FEDERAL COURT OF AUSTRALIA

Hancock Prospecting Pty Ltd v 150 Investments Pty Ltd [2017] FCA 520

ORDERS

THE COURT ORDERS THAT:

1.    This proceeding be transferred to the Supreme Court of New South Wales.

2.    The Registrar send forthwith a copy of each document filed, and of all orders made, in this proceeding to the appropriate officer of the Supreme Court of New South Wales.

3.    The applicant pay the third respondent’s costs of the third respondent’s amended interlocutory application dated 24 April 2017.

4.    Subject to Order 3, the costs of the proceeding to date in this Court be costs in the cause to be continued in the Supreme Court of New South Wales.

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

REASONS FOR JUDGMENT

YATES J:

INTRODUCTION

1    The third respondent, Bianca Hope Rinehart (BHR), applies to transfer the present proceeding to the Supreme Court of New South Wales (the Supreme Court). For convenience, I will refer to this application as the transfer application.

2    The proceeding concerns the amount of dividends required to be paid on a class of shares created under Article 3A of the Articles of Association (the Articles) of the applicant, Hancock Prospecting Pty Ltd (HPPL), as “cumulative special” shares (the CS shares). The rights attaching to those shares are more particularly described in Article 3A. Those rights include the right to quarterly cumulative dividends based on certain royalty streams payable under nominated agreements concerning the mining of iron ore. For convenience, those agreements can be described as the 1962 Agreement and the 1968 Agreement. The agreements are more particularly described in Article 3A(H). In submissions, BHR referred to dividends required to be paid in accordance with Article 3A as Mandatory CSS Dividends. It is convenient to adopt that description in these reasons. It is used to distinguish these dividends from other dividends (discretionary dividends) which BHR says should also have been paid by HPPL.

3    In its Fast Track Statement commencing the present proceeding (the Fast Track Statement), HPPL described the nature of the dispute as follows:

1     An issue has arisen between the Applicant company and one of its shareholders as to the calculation of the dividend payable to the holders of particular shares (CS Shares), in accordance with the Applicant's Articles of Association.

2     In particular, a matter of contention has arisen as to whether royalties received by the Applicant in respect to areas of land known as the "MBM Area" and "Marandoo Area" are received by the company pursuant to agreements described in subclause (H) of Article 3A of the Applicant's Articles of Association. If so, such royalties form part of the calculation of the dividends payable to holders of the CS Shares. If not, such royalties do not form part of that calculation.

4    HPPL also identified the issues likely to arise in the present proceeding, as follows:

1     Whether the royalties received by the Applicant in respect to the area of land known as the "MBM Area" are payable to the Applicant pursuant to:

a.     the 1962 Agreement … described in subclause (H)(1)(a) of Article 3A of the Applicant's Articles of Association;

b.     the 1968 Agreement … described in subclause (H)(1)(b) of Article 3A of the Applicant's Articles of Association; or

c.     the 1970 Agreement …

2     Whether the mine on the area of land known as the "Marandoo Area" is on any part of the land the subject of the 1968 Supplementary Agreement ...

3     Whether the royalties received by the Applicant in respect to the area of land known as the "Marandoo Area" are payable to the Applicant pursuant to:

a.     the 1962 Agreement … described in Subclause (H)(1)(a) of Article 3A of the Applicant's Articles of Association;

b.     the 1968 Agreement … described in Subclause (H)(1)(b) of Article 3A of the Applicant's Articles of Association; or

c.    the 1991 Agreement …

5    For reasons I will explain, the matter in dispute in the present proceeding is part of a broader dispute between, on the one hand, HPPL and the second respondent, Georgina Hope Rinehart (GHR), and, on the other hand, BHR who is the trustee of the Hope Margaret Hancock Trust (the Trust). GHR was, formerly, the trustee of the Trust. The broader dispute concerns, amongst other things, GHR’s conduct as trustee of the Trust and her management of the affairs of HPPL. More specifically, the dispute concerns whether, under GHR’s governance as a director and the Executive Chairman of HPPL, and as trustee of the Trust, HPPL ought to have paid greater dividends (both Mandatory CSS Dividends and discretionary dividends) to the Trust; whether HPPL ought to have used its funds to pay certain expenses solely for the benefit and advantage of GHR; and whether, by her conduct and involvement in each of these matters, GHR breached her duties as a director and as a trustee.

