an arbitration agreement as of no effect, see Societe Commerciale de Reassurance ERAS (International) Ltd, Re ERAS EIL appeals [1992] 1 Lloyd's Rep 570 at 610. The inability to give a particular remedy is just an incident of the agreement which the parties have made as to the method by which their disputes are to be resolved. The reason put forward by Mr Marshall for regarding the FAPL rules and FA rules as inapplicable to unfair prejudice petitions (because of the effect any award might have or might not have on third parties) is of even less substance than the supposed inability of an arbitrator to give any particular remedy." 172Thus it has been held that although an arbitrator would not have power to order the winding-up of a company (see A Best Floor Sanding Pty Limited v Skyer Australia Pty Limited [1999] VSC 170 at [13]-[19]) claims for relief under s 232 of the Corporations Act and its United Kingdom equivalent s 994 of the Companies Act have been held to be capable of being resolved by arbitration: ACD Tridon supra at [191]-[194]; Fulham Football Club supra at [76]-[79], [83], [101]-[103]. Similarly, the Supreme Court of Canada has concluded that disputes between parties as to the ownership of copyright are capable of settlement by arbitration: Desputeaux v Editions Chouette supra at [38], while Hammerschlag J in Larkden Pty Limited supra held that a dispute as to entitlements to a patent application was capable of resolution by arbitration. 173It is with this background that it falls to be determined whether a claim to remove a trustee is capable of settlement by arbitration. None of the parties were able to point to any authority on the question. It is correct, as the respondents submitted, that a trust is a creature of equity and the courts maintain an inherent supervisory jurisdiction over the administration of trusts: McLean v Burns Philp Trustee Co Limited (1985) 2 NSWLR 623 at 633, 637. This Court in Rinehart v Welker [2011] NSWCA 403 at [52] expressed the view that the proper conduct of trustees was a matter which required close public scrutiny. Further, the approach of a court in evaluating all relevant circumstances in considering whether it is in the interests of the beneficiaries to remove a trustee (Miller v Cameron supra) is a matter which tends against such disputes being arbitrable. 174In an article "The Arbitration of Trust Disputes" Journal of International Trust and Corporate Planning (1999) vol 7 No 4, Messrs Cohen QC and Staff expressed the view that the statutory jurisdiction of the court to appoint a new trustee could not be ousted by an arbitration provision. The only authority cited in support of that proposition was the decision of the United Kingdom Court of Appeal in Czarnikow v Roth Schmidt & Company [1922] 2 KB 478 which held void a provision in the rules of the Refined Sugar Association prohibiting an application by the arbitrator to the court for an opinion of the court on any question of law. The clause was held to be void for the reasons set out by Atkin LJ at 491: "The jurisdiction that is ousted in this case is not the common law jurisdiction of the Courts to give a remedy for breaches of contract, but the special statutory jurisdiction of the Court to intervene to compel arbitrators to submit a point of law for determination by the Courts. This appears to me to be a provision of paramount importance in the interests of the public." 175Notwithstanding these matters, it is my opinion that at least in circumstances where the trustee and each beneficiary have expressly agreed to their disputes being referred to arbitration, a court should give effect to that agreement. The supervisory jurisdiction of the court is not ousted. It continues to have the supervisory role conferred upon it by the relevant legislation, in this case the Commercial Arbitration Act. There may be powerful commercial or domestic reasons for parties to have disputes between a trustee and beneficiary settled privately. It does not seem to me that the matters to which I have referred above should preclude a court from giving effect to such an agreement provided the jurisdiction of the court is not ousted entirely. 176The fact that an arbitrator may not have power to remove a trustee or make a vesting order does not alter this position. An arbitrator could give effect to a claim for removal by ordering the trustee to resign, to appoint a new trustee and to convey the trust property to that person. Such an award could be enforced as a judgment under, in this case, the Commercial Arbitration Act s 33. 177In these circumstances it does not seem to me to be contrary to public policy for the beneficiaries under the Trust and the trustee to agree to resolve their disputes by arbitration, provided the supervisory jurisdiction of the court contained in the relevant legislation is maintained. It is not necessary in the present case to deal with a more difficult question which would arise if the arbitration clause was contained in the Trust Deed and purported to bind all persons beneficially entitled under the Trust, including infants and unborn beneficiaries. 178The other grounds on which it is said the dispute is not capable of resolution by arbitration may be dealt with shortly. The fact that it is not a commercial dispute and involves breaches of fiduciary duty does not mean that it is incapable of arbitration. I have already dealt with the public policy argument and the fact that it is not a commercial dispute seems irrelevant, particularly as there may be sound reasons for the parties desiring that a family or domestic dispute be resolved privately. 179So far as the suggestion that third party rights are affected, the only third party identified was HPPL, which supports the reference to arbitration. Its position could be readily accommodated by making a stay conditional upon it submitting to the arbitration and agreeing to be bound by the result. 180Nor does it matter in my view that the claim involves an allegation of serious misconduct. The fact that serious misconduct found by the court is a ground for the removal of a trustee does not, in my opinion, lead to the conclusion that a claim for serious misconduct is not capable of settlement by arbitration. It has been held that in cases of alleged fraud a stay will be refused as a matter of course where the stay is opposed by the party against whom the fraud is alleged, not where the stay is opposed by the defrauded party: Russell v Russell (1880) 14 Ch 471 at 476-477; Camilla Cotton Oil Co v Granadex SA [1976] 2 Lloyd's Rep 10 at 16; Cunningham-Reid v Buchanan-Jardine [1988] 2 All ER 438; [1988] 1 WLR 678 at 685-686, 690, 691. Consistent with that reasoning, where the allegations of serious misconduct are made against the party seeking the stay the fact that the allegations involve serious misconduct is relevant in the exercise of the discretion, but does not mean that a court as a matter of course would refuse a stay. 181Further, the fact that the claim involves the status of GHR as trustee does not seem to me to affect the position. The removal and replacement of a trustee does not destroy the substratum of the Trust. In that regard the position may be contrasted with the winding-up of a company which, as Warren J (as her Honour then was) pointed out in A Best Floor Sanding Pty Limited v Skyer Australia Pty Limited supra at [18], strikes at the very heart of the corporate structure enshrined in the Corporations Act. In a case of removal of a trustee neither the trust property nor the rights of beneficiaries are affected. In these circumstances the fact that the claim involves the so-called status of the trustee does not alter the position. 182GHFR relied on the provisions of s 42(f) of the Trustee Act which conferred upon the trustee the power to refer to arbitration "any debt, account, claim or thing whatever relating to the trust or to the trust property", in support of the submission that the dispute was capable of settlement by arbitration. Having regard to the conclusions which I have reached it is not necessary to reach a final view on the scope of that section. However, it does seem to me that the section is dealing with claims made by or against third parties of the Trust as distinct from claims between the trustee and beneficiaries. See Royal Bank of Scotland Ltd v Byng supra; Dowling v St Vincent De Paul Society of Victoria Inc supra at [21]; c/f Perpetual Trustees Australia Ltd v Wallace [2007] FCA 527 at [40]. 183It follows, in my view, that if the parties had in fact agreed that the claim for the removal of GHR as trustee should be submitted to arbitration such a dispute would be arbitrable. The question remains whether as a matter of discretion the present proceedings should be stayed in circumstances where the respondents' claim is not covered by the arbitration clause but particular defences raised by the appellants fall within the scope of that clause.

