Rinehart v Hancock Prospecting Pty Ltd, Rinehart v Rinehart

• Jurisdiction: Australia Federal only
• Judge: Kiefel CJ,Gageler,Nettle,Gordon JJ.
• Judgment Date: 08 May 2019
• Neutral Citation: [2019] HCA 13
• Court: High Court
• Docket Number: S143/2018 & S144/2018
• Date: 08 May 2019

Bianca Hope Rinehart & Anor

Appellants

and

Hancock Prospecting Pty Ltd & Ors

Respondents

Bianca Hope Rinehart & Anor

Appellants

and

Georgina Hope Rinehart (In Her Personal Capacity and as Trustee of the Hope Margaret Hancock Trust and as Trustee of the HFMF Trust) & Ors

Respondents

[2019] HCA 13

Kiefel CJ, Gageler, Nettle, Gordon and Edelman JJ

S143/2018 & S144/2018

HIGH COURT OF AUSTRALIA

Contract — Construction — Dispute resolution clause — Arbitration — Where arbitral clause in deeds provided for confidential arbitration in event of any dispute “under this deed” — Where deeds came into existence against background of claims and threats of litigation made publicly by one party to deeds against others — Where deeds contained releases, acknowledgments and covenants not to sue, and promises not to make further claims — Where deeds contained assurances they were entered into without undue influence or duress — Where appellants brought proceedings alleging breaches of equitable and contractual duties against other parties to deeds — Where appellants asserted they were not bound by deeds because their assent procured by misconduct of other parties to deeds (“validity claims”) — Where respondents sought orders that matter be referred to arbitration and proceedings be dismissed or permanently stayed — Whether validity claims subject to arbitral clause.

Arbitration — Parties — Where s 8(1) of Commercial Arbitration Act 2010 (NSW) (“NSW Act”) provided that court before which action is brought in matter which is subject of arbitration agreement must in certain circumstances refer parties to arbitration — Where s 2(1) of NSW Act defined “party” to include any person claiming “through or under” party to arbitration agreement — Where trustees and beneficiaries party to arbitration agreement — Where beneficiaries alleged breaches of trust against trustees and knowing receipt against third party companies as assignees of trust property — Where third party companies asserted beneficial entitlement of trustees to property as essential element of defence — Where third party companies sought order that claims against them be referred to arbitration pursuant to s 8(1) of NSW Act — Whether third party companies claiming “through or under” party to arbitration agreement.

Words and phrases — “arbitral clause”, “arbitration agreement”, “claiming through or under a party”, “confidential processes of dispute resolution”, “context and purpose of deed”, “dispute under this deed”, “party”, “privity of contract”.

Commercial Arbitration Act 2010 (NSW), ss 2, 8.

Representation

B W Walker SC and G E S Ng for the appellants in both matters (instructed by Yeldham Price O'Brien Lusk Lawyers)

N C Hutley SC with I C Colquhoun and J J Hutton for the first to eighth respondents in S143/2018 and the third to tenth respondents in S144/2018 (instructed by Corrs Chambers Westgarth)

P J Brereton SC with C N Bova and S A Lawrance for the ninth and eleventh respondents in S143/2018 and the first and second respondents in S144/2018 (instructed by Speed and Stacey Lawyers)

Submitting appearances for the twelfth and thirteenth respondents in both matters

No appearance for the tenth, fourteenth and fifteenth respondents in S143/2018 and the eleventh, fourteenth and fifteenth respondents in S144/2018

The Australian Centre for International Commercial Arbitration appearing as amicus curiae in both matters, limited to its written submissions

ORDER

Matter No S143/2018

• 1. The appeal be dismissed with costs.

• 2. The third party companies' application for special leave to cross-appeal be allowed.

• 3. The cross-appeal be treated as instituted and heard instanter and allowed.

• 4. Orders 5, 6 and 8 of the orders of the Full Court of the Federal Court of Australia made on 15 December 2017 be set aside and, in their place, it is ordered that:

  • “5. The orders of the Court made on 26 May 2016 be set aside and in lieu thereof order:

    • (a) that the proceeding brought in the Court by the applicants being NSD 1124 of 2014 be stayed under s 8(1) of the Commercial Arbitration Act 2010 (NSW) (CA Act) pending any arbitral reference between the parties or until further order, save and except for those claims made against Mulga Downs Investments Pty Ltd; and

    • (b) the first and second applicants to the main proceedings (being the first and second respondents to the appeals) pay the costs of the moving parties to the interlocutory application filed on 3 November 2014 in proceedings NSD 1124 of 2014 in connection with paragraph 9 thereof and the costs of the moving parties to the interlocutory application filed on 24 December 2014 in those proceedings, subject to Mulga Downs Investments Pty Ltd paying the costs related to the question of whether it is a party to the arbitration agreement pursuant to s 2 of the CA Act.

