FEDERAL COURT OF AUSTRALIA

Rinehart v Rinehart (No 2) [2015] FCA 339

THE COURT ORDERS THAT:

1.    The first and the second, third, fifth, sixth, seventh, twelfth, thirteen and fifteenth respondents (“the HPPL Respondents”) provide verified discovery of the following categories of documents within seven days:

a.    Documents created on or before 30 September 2003 recording or referring to any communication to or with the first applicant (“Ms Bianca Rinehart” or “BHR”) or the second applicant (“Mr Hancock” or “JLH”) concerning clause 16.2(a) of the Porteous Settlement Deed (referred to in paragraph 16 of the submissions of the HPPL Respondents dated 23 December 2014), or any draft thereof;

b.    Documents created on or before 30 April 2005 recording or referring to any communication to or with Mr Hancock concerning clause 14 of the Deed of Obligation and Release (referred to in paragraph 359 of the Statement of Claim), or any draft thereof;

c.    Documents created on or before 31 August 2006 recording or referring to any communication to or with Ms Bianca Rinehart concerning clause 20 of the Hope Downs Deed (referred to in paragraph 275 of the Statement of Claim), or any draft thereof;

d.    Documents created on or before 30 April 2007 recording or referring to any communication to or with Ms Bianca Rinehart or Mr Hancock concerning clause 9 of the April 2007 HD Deed (referred to in paragraph 284 of the Statement of Claim), or any draft thereof;

e.    Documents created on or before 31 August 2009 recording or referring to any communication to or with Mr Hancock concerning clause 16 of the Deed of Further Settlement dated 10 August 2009, or any draft thereof;

f.    Documents created on or before 30 November 2010 recording or referring to any communication to or with Mr Hancock concerning clause 11(ii) of the Deed of Variation dated 18 November 2010, or any draft thereof; and

g.    Board minutes of any meeting of the directors of HPPL concerning clause 16.2(a) of the Porteous Settlement Deed, clause 20 of the Hope Downs Deed or clause 9 of the April 2007 HD Deed, or any draft thereof.

2.    The parties have liberty to apply on 48 hours’ notice.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

1    This is an application for discovery of categories of documents (“discovery application”) said to be required by the applicants to enable them to resist two interlocutory applications which, in summary, seek orders that the parties be referred to arbitration pursuant to s 8(1) of the Commercial Arbitration Act 2010 (NSW) (“NSW Act”) or Commercial Arbitration Act 2012 (WA) (“WA Act”) and that the proceeding be stayed (“stay applications”).

2    The precise orders now sought by the applicants are:

    Pursuant to rule 1.34 of the Federal Court Rules 2011 (Cth) (“Rules”), compliance with r 20.13(3) be dispensed with for the purpose of the discovery sought in the application;

    The respondents give discovery pursuant to rule 20.15 of the Rules of 14 categories of documents specified in the application.

3    The categories of documents in respect of which discovery is sought are listed in the annexure to these reasons.

4    The application for discovery is opposed by the first respondent (“Mrs Rinehart” or “GHR”) and the second, third, fifth, sixth, seventh, twelfth, thirteen and fifteenth respondents (“HPPL respondents”) (collectively “respondents”).

Background to discovery application

5    The proceeding was commenced in October 2014 by an originating application and statement of claim. It was described by the previous docket judge as “the latest iteration of a bitter and long running dispute between some of the children of GHR and their mother as to GHR’s alleged misconduct in her administration of a trust of which the children are beneficiaries”: Rinehart v Rinehart [2014] FCA 1241 at [2]. In that judgment, his Honour summarised the statement of claim as follows:

32. ….It is 95 pages long and is accompanied by a “confidential addendum” of a further six pages.

33. The allegations in the Statement of Claim are similar to those which were made in the claims in Rinehart v Welker [[2011] NSWCA 403]. There are allegations of serious breaches of fiduciary duty by GHR in her capacity as trustee. The breaches date back to 1992. HPPL, as the main company in the HPPL Group, is said to have knowingly assisted in the breaches.

34. The differences between the earlier proceeding and the present may be stated briefly.

35. The principal difference is that the allegations of breach of fiduciary duty are said to found proprietary rights in equity. Declarations of trust and an account of profits are sought.

36. Another significant difference is the approach taken by GHR and JLH to the effect of a Settlement Deed entered into between the parties in August 2006 known as the Hope Downs Deed.