[19]

Consideration: Discretion 184Each of the parties agreed that the grant of a stay whether sought under s 67 of the Civil Procedure Act or under s 53 of the Commercial Arbitration Act was discretionary. It follows that it was necessary for the appellants to demonstrate error in the sense referred to in House v The King [1936] HCA 40; (1936) 55 CLR 499. 185The primary judge took the view that having concluded the respondents' claim was not a claim arising under the Settlement Deed, the question of discretion did not directly arise (at [50]). However, he concluded that even if the prospective defences under cl 7(e) and (8) were disputes under the Settlement Deed, he would not have stayed the proceedings, primarily for the reason that those defences were "but aspects of a larger dispute not properly characterised as one 'under this deed'" (at [49]-[50]). 186I have concluded that the respondents' claim was not a dispute under the Settlement Deed, that the Settlement Deed did not have the effect of barring any claim for removal of the trustee and that the other defences, although arising under the Settlement Deed, did not necessarily bar a claim for removal of GHR as trustee. In these circumstances, the manner in which the primary judge concluded he would have exercised his discretion had the occasion arisen would not have involved error in a House v The King sense. 187Further, to the extent it is necessary for this Court to re-exercise the discretion, having regard to the comment of the primary judge that it did not directly arise, I would reach the same conclusion. Once it is established that the claim for removal of the trustee did not arise under the Settlement Deed, this Court has no power to refer that claim to arbitration. There are therefore two alternatives; stay the proceedings pending determination of the issues raised by the defence or refuse the stay. 188In my opinion, it would not be appropriate to stay the proceedings pending determination of the defences. As I have indicated, the releases in cl 6 and the provisions of cll 7, 11 and 13 of the Settlement Deed do not bar the claim. They will not be relevant to a claim for removal of the trustee arising out of misconduct subsequent to the date of the Settlement Deed. Whether the other defences raised will result in a refusal of the relief could only be determined in the context of a consideration of the allegations of the respondents and whether, even taking into account the provisions of the Settlement Deed, the conduct complained of, if made out, would render GHR unfit to remain as trustee. 189The approach which I have suggested is appropriate. It is consistent with the approach commonly taken by courts to avoid multiplicity of proceedings and the possibility of inconsistent findings: Paharpur Cooling Towers Ltd v Paramount (WA) Ltd supra at [43]-[44]; Savcor Pty Limited v State of New South Wales [2001] NSWSC 596; (2001) 52 NSWLR 587 at [47]-[50]; Taunton-Collins v Cromie [1965] WLR 633; [1964] 2 All ER 332 at 334; McGrath v O'Sullivan [1964] NSWR 436 at 437. 190The position may be different in circumstances where that part of the claim which cannot be referred to arbitration is only a small part of the dispute: Bristol Corporation v John Aird [1913] AC 241 at 249-250; Radio Publicity (Universal) Ltd v Compagnie Luxembourgeoise de Radiodifusion [1936] 2 All ER 721 at 728. That is not the present case. 191In my opinion it is also relevant in considering this issue, that the respondents' claim relates to the proper conduct of a trustee, a matter warranting close public scrutiny: Rinehart v Welker supra at [52]. Whilst I have expressed the view that that factor would not render the dispute incapable of arbitration, it would not be a proper exercise of discretion to deny a beneficiary the right to approach the court in respect of alleged misconduct of a trustee where the issue in question was not covered by the arbitration clause. 192In those circumstances, I am of the view that the primary judge was correct in refusing a stay.

[22]