  • 6. The claims made by the applicants in the underlying proceedings against Mulga Downs Investments Pty Ltd be stayed on the same terms as the stay in order 5.

  • 8. The first and second respondents pay the appellants' costs of appeal including the costs of the application for leave to appeal, subject to Mulga Downs Investments Pty Ltd paying the costs related to the question as to whether it is a party to the arbitration agreement pursuant to s 2 of the CA Act.”

• 5. The respondents to the cross-appeal pay the cross-appellants' costs of the cross-appeal.

Matter No S144/2018

The appeal be dismissed with costs.

1 Kiefel CJ, Gageler, Nettle and Gordon JJ. The appellants in these appeals, Ms Bianca Rinehart and Mr John Hancock (who is referred to in these reasons as Mr Hancock), are two of Mrs Gina Rinehart's four children. Mrs Rinehart is the daughter of Mr Lang Hancock, the founder of the Hancock Group of companies, which were involved in the discovery and acquisition of substantial iron ore deposits in the Pilbara region of Western Australia. The Hancock Group includes Hancock Prospecting Pty Ltd (“HPPL”), which was incorporated in 1955, Hancock Family Memorial Foundation Limited (“HFMF”), Hancock Resources Limited (“HRL”) and Zamoever Pty Ltd (“Zamoever”). Mr Lang Hancock controlled the Hancock Group until his death in 1992.

The Federal Court proceedings

2 The appeals arise out of proceedings brought in the Federal Court of Australia by the appellants in which they make a number of claims concerning conduct of Mrs Rinehart, HPPL and others which is said to have diminished the assets of trusts which were established prior to Mr Lang Hancock's death and of which the appellants and their two siblings are beneficiaries. No defence has as yet been filed to the appellants' statement of claim and no findings with respect to the claims have been made.

3 Central to the appellants' claims is an agreement said to have been made between Mr Lang Hancock and Mrs Rinehart in 1988 concerning arrangements for future shareholdings of Mrs Rinehart and the children in HPPL and HFMF consequent upon Mr Lang Hancock's death (“the 1988 Agreement”). It is alleged that on 20 March 1992, in furtherance of the 1988 Agreement, Mr Lang Hancock executed a deed by which he formally declared in writing that he held the whole of his legal and beneficial interests in his two shares in Zamoever upon trust for Mrs Rinehart's four children as tenants in common in equal shares (“the HFMF Trust”). It also is alleged that as well as being equal beneficiaries of the HFMF Trust, the children were equal beneficiaries of “the HMH Trust” (the Hope Margaret Hancock Trust, a reference to Mr Lang Hancock's deceased wife). The HMH Trust is said to have a substantial shareholding in HPPL. The HFMF Trust, through the medium of HFMF and Zamoever, is said to have owned one-third of the shares in HPPL and shares in companies within the Hancock Group which own valuable mining tenements, including the tenements known as the Roy Hill Tenements, the Hope Downs Tenements and the Mulga Downs Tenement. There may be an issue as to the existence of the HFMF Trust.

4 The appellants' statement of claim avers that Mr Lang Hancock was the trustee of both trusts during his lifetime and that Mrs Rinehart became trustee upon his death. The children were all minors at that time. The trusts were to vest when Mrs Rinehart's youngest child attained the age of 25, which occurred in 2011.

5 The appellants further allege that Mrs Rinehart became the controlling mind of HPPL, HFMF and other relevant companies in the Hancock Group and that, in breach of the trusts and of other equitable and contractual duties, Mrs Rinehart dealt with the companies and their assets to her benefit and that of HPPL and to the detriment of the children as beneficiaries. These allegations were referred to in the proceedings below as “the substantive claims”. It is not necessary to detail them more fully for present purposes.

6 The appeals concern orders made on interlocutory applications brought by Mrs Rinehart, and HPPL and other related parties (“the HPPL respondents”), in the proceedings. Mrs Rinehart sought an order pursuant to s 8(1) of the Commercial Arbitration Act 2010 (NSW) (“the NSW Act”) that the matters the subject of the proceedings be referred to arbitration. That sub-section provides:

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

7 Both Mrs Rinehart and the HPPL respondents sought an order that the proceedings be dismissed or permanently stayed and certain other orders.

8 The applications brought by Mrs Rinehart and the HPPL respondents relied upon a number of deeds entered into between one or both...