37. In the earlier proceeding no challenge was made to the validity of the Hope Downs Deed which contained releases of claims against GHR to certain companies in the HPPL Group as well as an agreement to refer disputes “under this deed” to confidential arbitration. The question which arose in the earlier proceeding was whether the claims then made were a dispute under the Deed: see Rinehart v Welker [2012] NSWCA 95.

38. In the present proceeding GHR and JLH seek to set aside the Hope Downs Deed and the Arbitration Agreement in that Deed by reason of, inter alia, misleading conduct on the part of GHR and officers of HPPL. They also seek to set aside a number of other settlement deeds entered into between 2005 and 2008, including the arbitration agreements in those deeds.

39. Allegations of concealment of the causes of action are made in relation to the claims to set aside the Hope Downs Deed and the other settlement deeds.

40. A further difference is the way in which the claims made by GHR and JLH are formulated. The new formulations of the claims include pleading the causes of action as claims for unconscionable conduct and a novel claim described as the tort of collateral abuse of process.

41. The confidential addendum to the Statement of Claim deals with communications between certain parties to the proceedings in relation to arbitrations that are on foot and the status of those arbitrations.

6    The stay applications were filed in November and December 2014 by the HPPL respondents and by Mrs Rinehart respectively. Mrs Rinehart seeks an order pursuant to s 8(1) of the NSW Act that the parties be referred to arbitration in respect of the matters the subject of the proceeding, an order that this proceeding be dismissed or alternatively permanently stayed and, in the alternative, various orders pursuant to s 8(1) of the NSW Act. The order relevantly sought by the HPPL respondents is an order that the proceedings be stayed.

7    Section 8(1) of each of the NSW Act and the WA Act is in the following terms:

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.

8    Detailed written submissions in support of the stay applications were filed and served on behalf of each of Mrs Rinehart and the HPPL respondents before the end of 2014. In the submissions on behalf of Mrs Rinehart, the submissions of the HPPL submissions are adopted.

9    In submissions on the discovery application, the HPPL respondents identified the main issues for determination on the stay applications as:

(1)    Whether the respondents have established a “sustainable argument” that the claims made in the proceedings are subject to the alleged arbitration agreements: cf Hancock v Rinehart [2013] NSWSC 1352; (2013) 96 ACSR 76 at [130]; and

(2)    Whether the proviso in s 8(1), i.e. that the arbitration agreements are “null and void, inoperative or incapable of being performed”, is engaged.

10    There are other issues that it will be necessary to address on the stay applications, including whether either of the NSW Act or the WA Act have any relevant operation. The Acts apply to “domestic commercial arbitrations”: s 1(1). The applicants contend that this issue raises a matter on which discovery is required, namely whether the dispute between the parties should be properly characterised as a family dispute rather than a commercial dispute.

11    The applicants contend that the enforceability of the agreements in which the alleged arbitration agreements are situated is an issue of relevance to each of issues (1) and (2) above. On this basis, the discovery sought is not limited to documents concerning the arbitration agreements but extends to some categories of documents concerning the enforceability of those agreements. These categories of discovery are narrower than might be expected if the applicants were seeking a final hearing of the enforceability of those agreements. For example, discovery is not sought about the conduct which is said to have been concealed from the applicants at relevant times, except to a limited extent in relation to a matter referred to as the “Constructive Trust Claim”.

12    There are six alleged arbitration agreements, being:

(1)    Clause 16.2(a) of the Deed of Settlement and Release dated 15 September 2003 (“Porteous Settlement Deed”);

(2)    Clause 14 of the Confidential Deed of Obligation and Release dated 1 April 2005;

(3)    Clause 20 of the Hope Downs Deed dated 18 August 2006;

(4)    Clause 9 of the “April 2007 HD Deed”;

(5)    Clause 16 of the Deed of Further Settlement dated 10 August 2009; and

(6)    Clause 11(ii) of the Deed of Variation dated 18 November 2010.

13    All six are relied upon by Mrs Rinehart in support of her stay application. From paragraphs 205 and 259 of the written submissions of the HPPL respondents, it appears that those parties rely upon the first, third and fifth of these six alleged arbitration agreements.