Clause 20 197I agree with Bathurst CJ (at [120]) that determining the proper construction of cl 20 of the Settlement Deed turns on the language of the provision, bearing in mind that the words of an arbitration clause should, to the extent possible, be consistent with the ordinary meaning of the words liberally construed. 198There are multiple examples of the construction of the various verbal formulae used in arbitration clauses (and elsewhere), however as Sir Michael J Mustill and Stewart C Boyd said in Commercial Arbitration, 2nd ed, Butterworths, 1989 (at 118), after referring to numerous such illustrations: "... any attempt to ascribe an immutable meaning to a particular form of words would be not only unprofitable but positively misleading. Each arbitration clause must be construed in the context of the contract as a whole, and the meaning of a particular formula may be broader or narrower depending on the nature of the transaction, the circumstances in which the arbitration clause came into existence, and the other provisions of the contract. A decision on a particular form of words in one contract is no sure guide to its meaning in another." 199While Mustill and Boyd's cautionary words must be borne in mind, it is also of some assistance to look at some of the authorities for guidance. 200Evans J's statement in Overseas Union Insurance Ltd v A A Mutual International Insurance Co Ltd [1988] 2 Ll R 63 (at 67) usefully illustrates the narrower approach taken to construing words such as those used in cl 20 of the Settlement Deed: "[A] broad distinction ... may be drawn between those clauses which refer to arbitration only those disputes which may arise regarding the rights and obligations which are created by the contract itself, and other clauses which show an intention to refer to some wider class or classes of disputes. This distinction is obviously clear and justified as a matter of law. It may also be one which would be recognised by the parties whose contract it is, for at the very least, by making the contract, they demonstrate their agreement to create a new category of legal rights and obligations, legally enforceable between themselves. Disputes regarding this category may well be described, as a matter of language, as ones arising 'under' the contract, and this meaning of that phrase has been authoritatively recognised and established, e.g. by the House of Lords in Heyman v Darwins and by the Court of Appeal in Ashville. Conversely, if the parties agree to refer disputes arising 'in relation to' or 'in connection with' their contract, a fortiori if the clause covers disputes arising 'during the execution of this contract' (The Damianos [1971] 1 Lloyd's Rep. 502; [1971] 2 QB 588) or in relation to 'the work to be carried out hereunder', a common form in construction contracts, then, both as a matter of language and of authority, some wider category may be intended." 201As Austin J pointed out in ACD Tridon v Tridon Australia [2002] NSWSC 896 (at [155]), "the basic distinction propounded by Evans J is reflected in Australian cases". Echoing Mustill and Boyd, his Honour added: "The position under Australian law depends upon the precise meaning of the language used. The Australian approach is not without disadvantage. There is a risk that important commercial outcomes might be made to depend on over-subtle semantic distinctions, a risk to be avoided by a common sense and practical approach to the task of construction." 202BTR Engineering Australia Ltd v Dana Corporation [2000] VSC 246 involved the interpretation of an arbitration clause, the operation of which was invoked in the case of "a dispute involving their respective rights and obligations under this Purchase Agreement". Warren J (as her Honour then was) held (at [24]) by reference to the Shorter Oxford Dictionary definition of "under" that, as used in the arbitration clause, it meant "governed, controlled, or bound by; in accordance with" and, using the same reference, that "to involve" meant to "include or affect in its operation" so that "the parties [had] agreed to refer [to arbitration] a dispute including or affecting their rights and obligations governed, controlled, or bound by or in accordance with the agreement". Applying that construction, her Honour held (at [24]) that "the parties intended to confine the matters to be referred to arbitration to matters relating to their rights and obligations under the agreement and not other matters such as allegations of misleading or deceptive conduct, negligent misstatement or fraudulent misrepresentation". 203In my view this interpretation, focussing on the "rights and obligations" under the agreement, bears some resemblance to that used in relation to the expressions "under the Constitution" or "under the laws of the Parliament". A matter falls within those expressions where "the right or duty in question ... owes its existence to, ... or depends upon, Federal law for its enforcement, whether or not the determination of the controversy involves the interpretation (or validity) of the law": R v Commonwealth Court of Conciliation and Arbitration; Ex parte Barrett [1945] HCA 50; (1945) 70 CLR 141 (at 154) per Latham CJ. A matter may be said to so arise whether it is advanced to support, or as a defence to, a claim: Felton v Mulligan [1971] HCA 39; (1971) 124 CLR 367 (at 387 - 388) per Windeyer J. I agree, however, with Bathurst CJ (at [129]) that the analogy with such cases is limited - I would not extend it in the context of cl 20 to mean that any reliance on a provision of the Settlement Deed meant the whole dispute was governed by that Deed. 204Insofar as Fiona Trust & Holding Corporation v Privalov [2007] UKHL 40; [2007] 4 All ER 951 (at [13]) is concerned, I also agree with Bathurst CJ (at [121]) that to approach arbitration clauses on the basis of "[an] assumption that the parties, as rational businessmen, are likely to have intended any dispute arising out of the relationship into which they have entered or purported to enter to be decided by the same tribunal" is not in accord with High Court authority requiring the construction of contracts to be undertaken by reference to the terms of the contract, the meaning of which is to be determined by what a reasonable person would have understood them to mean: Toll (FGCT) Pty Limited v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165 (at [40]). The assumptive approach Lord Hoffmann embraced is inconsistent with that methodology. 205Further, Fiona Trust & Holding Corporation v Privalov concerned the scope and effect of arbitration clauses in eight charter parties each governed by a "widely used" standard form contract (Shelltime 4): Fiona Trust & Holding Corporation v Privalov (at [12]). The relationship between the parties arose from only one contract. Lord Hoffmann (at [12]) was concerned to assure the reputation of English commercial law. In that context, he endorsed Longmore LJ's opinion in the Court of Appeal "that the time has come to draw a line under the authorities to date and make a fresh start", an opinion Longmore LJ (who delivered the judgment of the Court) stated was appropriate "for cases arising in an international commercial context": Fiona Trust & Holding Corporation v Privalov [2007] EWCA Civ 20; [2007] All ER (D) 169 (at [17]). 206Such cases are a far remove from the present. The parties' relationships in this case arising out of their family relationships. Mundane as it may seem, they are concerned with domestic affairs, and not the lofty climes of international commerce. Moreover, the parties' relationships are not, unsurprisingly found in standard form contracts, but in unique and inter-woven agreements: the Trust Deed, the Deed of Obligation and Release and the Settlement Deed. Underpinning those agreements are equitable principles arising, to a substantial extent from, though not confined to, the law of trusts. In such circumstances, in my view, there is little or no room for the application of the presumption Lord Hoffmann declared. 207Returning to the approach taken in the authorities dealing with language in the same terms as cl 20 and having regard to the language of that clause, focussing as it does on a "dispute under this deed" (emphasis added), I would conclude that the parties intended to refer to arbitration only those disputes that may arise regarding the rights and obligations which are created by the Settlement Deed itself and which depend upon it for their enforcement. I agree therefore with the primary judge's construction of cl 20 (at [30]). I do not, however, agree with his Honour (at [27]) that determining whether there is "a dispute under" the Settlement Deed focuses on whether the respondents have such a dispute. As Windeyer J said in Felton v Mulligan, both claims and defences have to be examined to determine whether the dispute can be characterised as "under this Deed". I agree with Bathurst CJ (at [126] - [127]) that the orders the respondents seek are not a "dispute under this deed". I also agree with Bathurst CJ (at [144] - [145]), that the Settlement Deed does not bar the respondents' claims. 208I would also agree with the primary judge (at [49]) and Bathurst CJ (at [148]) that even if, as I would accept, the clauses invoked by the appellants in their defences raise "dispute[s] under this Deed", they were part of a "larger dispute", as to which it is a matter of discretion whether the Court should grant a stay pending arbitration. 209I agree with Bathurst CJ's reasons (at [184] - [192]) that it would not be appropriate to stay the proceedings pending determination of the defences by arbitration.

[23]