6    It is convenient to note at this point that the principal assets of the Trust comprise shares in HPPL, namely:

    1,407 A class ordinary shares (representing 23.45% of the ordinary shares in HPPL);

    156 CS shares (representing 23.45% of the CS shares); and

    51,584 D class preference shares (representing 23.45% of the preference shares in HPPL).

7    The balance of the ordinary shares (A class shares and B class shares) and the remaining CS shares in HPPL are held by GHR. Further, the remaining preference shares (J class shares) are held by the first respondent, 150 Investments Pty Ltd (150 Investments), which is said to be controlled by GHR. It can be seen, therefore, that GHR is and has been the majority shareholder in HPPL.

8    The Trust was created by a Deed of Settlement made on 27 December 1988 by Langley George Hancock. The beneficiaries were GHR and her four children (including BHR). After Mr Hancock’s death in 1992, GHR became the trustee of the Trust; the beneficiaries of the Trust were the four children.

background

9    The genesis of the broader dispute can be traced to 3 September 2011 when GHR raised with her children the prospect of extending the vesting date of the Trust, which was then 6 September 2011, to avoid the imposition of capital gains tax, provided certain releases were given to GHR in respect of her conduct as trustee, and provided certain other covenants were given by the children. This led to litigation in the Supreme Court by two of the children (BHR and John Langley Hancock (JLH)) seeking GHR’s removal as trustee (the Removal proceeding). The other two children, Hope Rinehart Welker and Ginia Hope Frances Rinehart, were joined as defendants. The Removal proceeding was commenced on 5 September 2011. It culminated in GHR being replaced as the trustee of the Trust by BHR in circumstances where, in the week before the final hearing of the Removal proceeding in October 2013, GHR declared her desire to be discharged as trustee of the Trust. One of the issues that remained in the Removal proceeding was whether BHR should be the new trustee of the Trust.

10    In his reasons for judgment in the Removal proceeding (Hancock v Rinehart (2015) 106 ACSR 207; [2015] NSWSC 646), published on 28 May 2015, Brereton J recorded the following findings of fact:

32    The current proceedings were precipitated by a letter from Mrs Rinehart dated 3 September 2011 – 3 days before the trust was due to vest – to the beneficiaries of the Trust, sent at her request by the chief financial officer of HPPL, Mr Jay Newby. By the letter Mrs Rinehart represented to the beneficiaries that the trust's tax advisors, PricewwaterhouseCoopers, had provided advice confirming that upon vesting, each beneficiary would become liable to pay CGT on the value of the trust estate to which they became entitled, which would be “very substantial”; that the shares could not be sold to a non-Hancock family group member or encumbered; and that the vesting of the trust and the consequent CGT liability would therefore lead to the bankruptcy of each beneficiary, with serious consequences and disabilities for them. She then informed them that these consequences could be averted by her extending the vesting date, but that she would do so only if they executed a deed poll, covenanting not to seek to query or challenge any act or omission of Mrs Rinehart in relation to the trust, and undertaking that if they intended to enter into marriage or a marriage-like relationship they would enter into a cohabitation or nuptial agreement excluding their partner from any claim in respect of the trust, HPPL or HDIO.