14    On 13 February 2015, the applicants were ordered to file and serve any evidence and/or written submissions in response to the respondents’ stay applications on or before 31 March 2015. The stay applications were listed for hearing for three days in late April 2015, on the basis of the estimate given by counsel for the applicants, Mr Withers (and not disputed by the respondents) that the hearing would take three and possibly four days. On that occasion, Mr Withers said that “almost everything that is put in the written submissions is going to be at issue in this hearing”.

15    The discovery application was filed on 9 March 2015 and made returnable on 11 March 2015. On that occasion, the application was listed for argument on 2 April 2015.

16    On 31 March 2015, the applicants filed an affidavit of Timothy Price sworn 31 March 2015 to which were exhibited two bundles of documents comprising:

(1)    A three volume bundle marked “TRP1”; and

(2)    A volume comprising outlines of evidence of each of the applicants “for the purposes of the hearing of the respondents’ application” marked “TRP2”.

17    The applicants also filed an outline of submissions in opposition to the stay applications. In summary, and without attempting to be comprehensive, the contentions put by the applicants include:

(1)    The various deeds relied upon by the respondents are void and therefore unenforceable because they are presumptively invalid, the burden on the respondents to displace the presumption of undue influence not having been discharged; and because there is no evidence that the applicants gave informed consent when they signed the deeds (paragraph 11);

(2)    The Hope Downs Deed was procured through duress and, consequently, is void (paragraph 16). According to the submissions, “[t]hat is a matter that the Court could readily decide on the stay application”;

(3)    The various deeds relied upon by the respondents were procured by them through a combination of fraudulent concealment of material facts and misleading and deceptive conduct. “That includes the arbitration clauses” (paragraph 17). In this regard, the submissions state:

That is a more detailed factual inquiry than is required in relation to the presumption of undue influence, absence of informed consent and duress. The Court will not need to address that question if it is satisfied that the deeds are void by reason of undue influence, absence of informed consent and duress. Nevertheless, if the Court is not satisfied of those matters, the allegation that the deeds were procured through fraudulent concealment and misleading and deceptive conduct presents a direct challenge to the validity of the arbitration agreements which must be determined before the Court could refer the parties to arbitration.

(4)    “If the Court is satisfied that the Applicants’ contentions as to the presumption of undue influence, informed consent, duress and fraud on a power are correct, then the Court would also be satisfied, for the purposes of s 8(1) that the arbitration agreements are null and void, or alternatively inoperative. The same is true if the Court is satisfied that the arbitration agreements were procured through fraudulent concealment of material facts and misleading and deceptive conduct” (paragraph 21).

18    Paragraph 12 of the applicants’ outline of submissions states:

…The Applicants have served outlines of evidence from BHR and JLH. They are exhibited to the affidavit of Timothy Price, sworn 31 March 2014…. Those outlines represent a summary of the evidence that the Applicants are ready to give at the forthcoming hearing, if permitted to do so by the Court. Their evidence will provide the Court with a sufficient evidentiary basis to make a finding that each of the deeds GHR and the HPPL respondents rely upon are void or alternatively, will satisfy the Court that the validity of those agreements must first be determined before the Court would refer any of the parties to arbitration.

19    These submissions suggest, in some respects, a degree of ambivalence on the part of the applicants about the issues that they will seek to raise on the stay applications. Obviously enough, any factual issue that is to be determined on the stay application will need to be the subject of evidence. Unless an order is made for determination of a separate question, all of the evidence on the stay applications will be heard at the commencement of the hearing of those applications. If the applicants intend to ask the Court to embark upon the “more detailed factual inquiry” involved in the allegations of fraudulent concealment of material facts and misleading and deceptive conduct on the hearing of the stay applications, then they will need to do so on the basis of the evidence filed and served in answer to the stay applications. In saying this, I do not mean to convey that the applicants are necessarily entitled to raise these issues on the stay application. However, whatever the position the applicants seek to adopt, it should be made clear well before the hearing of the stay applications. The purpose of the directions for the service of evidence and submissions in advance of the hearing of the stay applications is, among other things, to ensure that each side knows the case that it is required to meet.

20    The applicants were directed to serve their evidence in opposition to the stay applications by 31 March 2015 but did not serve evidence from either of the applicants, instead serving only outlines of evidence annexed to the affidavit of their solicitor. At the hearing of the discovery application, it became clear that the applicants were seeking to rely on evidence of the matters in the outlines of evidence in opposition to the stay applications. Since that evidence was not served in accordance with the Court’s directions, I directed the applicants to file an application for leave to rely on evidence from the applicants and that the evidence in the form sought to be relied upon be filed and served by 10 April 2015. The application for leave has not yet been determined.