Arbitrability 210I agree with Bathurst CJ's reasons that the fact that the respondents' claims seek to invoke both the inherent and statutory jurisdiction of the court to remove GHR as trustee and to reconstitute the trust, a process which will include the making of a vesting order and ancillary issues, does not render such dispute non-arbitrable. I would add the following to his Honour's consideration of this issue. 211The common element to the notion of non-arbitrable matters is that there is a sufficient element of legitimate public interest in their subject matter making the enforceable private resolution of such disputes outside the national court system inappropriate: Comandate Marine Corp v Pan Australia Shipping Pty Ltd [2006] FCAFC 192; (2006) 157 FCR 45 (at [200]) per Allsop J (as his Honour then was) (Finn and Finkelstein JJ agreeing). His Honour listed disputes such as those concerning intellectual property, anti-trust and competition disputes, securities transactions and insolvency as types of disputes which national laws may see as not arbitrable. 212In Larkden Pty Limited v Lloyd Energy Systems Pty Limited [2011] NSWSC 268; (2011) 279 ALR 772 (at [62]) Hammerschlag J stated that "[g]enerally, any dispute or claim which can be the subject of an enforceable award is capable of being settled by arbitration"; see also Mustill and Boyd (at 149). His Honour (at [64]) considered that criminal prosecutions are non-arbitrable, as well as the determination of status matters "such as bankruptcy, divorce, and the winding up of corporations in insolvency" and "certain types of dispute concerning intellectual property such as whether or not a patent or trade mark should be granted". He observed that "[t]hese matters are plainly for the public authorities of the state" commenting that "[p]atents and trade marks are monopoly rights that only the state can grant": (at [64]). 213In Siemens Ltd v Origin Energy Uranquinty Power Pty Ltd [2011] NSWSC 195; (2011) 279 ALR 759 (at [38]) Ball J also indicated that in certain circumstances, a subject matter may be non-arbitrable where jurisdiction was conferred on a specialist tribunal, referring to Metrocall Inc v Electronic Tracking Systems Pty Ltd [2000] NSWIRComm 136; (2000) 52 NSWLR 1. Applying that principle, his Honour concluded that a dispute under s 15(2)(a)(i) of the Building and Construction Industry Security of Payment Act 1999 (the "BSOP Act") was not arbitrable. In his Honour's view it was apparent from the nature of the subject matter with which that BSOP Act dealt that it was appropriate for disputes concerning its subject matter to be resolved by the courts, or specialist tribunals established for that purpose. In that case, s 34(1) of the BSOP Act which says that the Act takes effect despite any provision to the contrary in any contract, was clearly a strong factor in his Honour's decision: see (at [42]). His Honour also said: "[43] It follows from these provisions that arbitration cannot be a substitute for an adjudication under the Act. In addition, in my opinion, the supervisory jurisdiction the court exercises over the adjudication process cannot be the subject of an arbitration. In exercising that jurisdiction, the court is exercising a public function of ensuring the integrity of a dispute resolution system established by parliament. It is not simply resolving disputes between private litigants ..." 214Matters of the special nature of which Ball J wrote aside, the mere fact that a power is conferred on a Court by statute, does not mean that an arbitrator cannot exercise such a power. The question turns on the language of the arbitration clause. Thus it has been held an arbitrator can award relief and make orders under s 87 of the Trade Practices Act 1974 (Cth): IBM Australia v National Distribution Services Pty Ltd (1991) 22 NSWLR 466; Francis Travel Marketing Pty Ltd v Virgin Atlantic Airways Ltd (1996) 39 NSWLR 160 (at 167). In IBM Australia v National Distribution Services, Handley JA said (at 487) he could "see no basis for excluding [from an arbitrator's consideration] claims arising under statutes which grant remedies enforceable in or confer powers on courts of general jurisdiction." In ACD Tridon v Tridon Australia, Austin J held that disputes arising under the Corporations Act 2001 (Cth) were arbitrable. His Honour (at [192]) could "see nothing special about the Corporations Act that would distinguish it, as a whole, from other legislation such as the Trade Practices Act". His Honour accepted, however, (at [192]) that public policy considerations such as those to which Warren J (as her Honour then was) referred in A Best Floor Sanding Pty Ltd v Skyer Australia Pty Ltd [1999] VSC 170, "operate against referring to arbitration a determination to wind up a company on the grounds upon which a court may order that a company be wound up." However, winding-up aside, to the extent that the statutory powers of a court under the Corporations Act were, "generally speaking, comparable to the powers exercised by a court under the general law", his Honour (at [193]) was of the view that they were "generally not special powers to be exercised having regard to specialist public interest criteria". 215The critical question appears to be "whether there was to be implied in the parties' submission to arbitration a term that the arbitrator is to have the authority to give the claimant such relief as would be available in a court of law having jurisdiction with respect to the subject matter": Francis Travel Marketing Pty Ltd v Virgin Atlantic Airways Ltd (at 167), per Gleeson CJ (Meagher and Sheller JJA agreeing). In that case, at issue was whether an arbitrator had jurisdiction to determine a claim for damages in respect of a contravention of s 52 of the Trade Practices Act. His Honour considered (at 166) the effect of IBM Australia v National Distribution Services to have been that "it is possible and lawful for parties to agree to refer to arbitration a dispute under the Trade Practices Act 1974 (Cth), secondly, that an arbitrator to whom such a dispute has been referred may, in general, exercise the discretionary powers which the Act confers upon the Supreme Court or the Federal Court ..." (Emphasis added). 216I accept the force of Young JA's observations about the potential difficulties of enforcing an arbitrator's award. However, compelling as they are, they do not militate against conclusion that the respondent's claims, if within cl 20, would be arbitrable. As Patten LJ said in Fulham Football Club (1987) Ltd v Richards [2011] EWCA Civ 855; [2012] 1 All ER 414 (at [84]): " ... [A]s explained earlier in this judgment, these jurisdictional limitations on what an arbitration can achieve are not decisive of the question whether the subject-matter of the dispute is arbitrable. They are no more than the practical consequences of choosing that method of dispute resolution: see Societe Commerciale de Reassurance v ERAS (International) Ltd [1992] 1 Lloyd''s Rep 570; Wealands v CLC Contractors Ltd [1999] 2 Lloyd's Rep 739."

[24]

Mediation 217I agree with Bathurst CJ's reasons on this issue. 218YOUNG JA: I agree with the Chief Justice and with the orders he proposes, but wish to add some comments of my own. 219I respectfully agree with the Chief Justice in [121] that we should not follow what Lord Hoffmann said in Fiona Trust and Holding Corporation v Privalov [2007] 4 All ER 951, 958 [12]. However, I would not want to think that my concurrence means that the prime thrust of what Lord Hoffmann said in that case should be rejected. Lewison & Hughes, The Interpretation of Contracts in Australia (Law Book Company, Sydney, 2012) section 2.06, clearly shows that much of the Fiona case is consistent with leading Australian authority. I agree with the Chief Justice's caveat in his [122]. 220However, as French J (as his Honour then was) said in Paper Products Pty Ltd v Tomlinsons (Rochdale) Ltd (1993) 116 ALR 163, 172, where parties have chosen narrow words, a court is somewhat inhibited in resorting to a general proposition that commercial contracts are to be construed liberally. 221When considering the phrase "under this deed" a court must take into account the treatment that the word "under" has received in decisions in the past. One would like to think that drafters of legal documents would have had them in mind when preparing the document in question. 222I respectfully agree with the Chief Justice in his [129] that authorities dealing with the phrase "under the Constitution" or the like are not of assistance. However, I consider that there is some useful material in cases which have construed the phrase "under a treaty". 223Although the authorities have not always spoken with one voice, the prevailing view is that a matter will not be said to be within the phrase merely because the treaty has to be interpreted to get to a result in the litigation. What is essential is, in the words of Miles CJ in R v Donyadideh (1993) 114 FLR 43, 47-8, "that the right, duty or liability in question 'owes its existence' to the treaty or depends upon the treaty for its enforcement, or has its source in the treaty". See also the discussion by O'Keefe J in this Court in Matchett v Deputy Commissioner of Taxation [2000] NSWSC 975; 158 FLR 171, 185-188 and the remarks of Kirby J in Re East; Ex Parte Nguyen [1998] HCA 73; 196 CLR 354, 382. 224These thoughts confirm the views expressed by the Chief Justice. 225Where I respectfully differ from the Chief Justice is his view summarised in [175] that, subject to the exercise of discretion a claim for removal of a trustee and associated issues would be arbitrable. 226As the Chief Justice notes, there is no authority directly on point. There are, as the Chief Justice has detailed, indications in some of the cases which give some support to his view. However, I consider that the difficulties in a court enforcing any decision of an arbitrator are so great (or could be so great if a party was uncooperative) that the opposite view is preferable. Whilst a court could make orders authorising a Registrar to sign transfers on behalf of the former trustee and direct the Registrar General to register them, removal and replacement of trustees usually involves the taking of accounts and an in personam order against the former trustee which if he or she disobeys it leads to imprisonment. It is stretching things to contemplate that an order for imprisonment would be an appropriate enforcement procedure to perfect an arbitrator's award. 227I believe that history supports this view. Nineteenth century attempts to merge common law and equity tended to fall down because only the Chancery had the proper machinery to enforce in personam orders. 228Even if my view is erroneous, it would be a rare case where discretion would be exercised in favour of permitting the arbitration to proceed. 229My difference of opinion on this issue does not affect the result of the appeal. 230As to mediation, the primary judge considered that the application for mediation was premature. This does not preclude a further application at the appropriate time. That, however, is not a matter for this Court on appeal.