21    The respondents have until 17 April 2015 to file and serve evidence in reply.

22    In December 2014, the previous docket judge declined to order the respondents to file defences prior to the hearing of the stay applications. Accordingly, this discovery application was heard without any joinder of the parties on the issues in the proceeding, and without clarity about the evidence upon which the various parties will seek to rely on the stay applications. Each of these matters makes it difficult to be satisfied as to what discovery, if any, ought to be ordered.

Why the applicants seek discovery

23    The applicants say that discovery is necessary in this case to facilitate the just resolution of four broad issues arising on the stay applications, being:

(1)    The proper construction of the agreements relied upon by the respondents to support the stay applications;

(2)    The enforceability of those agreements, it being contended by the applicants that the respondents seek to rely upon agreements which are unenforceable;

(3)    Whether the proviso in s 8(1) is engaged; and

(4)    Whether the WA Act or the NSW Act has any relevant application.

24    It is common ground that, in order for s 8(1) to apply, the respondents must demonstrate a “sustainable argument” that certain releases or other provisions of various deeds have the effect of “governing or controlling” the outcome of the applicants’ claims in the proceedings. According to the applicants, this issue raises the questions of construction and enforceability identified above.

25    The applicants’ written submissions contend that the applicants’ evidence “will provide the Court with a sufficient evidentiary basis to make a finding that each of the deeds GHR and the HPPL respondents rely upon are void or alternatively will satisfy the Court that the validity of the agreements must first be determined before the Court would refer any of the parties to arbitration” (paragraph 12). However, the applicants appear to accept that the respondents will satisfy s 8(1) (subject to the proviso) if they can prove the existence of an apparently binding arbitration agreement (applicants’ written submissions paragraphs 83(a) and 84).

26    Concerning the applicants’ burden of proof under the proviso in s 8(1), paragraph 161 of the applicants’ outline of submissions contends:

As a procedural matter, where the party resisting referral establishes, at the interlocutory hearing, a “credible case” that the arbitration agreement is “null and void, inoperative or incapable of being performed”, the Court should decline to refer the parties to arbitration and should allow that issue to proceed to a final hearing.

27    The respondents contend that, in order to obtain the benefit of the proviso, the applicants must demonstrate that the arbitration agreements are “null and void, inoperative or incapable of being performed” on a final basis. Mr Hutley SC submitted on behalf of the HPPL respondents that this was a matter that could not be resolved within four days, being the maximum period for which the hearing of the stay application was estimated to require. That may well be so, but it is a separate question from the question of what issues arise on the stay application.

28    At the hearing of the discovery application, Mr Withers maintained that the applicants only need to prove a credible case to engage the proviso in s 8(1).

29    Mr Withers submitted that the respondent companies ought to give discovery because they have obligations to retain records, unlike the individual applicants. As I understood the applicants’ case, it was also suggested, by reference to a memorandum addressed to Mrs Rinehart, that she was likely to retain relevant records.

Statutory provisions concerning discovery

30    A party must not apply for an order for discovery unless the making of the order sought will facilitate the just resolution of the proceeding as quickly, inexpensively and efficiently as possible: rule 20.11 of the Rules.

31    Rule 20.13 provides relevantly:

(1)  A party may apply to the Court for an order that another party to the proceeding give discovery.

…

(3)  An application may not be made until 14 days after all respondents have filed:

(a)  a defence; or

(b)  an affidavit in response to the affidavit accompanying the originating application…

32    However, by rule 1.32, the Court may make any order that the Court considers appropriate in the interests of justice.

33    The applicants rely on rule 1.34, which provides that the Court may dispense with compliance with any of the Rules, either before or after the occasion for compliance arises. In my view, rule 1.34 does not operate to permit the Court to dispense with the operation of rule 20.13(3). Rather, it permits the Court to relieve a party of an obligation imposed by the Rules in appropriate circumstances.

34    Even so, I accept that by reason of the Court’s power in rule 1.32 the applicants may apply for an order for discovery although the time for making such an application under rule 20.13 has not arrived, and the Court may make such an order if the Court considers it appropriate in the interests of justice. Accordingly, I would not refuse the discovery application simply on the basis that the applicants are not entitled to apply for discovery under rule 20.13 by reason of the operation of rule 20.13(3). The respondents did not suggest that I should do so.

35    Rule 20.15 provides relevantly:

(1)    A party seeking an order for discovery (other than standard discovery) must identify the following:

(a)    any criteria mentioned in rules 20.14(1) and (2) that should not apply;

(b)    any other criteria that should apply;

(c)    whether the party seeks the use of categories of documents in the list of documents; …

(2)    An application by a party under subrule (1) must be accompanied by the following:

(a)    if categories of documents are sought--a list of the proposed categories; …

Principles relevant to discovery application

36    The Court will not order discovery as a matter of course unless discovery is necessary for the determination of issues in the proceeding: Alliance Craton Explorer Pty Ltd v Quasar Resources Pty Ltd (No 4) [2013] FCA 1044 at [33]; Construction, Forestry, Mining & Energy Union v Rio Tinto Coal Australia Pty Ltd [2014] FCA 462 at [92].

37    In Trade Practices Commission v CC (New South Wales) Pty Ltd (No 4) (1995) 58 FCR 426 at 436 to 437, Lindgren J considered the meaning of the word “necessary” in the context of Order 15 r 15 of the former Federal Court Rules. Although the requirement of “necessity” is not explicitly retained in the current rules, the citations above make plain that the concept has continued relevance in justifying an application for discovery. In particular, it directs attention to the potential evidentiary difficulties of a party taking into account the interests of the party to whom the order is to be directed. Lindgren J concluded that, where one party and not the other was likely to have documents relating to a matter in question, it was prima facie “necessary” that discovery be ordered.

38    This conclusion was subject to the qualification that the Court will not grant an application for discovery where to do so would permit “fishing”, that is, to seek evidence to support a claim which is essentially speculative in nature.

39    Even if the Court is persuaded to make an order for discovery, the Court will fashion the order to suit the particular circumstances of the case: Taylor v Saloniklis [2013] FCA 679 at [7].

Consideration

40    In my view, the applicants should be afforded discovery if that will facilitate the just resolution of the stay applications subject to the other considerations mentioned in rule 20.11. However, as far as possible, that process should not deprive the respondents of any right that they may have to an order that the parties be referred to arbitration. Discovery, by its nature, is a process that will tend to defeat any such right and, to the extent that the WA Act or the NSW Act applies in this case, the objects of those Acts.

41    I accept the submission that, if the parties are referred to arbitration, the arbitral tribunal will have the power to determine the applicants’ claims about the invalidity of the various arbitration agreements and about the invalidity of the agreements in which they are found: s 16(1). I also accept that the arbitral tribunal will have the power to order discovery: s 17(3)(b). However, a referral to arbitration will itself defeat the asserted right of the applicants to have their claims determined by this Court. In this regard, I do not accept the contention on behalf of Mrs Rinehart that the Court and an arbitrator are “perfectly adequate fora” for all parties.

42    I accept the general proposition put on behalf of the respondents that an application to stay proceedings in favour of an arbitration agreement should not involve the final determination of the underlying factual and legal issues between the parties, except in so far as that is necessary to determine the respondents’ entitlement to the stay. Any discovery is unlikely to facilitate the just resolution of the stay proceedings “as quickly, inexpensively and efficiently as possible” if it is directed towards the final determination of factual issues that are not required to be determined on the stay applications.

43    I also accept the submission made on behalf of Mrs Rinehart that the applicants’ failure to offer mutual discovery is relevant to the exercise of the Court’s discretion to order discovery, because it is unclear whether any requirement that the applicants give discovery consequent to a discovery order in their favour will delay the proceedings.

The applicants’ grounds for seeking discovery

Construction of agreements relied upon by the respondents

44    The applicants refer to the statement of Dixon CJ, Fullagar, Kitto and Taylor JJ in Grant v John Grant & Sons Pty Ltd [1954] HCA 23; (1954) 91 CLR 112 at 129 to 130 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”.

45    The applicants seek discovery of documents concerning the surrounding circumstances of the agreements relied upon by the respondents, in order to support their case that the matters raised in the statement of claim do not fall within the scope of various releases. The written submissions in support of the discovery application did not detail the surrounding circumstances sought to be proved. Taking the Porteous Settlement Deed as an example, the applicants’ written submissions in opposition to the stay application address the “true purpose of the transaction” in detail and do not suggest that the applicants require discovery in order to make out their case.