[25]

SCHEDULE Statement of Claim Defence [17] The 3 September email: [17] In answer to the whole of paragraph 17 the first defendant: .... ... ii) attached an unexecuted deed between the First Defendant, the Plaintiffs and the Second Defendant ("3 September Deed"); ii) says that each of the first and third plaintiffs and the second defendant entered into a Confidential Settlement Deed in August 2006 (Hope Downs Deed). The second plaintiff bound himself to the Hope Downs Deed upon execution of a Confidential Deed on 13 April 2007 (2007 Deed). The first defendant will rely upon the terms of the Hope Downs Deed and the 2007 Deed as if fully set out herein; iii) stated that the Deed was "required to be signed by each beneficiary"; iii) says that pursuant to the terms of the Hope Downs Deed the vesting date of the Trust was expressly provided for as follows: ... "Subject to [the first defendant's] agreement at any time prior to 6 September 2011, the Beneficiaries agree to extend the vesting date of [the Trust] to the maximum extent permitted by law or to any prior date after 6 September 2011 by agreement of the majority of Beneficiaries" Particulars: Clause 9.1 of the Hope Downs Deed iv) the first defendant further says that the request contained in the 3 September email was not unreasonable, both in respect of this Trust and the benefits for the beneficiaries pursuant to the Hope Dows Deed and given the protections usually available to trustees and providers of various professional services. Further, the request was not unreasonable given the terms and operations of the Trust and the Hope Downs Deed and was consistent with the Hope Downs Deed. .... v) the first defendant further states that the 3 September letter and enclosed 3 September Deed did no more than: ask the plaintiffs to act in conformity with the Hope Downs Deed in relation to the vesting date, given that it was in the interest of the plaintiffs to do so; confirm that the releases and covenants contained in the Hope Downs Deed would apply to conduct of the first defendant that occurred after the execution of the Hope Downs Deed; .... Particulars: Clauses 5, 6, 7 and 9 of the Hope Downs Deed. [19] The 3 September Deed: [19] In answer to paragraph 19 the first defendant: i) contained a recital to the effect that the First Defendant was willing to extend the vesting date of the Trust if each of the Plaintiffs and Second Defendant executed the Deed; i) denies that the content and effect of the 3 September Deed is sufficiently set out in the statement of claim and will at the hearing seek to rely upon the 3 September Deed as if fully set out herein and says that it cannot be read in isolation without referring to the Hope Downs Deed; .... .... iv) by clause 2 provided that if any of the beneficiaries of the Trust intended to marry or live in a marriage like relationship, the beneficiary was required to enter into a prenuptial agreement on the terms set out in clause 2. v) in answer to subparagraph 19(iv) that first defendant says that the requirement in clause 2 of the 3 September Deed was in the interests of each of the beneficiaries and was otherwise in conformity with: clause 7 of the Hope Downs Deed; and recital F of the Confidential Settlement Deed dated 13 April 2007 between the second plaintiff the first defendant and HPPL [binding the second plaintiff to the Hope Downs Deed] vi) in further answer to paragraph 19 the first defendant repeats subparagraphs 17(iv) and 17 (v) [requests were not unreasonable and consistent with the terms of the Hope Downs Deed] [22] The First Plaintiff was: [22] In answer to paragraph 22 the first defendant: i) was not provided with access to the material requested in paragraph [21(i)] on 4 September 2011 or at any time since; ... ii) did not receive confirmation that the vesting date of the Trust had been extended for a period of six months on 4 September 2011 or at any time since. ii) denies that the first defendant was under an obligation to provide access to the Trust information requested, other than in accordance with the Trust Deed and the Hope Downs Deed; ... iv) otherwise denies that the first plaintiff is entitled at law to copies of the past accounts and says further that such request was proscribed by the terms of the Hope Downs Deed. Particulars: Clauses 1.1(b), (d) and (d) [sic] and clause 6 of the Hope Downs Deed [23] By an email dated 4 September 2011 to Mr Newby, the Third Plaintiff: [23] In response to paragraph 23 the first defendant: i) sought "preliminary information" including: ... .... ii) says in answer to subparagraph 23(i): Financial statements, tax returns, bank and other records for the Trust; denies that the third plaintiff had any entitlement to be provided with copies of the financial statement, tax returns and bank records of the Trust and says that the request was otherwise proscribed by the terms of the Hope Down Deed; Financial statements, tax returns, bank and other records for HMHT Investments Pty Ltd for all available years; Particulars: Clauses 1.1(b), (d) and (d) [sic] and clause 6 of the Hope Downs Deed .... d) denies that the third plaintiff had any entitlement to be provided with copies of the financial statements and bank records for HMHT Investments Pty Ltd and says that the request was otherwise proscribed by the terms of the Hope Downs Deed; Particulars: Clauses 1.1(b), (d) and (d) [sic] and clause 6 of the Hope Downs Deed [24] By email dated 4 September 2011 to the Third Plaintiff, Mr Newby: [24] In answer to paragraph 24 the first defendant...otherwise repeats the matters set out in paragraphs 22 and 23 above, and says further it was reasonable to limit the financial statements provided to the years 2007 to 2010 because this was in conformity with the Hope Downs Deed. i) agreed to provide the Third Plaintiff with the financial statements of the Trust for the years 2007 to 2010 but only on condition that "you kindly advise us this is your last request for Trust information"; Particulars: Clause 1.1(b), (d) and (d) [sic] and clause 6 of the Hope Downs Deed .... [30] By email dated 5 September 2011 to Mr Newby, the Third Plaintiff: [30] In response to whole of paragraph 30 the first defendant: ... ... ii) reiterated her request for copies of the bank statements and tax returns of the Trust; ii) refers to and repeats the matters pleaded at paragraphs 23 and 24 above. ... [31] The First Defendant did not and never has complied with the request pleaded at [30] above. [Further request on 5 September 2011 for copy of HPPL constitution, copies of bank statements and tax returns for trust, information provided to PWC, and cashflow forecasts for Hope Downs] [31] In answer to paragraph 31 the first defendant refers to and repeats the matters pleaded at paragraphs 23 and 24 above. [There was no obligation to provide requested material, and in certain respects to do so was proscribed by the Hope Downs Deed] [38] The 5 September 2011 Deed provided: [38] In answer to paragraph 38 the first defendant: i) that the First Plaintiff released and discharged the First Defendant from all actions, suits, claims, demands and causes of action both in law and in equity in relation to, or in connection with, the First Defendant including amending the 5 September 2011 Deed (cl 4.1); i) refers to and repeats the matters pleaded in paragraphs 17, 19, 36 and 37 [Content and effect of emails not sufficiently set out in statement of claim; what was sought by First Defendant was in conformity with Hope Downs Deed] ii) that the First Plaintiff covenanted that she would not take any action, suit, claim, demand in relation to, or in connection with, the First Defendant including amending the "Deed of Settlement" (cl 4.2); ii) says further that the release and discharge and covenant sought from the first plaintiff were not materially different to the releases provided for in the Hope Downs Deed and what was sought by the 3 September Deed; iii) that the 5 September 2011 Deed could be pleaded in bar to any action or suit taken by the First Plaintiff then or hereafter against the First Defendant in relation to, or in connection with, the First Defendant including amending the 5 September 2011 Deed (cl 4.2). Particulars: Clauses 5 and 6 of the Hope Downs Deed and Clause 3 of the 3 September 2011 Deed. [40] The Deed Poll: [40] In answer to paragraph 40 the first defendant admits the same but denies that the content and effect of the Deed Poll is fully set out therein: i) stated that "clause 6" of the 1988 Trust Deed "will be amended to provide that the Trust is to vest on 1 July 2068, as follows" (recital B); i) that the release and discharge and covenant sought from the third plaintiff was not materially different to the releases provided for in the Hope Downs Deed and what was sought by the 3 September Deed and repeats paragraph 17; ii) provided that the Third Plaintiff had no objection to the First Defendant amending the 1988 Trust Deed in the manner provided for (cl 1); ii) the first defendant further says that the request contained in the Deed Poll was not unreasonable, both in respect of this Trust and for trustees generally, given the terms and operation of the Trust and the Hope Downs Deed and the protections usually available to trustees and providers of various professional services. iii) provided that the Third Plaintiff released and discharged the First Defendant from all actions, suits, claims, demands and causes of action both in law and in equity in relation to, or in connection with, the First Defendant amending the 1988 Trust Deed in the manner provided for (cl 2); iii) the first defendant furthers states that the Deed Poll did no more than seek to confirm that the releases and covenants contained in the Hope Downs Deed would apply to conduct of the first defendant that occurred after the execution of the Hope Downs Deed and the protections usually available to trustees and providers of various professional services. iv) provided that the Third Plaintiff acknowledged and confirmed that the amendments provided for were in the best interests of the beneficiaries of the Trust and the First Defendant in making the amendments was acting in the best financial interests of the beneficiaries of the Trust (cl 3). Particulars: Clauses 6, 7 and 13 of the Hope Downs Deed. [42] The revised Deed" ("Revised Deed Poll"): [42] In response to paragraph 42 the first defendant: ... ... iv) provided that the Third Plaintiff released and discharged the First Defendant from all actions, suits, claims, demands and causes of action both in law and in equity in relation to, or in connection with, the First Defendant amending the 1988 Trust Deed in the manner provided for, and otherwise in regard to the First Defendant and the Trust (cl 2); ii) says further that the first defendant formed the view that the exercise by her of the power to extend the vesting date was in the best financial interests of the plaintiffs and the second defendant and repeats paragraphs 17, 19, 36, 37 and 38. [Content and effect of emails not sufficiently set out in statement of claim; what was sought by First Defendant was in conformity with Hope Downs Deed] ... vii) provided that the First Plaintiff released and discharged the First Defendant from all actions, suits, claims, demands and causes of action both in law and in equity in relation to, or in connection with, the First Defendant including amending the 1988 Trust Deed and the Trust (cl 8); viii) provided that the First Plaintiff would not take any action, suit, claim, demand in relation to, or in connection with, the First Defendant including amending the 1988 Trust Deed and the Trust (cl 9); ix) provided that the Deed could be pleaded in bar to any action or suit taken by the First Plaintiff now or hereafter against the First Defendant in relation to, or in connection with, the First Defendant including amending the 1988 Trust Deed and the Trust (cl 9). [43] By email dated 6 September 2011 to the Second Plaintiff, the First Defendant requested that the Second Plaintiff execute the "revised Deed" attached to the email ("Second Revised Deed Poll"). [43] In response to paragraph 43 the first defendant admits the contents of the email attaching the Second Revised Deed Poll and repeats paragraphs 17, 19, 36, 37 and 38. [Content and effect of emails not sufficiently set out in statement of claim; what was sought by First Defendant was in conformity with Hope Downs Deed] [44] The Second Revised Deed Poll: [44] In response to paragraph 44 the first defendant: i) stated that consideration had been given that it was not in the best interests of the beneficiaries of the Trust to vest on 6 September 2011 and should provide that the Trust is to vest on 1 July 2068 "as follows" (recital B); i) admits the same ...and repeats paragraphs 17, 19, 36, 37 and 38; [content and effect of emails not sufficiently set out in statement of claim; what was sought by First Defendant was in conformity with Hope Downs Deed] ii) stated that the Plaintiff had commenced the Proceedings against the First Defendant "in relation to the Trust" (recital C); iii) provided that the Second Plaintiff had no objection to the First Defendant amending the 1988 Trust Deed in the manner provided for (cl 1); iv) provided that the Second Plaintiff released and discharged the First Defendant from all actions, suits, claims, demands and causes of action both in law and in equity in relation to, or in connection with, the First Defendant amending the 1988 Trust Deed in the manner provided for, and otherwise in regard to the First Defendant and the Trust (cl 2); v) provided that the Second Plaintiff acknowledged and confirmed that the amendment pleased at [26(ii)] above was in the best interests of the beneficiaries of the Trust and the First Defendant in making the amendment was acting in the best financial interests of the beneficiaries of the Trust (cl 3); vi) provided that the Second Plaintiff released and discharged the First Defendant from all actions, suits, claims, demands and causes of action both in law and in equity in relation to, or in connection with, the First Defendant including amending the 1988 Trust Deed and the Trust (cl 8); vii) provided that the Second Plaintiff would not take any action, suit, claim, demand in relation to, or in connection with, the First Defendant including amending the 1988 Trust Deed and the Trust (cl 9); viii) provided that the Deed could be pleaded in bar to any action or suit taken by the Second Plaintiff now or hereafter against the First Defendant in relation to, or in connection with, the First Defendant including amending the 1988 Trust Deed and the Trust (cl 9). [55] On or about 13 September 2011, the Plaintiffs, in their capacity as beneficiaries of the Trust, requested copies of the following documents from the First Defendant in her capacity as trustee of the Trust: [55] In response to paragraph 55 the first defendant: i) copies of the accounts of the Trust since the date of death of Mr Hancock; i) admits the same but says that the 1995 Trust Amendment Deed was effective...; ii) a copy of the executed version of the 1988 Trust Deed; ii) denies that the plaintiffs had any entitlement to be provided with such copies of the Trust information requested, other than in accordance with the Trust Deed or the Hope Downs Deed; iii) a copy of the executed version of the 1995 purported variation of the 1988 Trust Deed; iii) says that if the plaintiffs did have an entitlement, which is denied, says that it was a condition of any such request that the plaintiffs make the same in good faith and reasonably, and the first defendant denies that any such condition was satisfied; iv) details of all dividends declared by HPPL since the date of death of Mr Hancock. iv) further says that the request that was made was not reasonable, not necessary and not made for a proper purpose; ... [56] On or about 27 October 2011, the Plaintiffs, in their capacity as beneficiaries of the Trust: [56] In response to paragraph 56 the first defendant: i) requested copies of...documents from the First Defendant in her capacity as trustee of the Trust: ... [List includes Trust Deed, documents executed by Mr Hancock and/or first defendant purporting to vary Trust Deed, financial statements, management accounts and tax returns, documents identifying assets of trusts, all resolutions executed by Mr Hancock and the First Defendant] ii) denies that the plaintiffs had any entitlement to be provided with such copies of the Trust information requested, other than in accordance with the Trust Deed and the Hope Downs Deed; iii) says that if the plaintiffs did have an entitlement, which is denied, says that it was a condition of any such request that the plaintiffs make the same in good faith and reasonably, and the first defendant denies that any such condition was satisfied; iv) further says that the request that was made was not reasonable, not necessary and not made for a proper purpose; ... [57] On or about 27 October 2011, the Plaintiffs, in their capacity as beneficiaries of the Trust sought confirmation from the First Respondent