46    The respondents submitted that the applicants had not identified any real issue of construction of any of the deeds, or any specific background facts that they seek to prove, or how evidence of the purpose of any specific transaction would assist on the construction of any specific clause. In the absence of a detailed justification, the Court could not be satisfied that discovery was necessary to address the construction of the agreements for the purposes of the stay application.

47    I accept the respondents’ submissions on this issue. The applicants did not make a case that discovery was necessary for the purpose of construing any of the relevant agreements. In particular, having reviewed the applicants’ submission in opposition to the stay application, I did not detect any particular issue of construction about which discovery appears to be necessary.

Unenforceability of agreements by reason of rebuttable presumptions

48    The applicants contend that they have the benefit of a presumption that the agreements relied upon by the respondents were procured through undue influence and that the agreements are unenforceable in the absence of fully informed consent on the part of the applicants.

49    For their part, the respondents say that they will contend the asserted presumptions do not arise in the circumstances of the case.

50    The applicants seek discovery of documents supporting their case that the presumptions upon which they rely cannot be rebutted. Since the respondents do not contend that the presumptions can be rebutted, I am not persuaded that I should order discovery for this purpose.

Unenforceability of agreements by reason of undue influence, duress, misleading and deceptive and unconscionable conduct in the making of the agreements

51    As I understood the applicants’ submissions, it is contended that the validity of the agreements relied upon by the respondents, by which it is said that the applicants’ substantive claims are released or otherwise not able to be prosecuted in these proceedings, is an issue arising on the question whether those claims are matters the subject of an arbitration agreement.

52    Thus, it is contended that discovery is necessary on the issues whether the various agreements are vitiated by fraud or other misconduct. The applicants assert that matters which impugn the deeds generally may also impugn the arbitration clauses within those deeds.

53    The HPPL respondents noted that it is only necessary for them to establish a “sustainable argument” that the claims made in the proceedings are subject to the arbitration agreements, so that the Court would not undertake a detailed forensic examination of all of the surrounding circumstances of the arbitration agreements. The HPPL respondents also submitted that, if there were to be a determination of the nullity and voidness of the arbitration agreements (or the agreements generally) on the stay application, they would want to ensure that the applicants also provide discovery of all of their relevant documents, including any legal advice they received at or around the time of entry into the various deeds. As I understood the point, it was that discovery on this issue will tend to increase the costs of the stay application because the applicants would also have to give discovery, the hearing of the stay applications would take longer and (possibly) the application could not proceed on the dates currently fixed.

54    The respondents also argued that the principle of separability, explained by Allsop J (as he then was) in Comandate Marine Corp v Pan Australia Shipping Pty Ltd [2006] FCAFC 192; (2006) 157 FCR 45 means that the Court “must not consider or entertain attacks on an arbitration agreement which are “parasitic” upon the attacks made on the agreement generally: Fiona Trust & Holding Corporation v Privalov [2007] 4 All ER 951 at [35]; Joint Stock Company “Aeroflot Russian Airlines” v Berezovsky [2013] 2 Lloyd’s Rep 242 at [79] to [80].

55    I am not convinced that the principle of separability applies in this case because of the family relationships between the applicants and Mrs Rinehart. That is a matter that will need to be addressed on the hearing of the stay applications. Even so, I am not persuaded that discovery encompassing documents relating to the enforceability of the agreements in which the alleged arbitration agreements are located will facilitate the just resolution of the stay proceedings, or would be appropriate in the interests of justice for the following reasons:

(1)    If, as the applicants submit, the respondents must demonstrate a “sustainable argument” that certain releases or other provisions of various deeds have the effect of “governing or controlling” the outcome of the applicants’ claims in the proceedings, it is far from clear that the Court should attempt to determine the validity of the agreements in which the arbitration agreements are contained on the hearing of the stay applications;

(2)    The evidence does not support a conclusion that the applicants have particular evidentiary difficulties that warrant an order for discovery on the issue of whether the respondents have such a “sustainable argument”;

(3)    The proposed discovery would tend to defeat any right which the respondents may have pursuant to s 8(1);

(4)    The questions of whether agreements were procured by undue influence or duress are matters that are within the knowledge of the applicants;

(5)    The applicants have apparently not given discovery on the issue of the enforceability of the agreements.

Proviso in s 8(1)

56    The nature of the enquiry under the proviso in s 8(1) is yet to be determined. I have identified the parties’ respective positions above.