as to whether any property other than the Shares was, or had been the property of the Trust. [57] in response to paragraph 57 the first defendant: ... ii) denies that the plaintiffs had any entitlement to be provided with such copies of the Trust information requested, other than in accordance with the Trust Deed or the Hope Downs Deed;... [58] the Plaintiffs, in their capacity as beneficiaries of the Trust had an entitlement to be furnished with each of: [58] In response to paragraph 58 the first defendant: [cites multiple Trust documents including; copies of accounts of Trust, executed version of Trust and Trust variations; details of dividends; all documents executed by Mr Hancock and the First Defendant purporting to vary the Trust; financial statements; all resolutions executed by Mr Hancock or the First Defendant in capacity as trustees; all advices about such resolutions; all documents recording payment of income of the Trust; the advice from PWC; information about property that was or had been Trust property.] i) denies that the plaintiffs had any entitlement to be provided with such copies of the Trust information; ... iii) further says that the request that was made was not reasonable, not necessary and not made for a proper purpose, particularly in circumstances where: the plaintiffs had released the first defendant for any breaches of duty as Trustee of the Trust prior to the ratification of the Hope Downs Deed on 13 April 2007; ... [63] At all material times, the First Defendant, in her capacity as trustee of the Trust, has been under each of the following duties: [63] In answer to paragraph 63 the first defendant denies the content of the duties alleged against the first defendant in her capacity as Trustee of the Trust adequately and sufficiently describe the duties to which she is subject in the particular circumstances of this Trust and according to the terms of the Trust Deed, and save as aforesaid: i) to obey the terms of the Trust in the absence of a court order to the contrary; .... ii) to act honestly and in good faith; iv) says in answer to subparagraph 63(iv) the first defendant had a wide discretion under the Trust and her duty was to exercise it by reference to the objects and purposes of the Trust having regard to the competing interests of the various beneficiaries of the Trust, and without taking into account improper, irrelevant or irrational considerations. The first defendant furthers says that she had a duty to exercise the discretion personally and from time to time, having regard to all relevant circumstances as they exist from time to time; iii) to act in the best interests of the beneficiaries of the Trust; .... iv) to act impartially as between beneficiaries; ix) admits subparagraph 63(ix) subject to the right of the first defendant to act despite other interests in accordance with clause 7C of the Trust Deed; v) not to interfere with the lawful exercise of rights held by the Plaintiffs in their capacity as beneficiaries of the Trust; x) denies subparagraph 63(x), refers to and repeats the matters in paragraph 58 above; [plaintiffs had no entitlement to be provided with copies of the relevant Trust information] vi) to exercise such care and skill in the exercise of her duties as trustee as is reasonable in the circumstances; Particulars: Hope Downs Deed, 2007 Deed, 2009 Deed. vii) to refrain from acting irresponsibly, capriciously or wantonly; xi) denies subparagraph 63(xi), refers to and repeats the matters in paragraph 58 above; viii) not to exercise, or refrain from exercising, powers for ulterior or improper purposes; ... ix) to avoid any conflict of duty and interest; x) to provide the accounts of the Trust to beneficiaries as and when requested; xi) to give to beneficiaries full and accurate information as to the amount and state of the trust property as and when requested; and xii) to furnish beneficiaries with the terms of the Trust; xiii) to make available to beneficiaries all documents relating to the trust as and when requested. [64] The First Defendant: [64] In response to the whole of paragraph 64 the first defendant says as follows: i) gave the Plaintiffs only one business day in which to consider the contents of the 3 September Letter and 3 September Deed before the Trust was due to vest in the absence of a variation to the 1988 Trust Deed; i) admits subparagraphs 64 I) but says that the first and third plaintiffs had previously agreed to extend the vesting date to the maximum extent permitted by law by the Hope Downs Deed and in the case of the second plaintiff by the 2007 Deed and further says that the plaintiffs were all sui juris; ii) engaged in the conduct in (i) above despite being aware of the vesting date of the Trust at all material times; Particulars: Clause 9.1 of the Hope Downs Deed; Clause 1 of the 2007 Deed iii) represented to the Plaintiffs that the 3 September Deed was required to be signed by them; ii) denies subparagraph 64(ii) and repeats subparagraph 64(i), and says that at all times the plaintiffs were aware of the vesting date of the Trust and had previously agreed in 2006 to extend the vesting date to the maximum extent permitted by law; iv) engaged in the conduct pleaded in (iii) above despite being aware that the Plaintiffs were not required to sign the 3 September Deed by any law or legal obligation; Particulars clause 9.1 of the Hope Down Deed. v) represented to the Plaintiffs that it was necessary for them to sign the 3 September Deed before the First Defendant would agree to extend the vesting date of the Trust; iii) admits subparagraph 64(iii) and says that the 3 September Deed had, as to part, been previously agreed to by the plaintiffs and the releases sought in the 3 September Deed were in conformity with the 3 September letter; vi) from the time at which the 2011 Deed had been executed to at least 8 September 2011, falsely represented to the Plaintiffs and the Second Defendant that the vesting date of the Trust had not been extended; Particulars: Hope Downs Deed vii) from the time at which the 2011 Deed had been executed to at least 8 September 2011, deliberately concealed the fact that the vesting date of the Trust had been extended; iv) denies subparagraph 64(iv) and otherwise repeats the mattes pleaded at subparagraphs (ii) and (iii) hereof and repeats earlier paragraphs 17, 19, 36, 37 and 38; viii) Falsely represented to the first Plaintiff that it was necessary for her to execute one or more of: v) admits subparagraph 64(v) and repeats paragraphs 17, 19, 36, 37 and 38 and subparagraphs (ii) and (iii) above; an "additional agreement"; .... 5 September 2011 Deed; viii) denies subparagraph 64(viii) and says that the first plaintiff had previously agreed to extend the vesting date to the maximum extent permitted by law and were on notice from at least 5 September 2011 that the vesting date of the Trust had been extended; Revised Deed Poll, Particulars: Clause 9.1 of the Hope Downs Deed If she wished the First Defendant to extend the vesting date of the Trust; ix) denies subparagraph 64(ix) and says that the second plaintiff had previously agreed to extend the vesting date to the maximum extent permitted by law and were on notice from at least 5 September 2011 that the vesting date of the Trust had been extended; ix) falsely represented to the Second Plaintiff that it was necessary for him to execute the Second Revised Deed Poll if he wished the First Defendant to extend the vesting date of the Trust; Particulars: Clause 9.1 of the Hope Down Deed; email from Mr Newby to the second plaintiff dated 5 September 2011 at 7.46pm. x) falsely represented to the Third Plaintiff that it was necessary for her to execute the Deed Poll if she wished the First Defendant to extend the vesting date of the Trust; x) denies subparagraph 64(x) and says that the third plaintiff had previously agreed to extend the vesting date to the maximum extent permitted by law and was on notice from at least 5 September 2011 that the vesting date of the Trust had been extended; [Particulars omitted] Particulars: Clause 9.1 of the Hope Downs Deed; email from Mr Newby to the third plaintiff dated 5 September 2011 (11.58pm) .... ... [65] By reasons of the matters pleaded in paragraph [64] the First Defendant has: [65] The first plaintiff [sic] denies paragraph 65 and repeats paragraph 64. i) breached her duty to act honestly and in good faith; ii) acted with gross dishonesty in her dealings with the beneficiaries of the trust; iii) acted deceitfully in her dealings with the beneficiaries of the Trust.

Parties

Applicant/Plaintiff:

Rinehart

Respondent/Defendant:

Welker

Legislation Cited (5)

Trustee Act 1962(WA)s 42, s

Commercial Arbitration Act 1985(WA)s 33, s

Trade Practices Act 1974(Cth)

Civil Procedure Act 2005(NSW)s 67

Corporations Act 2001(Cth)

Cases Cited (61)

1757 Cunningham-Reid v Buchanan-Jardine [1988] 2 All ER 438; [1988] 1 WLR 678 Czarnikow v Roth Schmidt & Company [1922] 2 KB 478 Desputeaux v Editions Chouette (1987) Inc [2003] 1 SCR 178 Dowling & Ors v St Vincent de Paul Society Victoria Inc [2003] VSC 454 Felton v Mulligan [1971] HCA 39; (1971) 124 CLR 367 Fiona Trust & Holding Corporation v Privalov [2007] EWCA Civ 20; [2007] All ER (D) 169 Fiona Trust & Holding Corporation v Privalov [2007] UKHL 40; [2007] 4 All ER 951 Francis Travel Marketing Pty Limited v Virgin Atlantic Airways Ltd (1996) 39 NSWLR 160 Fulham Football Club (1987) Ltd v Richards [2012] 1 All ER 414 Global Partners Fund Limited v Babcock & Brown Limited (In liq) [2010] NSWCA 196; (2010) 79 ACSR 383 Government Insurance Office (NSW) v Atkinson-Leighton Joint Venture [1981] HCA 9; (1981) 146 CLR 206 Grant v John Grant & Sons Pty Limited [1954] HCA 23; (1954) 91 CLR 112 House v The King [1936] HCA 40; (1936) 55 CLR 499 IBM Australia Ltd v National Distribution Services Ltd (1991) 22 NSWLR 466 Larkden Pty Limited v Lloyd Energy Systems Pty Limited [2011] NSWSC 268; (2011) 279 ALR 772 Leerac Pty Limited v Fay [2008] NSWSC 1082 Lipman Pty Limited v Emergency Services Superannuation Board [2011] NSWCA 163 LNC Industries Ltd v BMW (Aust) Ltd [1983] HCA 31; (1983) 151 CLR 575 Marinchek v Cabport Pty Limited [2010] NSWCA 334 Matchett v Deputy Commissioner of Taxation [2000] NSWSC 975; 158 FLR 171 McGrath v O'Sullivan [1964] NSWR 436 McLean v Burns Philp Trustee Co Limited (1985) 2 NSWLR 623 Metrocall Inc v Electronic Tracking Systems Pty Ltd [2000] NSWIRComm 136; (2000) 52 NSWLR 1 Michael Wilson & Partners Ltd v Nicholls [2011] HCA 48; (2011) 86 ALJR 14 Miller v Cameron [1936] HCA 13; (1936) 54 CLR 572 Miller v Haweis [1907] HCA 44; (1907) 5 CLR 89 Mitsubishi Motors Corporation v Soler-Chrysler Plymouth Inc 473 US 614 (1985) Moorgate Tobacco Co Ltd v Philip Morris Ltd (1980) 145 CLR 457 Osborne v Bank of the United States (9 Wheat.) 737 (1824) Overseas Union Insurance Ltd v A A Mutual International Insurance Co Ltd [1988] 2 Ll R 63 Paharpur Cooling Towers Ltd v Paramount (WA) Ltd [2008] WASCA 110 Paper Products Pty Limited v Tomlinsons (Rochdale) Ltd & Ors (1993) 43 FCR 439 Permanent Trustee Company v Dougall (1931) 34 SR (NSW) 83 Perpetual Trustees Australia Ltd v Wallace [2007] FCA 527 R v Commonwealth Court of Conciliation and Arbitration; Ex parte Barrett [1945] HCA 50; (1945) 70 CLR 141 R v Donyadideh (1993) 114 FLR 43 Radio Publicity (Universal) Ltd v Compagnie Luxembourgeoise de Radiodifusion [1936] 2 All ER 721 Re Earl of Strafford Deceased; Royal Bank of Scotland Ltd v Byng [1980] Ch 28 Re East; Ex Parte Nguyen [1998] HCA 73; 196 CLR 354 Re Purkiss [1999] 3 VR 223 Rinehart v Welker [2011] NSWCA 403 Russell v Russell (1880) 14 Ch 471 Samick Lines Co Ltd v Owners of the Antonis P Lemos [1985] AC 711 Savcor Pty Limited v State of New South Wales [2001] NSWSC 596; (2001) 52 NSWLR 587 Scaffidi v Montevento Holdings Pty Limited [2011] WASCA 146 Siemens Ltd v Origin Energy Uranquinty Power Pty Ltd [2011] NSWSC 195; (2011) 279 ALR 759 Sun Life Assurance Company of Canada v Lincoln National Life Insurance Company [2005] 1 Lloyd's Rep 606 Taunton-Collins v Cromie [1965] WLR 633; [1964] 2 All ER 332 TCL Airconditioner (Zhongshan) Co Ltd v Castel Electronics Pty Limited [2009] VSC 553 Toll (FGCT) Pty Limited v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165 Walter Rau Neusser Oel und Fett AG v Cross Pacific Trading Ltd [2005] FCA 1102 Western Export Services Inc v Jireh International Pty Limited [2011] HCA 45; (2011) 86 ALJR 1 Texts Cited: Born, International Commercial Arbitration (2009) Klewer Cohen and Staff, "The Arbitration of Trust Disputes" Journal of International Trust and Corporate Planning (1999) vol 7 No 4 Jacobs Law of Trusts in Australia 7th ed (2006) LexisNexis Butterworths Lewison & Hughes, The Interpretation of Contracts in Australia (Law Book Company, Sydney, 2012) Mustill and Boyd, Commercial Arbitration, 2nd ed (1989) Butterworths Tweeddale and Tweeddale, Arbitration of Commercial Disputes: International and English Law and Practice (2007) Oxford University Press Category: Procedural and other rulings Parties: Gina Hope Rinehart (First Appellant) Ginia Hope Frances Rinehart (Second Appellant) Hope Rinehart Welker (First Respondent) John Langley Hancock (Second Respondent) Bianca Hope Rinehart (Third Respondent) Representation: J T Gleeson SC and P Kulevski (First Appellant) F Kunc SC and P Flynn (Second Appellant) A S Bell SC and D F C Thomas (First, Second and Third Respondents) Corrs Chambers Westgarth (First Appellant) Gadens Lawyers (Second Appellant) Johnson Winter & Slattery (First, Second and Third Respondents) File Number(s): CA 2011/344306; 2011/344307 Decision under appeal Citation: Welker & Ors v Rinehart & Anor (No. 2) [2011] NSWSC 1238 Date of Decision: 2011-10-07 00:00:00 Before: Brereton J File Number(s): 2011/285907

[1999] VSC 170

[2000] VSC 246

[1907] HCA 44

[2008] WASCA 110

[2011] WASCA 146

[2009] VSC 553

(2005) 223 CLR 251

(1982) 149 CLR 337

(2006) 157 FCR 45

(1971) 124 CLR 367

(1996) 39 NSWLR 160

(1981) 146 CLR 206