57    On behalf of Mrs Rinehart, Mr McClintock SC submitted that the applicants’ claims to the benefit of the proviso would need to be assessed by reference to their previous conduct, which he said affirmed at least clause 20 of the Hope Downs Deed. It was claimed that the applicants have participated in arbitrations conducted under the auspices of the arbitration agreement in clause 20 of the Hope Downs Deed and have themselves commenced arbitral proceedings in reliance on clause 20 of the Hope Downs Deed. It was said that, in 2013, Mr Hancock offered a personal undertaking to Mr Fitzgerald QC in his capacity as arbitrator under clause 20 of the Hope Downs Deed.

58    Mr McClintock SC also submitted that the language of “unless it finds” in s 8(1) requires the Court to make a decision as to whether to embark upon an inquiry about whether the proviso in s 8(1) is engaged which the Court would not do in this case because that would require the Court to deal with the merits of the applicants’ substantive claims.

59    In Comandate Marine Corp v Pan Australia Shipping Pty Ltd [2006] FCAFC 192; (2006) 157 FCR 45, Allsop J observed (at [216]) that, if the claim for nullity or voidness is properly directed to the arbitration clause itself, the need for the court to deal with the issue can be readily appreciated even accepting the doctrine of separability. I am not presently in a position to determine whether the Court will be required to decide if the proviso in s 8(1) is engaged. I accept the submission on behalf of the applicants that this is a case in which the respondents are likely to have documents of the kind in question, and are likely to have kept better records that the respondents. In those circumstances, I am satisfied that discovery is necessary in relation to the factual issues arising from the terms of the s 8(1) proviso, and that it is appropriate in the interests of justice.

Conclusions about categories of documents sought by the applicants from Mrs Rinehart and the HPPL respondents

Categories 1 to 6: documents concerning allegation that arbitration agreements are “null and void, inoperative or incapable of being performed”

1    A copy of any document created on or before 30 September 2003 recording or referring to any communication to or with BHR or JLH which refers to the Porteous Settlement Deed or any term of the Porteous Settlement Deed.

2    A copy of any document created on or before 30 April 2005 recording or referring to any communication to or with JLH which refers to the Deed of Obligation and Release or the Deed of Loan or any term of the Deed of Obligation and Release or the Deed of Loan.

3    A copy of any document created on or before 31 August 2006 recording or referring to any communication to or with BHR which refers to the Hope Downs Deed or any term of the Hope Downs Deed.

4    A copy of any document created on or before 30 April 2007 recording or referring to any communication to or with BHR or JLH which refers to the Hope Downs Deed, the CS Deed or the April 2007 HD Deed, or any term of the Hope Downs Deed, the CS Deed or the April 2007 HD Deed.

5    A copy of any document created on or before 31 August 2009 recording or referring to any communication to or with JLH which refers to the 2009 Deed or any term of the 2009 Deed.

6    A copy of any document created on or before 30 November 2010 recording or referring to any communication to or with JLH which refers to the 2010 Deed or any term of the 2010 Deed.

60    For the reasons given above, I am persuaded that the respondents should be ordered to give discovery of these documents to the extent that they refer to the alleged arbitration agreements.

Categories 7 and 8: the Constructive Trust claim

7.    A copy of any initiating process, defence or pleading filed or served in the Constructive Trust Claim or any other document by which the Constructive Trust Claim was made or asserted.

8    A copy of any minutes of a board meeting of the fourth respondent or the sixth respondent recording a resolution not to contest the Constructive Trust Claim, or any document constituting such a resolution.

61    Mr Withers pressed category 7 only in relation to the defence filed or served in the Constructive Trust Claim.

62    I have reviewed paragraphs 163 to 171 of the Statement of Claim in which allegations are made concerning the “Constructive Trust claim” and the alleged decision of HFMF and HRL to cease contesting that claim.

63    The applicants seek these documents to support their case of fraudulent concealment of facts that should have been disclosed by Mrs Rinehart prior to the execution of one or more of the disputed agreements. For the reasons given above, I am not satisfied that it is necessary to require discovery of these documents in order to resolve the stay applications.

Categories 10 and 11: Second Hope Downs Intercreditor Deed and documents recording or referring to the Hope Downs Net Cash Flow After Tax for the period 6 September 2011 to 30 June 2014; or any payments made pursuant to the Distribution Covenant.

64    As I understood the applicants’ contentions, these documents are said to be relevant to misrepresentations made about benefits that would flow to them if they executed the Hope Downs Deed.

65    Mr Withers made a submission to the effect that these documents are relevant to injunctive relief sought by the applicants. I do not understand how this submission tends to demonstrate the necessity of discovery of the documents to resolve the stay application. At least the questions of what representations were made and whether those representations have been made good are matters within the knowledge of the applicants. The reasonableness of any representations may be a matter for discovery but I did not understand these documents to go to that question, even if that is a matter for determination on the stay applications. Accordingly, I will not order discovery of these documents.

Category 12: documents referring to the appointment and/or the removal and/or the resignation of BHR as a director of HPPL, including any Resignation Letter.

66    I am not satisfied that there is an issue between the parties as to whether Ms Bianca Rinehart signed an undated resignation letter at the time she became a director of HPPL (Statement of Claim paragraph 327.6). In any event, this is a fact within Ms Bianca Rinehart’s knowledge about which she can give evidence. It follows that I do not consider the discovery sought to be fishing in any relevant sense. However, I am not persuaded that the discovery sought is necessary to facilitate the just resolution of the stay applications.

Category 13: all Board Minutes dated on or before 30 April 2007 referring to the Porteous Settlement Deed, the Hope Downs Deed or the April 2007 HD Deed.

67    For the reasons given above, I will order discovery of these documents to the extent that they relate to the alleged arbitration agreements.

Category 14: all documents recording or referring to the enforcement or forgiveness of the loan contained in the Deed of Loan.

68    Mr Hancock complains that a loan from HPPL was forgiven without his knowledge in circumstances which attracted a tax liability in the income year ended 30 June 2012. Since this event appears to post-date the alleged arbitration agreements and since it was not explained why these documents were required for the purpose of the stay application, I am not prepared to order discovery of this category.

Conclusion

69    The respondents will be required to provide verified discovery of the relevant categories of the documents within seven days. There will be liberty to apply on 48 hours’ notice.

Associate:

Dated:    13 April 2015

ANNEXURE

Documents in respect of which discovery is sought by the applicants

(1)    A copy of any document created on or before 30 September 2009 recording or referring to any communication to or with BHR or JLH which refers to the Porteous Settlement Deed or any term of the Porteous Settlement Deed.

(2)    A copy of any document created on or before 30 April 2005 recording or referring to any communication to or with JLH which refers to the Deed of Obligation and Release or the Deed of Loan or any term of the Deed of Obligation and Release or the Deed of Loan.

(3)    A copy of any document created on or before 31 August 2006 recording or referring to any communication to or with BHR which refers to the Hope Downs Deed or any term of the Hope Downs Deed.

(4)    A copy of any document created on or before 30 April 2007 recording or referring to any communication to or with BHR or JLH which refers to the Hope Downs Deed, the CS Deed or the April 2007 HD Deed, or any term of the Hope Downs Deed, the CS Deed or the April 2007 HD Deed.

(5)    A copy of any document created on or before 31 August 2009 recording or referring to any communication to or with JLH which refers to the 2009 Deed or any term of the 2009 Deed.

(6)    A copy of any document created on or before 30 November 2010 recording or referring to any communication to or with JLH which refers to the 2010 Deed or any term of the 2010 Deed.

(7)    A copy of any initiating process, defence or pleading filed or served int eh Constructive Trust Claim or any other document by which the Constructive Trust Claim was made or asserted.

(8)    A copy of any minutes of a board meeting of the fourth respondent or the sixth respondent recording a resolution not to contest the Constructive Trust Claim, or any document constituting such a resolution.

(9)    A copy of the First Hope Downs Intercreditor Deed.

(10)    A copy of the Second Hope Downs Intercreditor Deed.

(11)    A copy of all documents recording or referring to:

(a)    The Hope Downs Net Cash Flow After Tax for the period 6 September 2011 to 30 June 2014; or

(b)    Any payments made pursuant to the Distribution Covenant.

(12)    A copy of any document referring to the appointment and/or the removal and/or the resignation of BHR as a director of HPPL, including any Resignation Letter.

(13)    A copy of all Board Minutes dated on or before 30 April 2007 referring to the Porteous Settlement Deed, the Hope Downs Deed or the April 2007 HD Deed.

(14)    A copy of all documents recording or referring to the enforcement or forgiveness of the loan contained in the Deed of Loan.