33    However, as documents ultimately obtained by the plaintiffs by discovery and subpoenas in the course of these proceedings would establish, Mrs Rinehart and Mr Newby had no such advice in respect of CGT; while it may not have been entirely unequivocal, the advice they had obtained was to the effect that CGT would not be payable upon the mere vesting of the trust. Moreover, the dispatch of the letter was intentionally delayed, so that the beneficiaries would have only one business day in which to obtain any professional advice they might require to consider their response. Indeed, Mrs Rinehart instructed Mr Newby to defer sending the letter until after Ginia had left New York to travel – thus further limiting her ability to obtain appropriate advice and increasing the pressure on her to succumb to its demands.

34    After the 3 September 2011 letter was sent, Mr Newby sought to persuade John of its accuracy, in that CGT would be payable on vesting, and to convince him to sign the deed proposed by Mrs Rinehart. He also pressed Bianca to sign the deed to avoid bankruptcy, and told her that she would have a tax liability of $142 million if the trust vested on 6 September 2011. On 4 September, Mrs Rinehart, by a further deed of amendment, deleted and replaced clause 6 of the trust deed, so as to extend the vesting date of the Trust to 1 July 2068. However, the beneficiaries were not told of this, and Mrs Rinehart and Mr Newby continued to press them to sign the proposed deed before 6 September 2011, ostensibly in order to avoid bankruptcy.

11    His Honour described the primary claim in the Removal proceeding as follows:

38    Thus the plaintiffs primarily claimed removal and replacement of Mrs Rinehart as trustee of the trust – essentially on the ground that, in connection with giving consideration to the extension of its vesting date in September 2011, she so misconducted herself as to demonstrate unfitness to retain the office of trustee. At the core of this were allegations that, as the vesting date approached, she misrepresented to the beneficiaries that they would incur capital gains tax liabilities with catastrophic financial consequences for them unless she exercised her discretion to extend the vesting date, but also informed them that she would so exercise her discretion only if they gave her a release in respect of the whole of her past and future trusteeship, and they entered into nuptial agreements with their respective partners – thereby placing immense pressure on the beneficiaries in order to obtain benefits for herself as the price of her performing her duties as trustee.

12    However, given GHR’s stated desire to be discharged as trustee, no issue remained in the Removal proceeding as to whether she had committed breaches of trust or had misconducted herself so as to warrant her removal as trustee. Nevertheless, when dealing with the admissibility of certain evidence, Brereton J said:

47    … While, as I held in the course of the second hearing (Hancock v Rinehart [2014] NSWSC 860…), Mrs Rinehart having announced her intention to resign, there is no longer an issue in these proceedings whether she committed breaches of trust or misconducted herself so as to warrant her removal, there are live issues as to her capacity and propensity, after her replacement as trustee, to endeavour to retain at least some control or influence in respect of the trust, to influence its administration, and to overbear her successor. Those issues inform the context in which a replacement trustee may have to operate, and the characteristics which such a trustee may require. Many of the disputed documents are relevant to the contention that Mrs Rinehart will go to extraordinary lengths to retain control of or influence over the trust. Further, as one of the objections advanced to the appointment of Bianca as replacement trustee was that she lacks impartiality and has aligned herself with John, and preferred her interests in the litigation to her relationship with her sisters, the plaintiffs are entitled to endeavour to explain Bianca's conduct by showing why she has prosecuted the litigation as she has, which includes establishing the conduct of her mother to which she responded. Many of the disputed documents are relevant to the contention that Bianca was compelled to take the action she did to protect her interests and those of the trust.

13    In the course of the Removal proceeding, BHR’s solicitors wrote to GHR’s solicitors on 20 December 2013 raising the question of the amount of the dividends that had been paid to the Trust. The letter expressed the concern that the Trust appeared to have received significantly less than its share of dividends in the 2012 year. GHR’s solicitors responded by letter dated 23 January 2014. They said that “all of the misguided allegations made in your letter of 20 December are absolutely without foundation and we invite you to withdraw them”.

14    Some time later, on 30 October 2014, BHR’s solicitors wrote again to GHR’s solicitors, this time querying the amount of dividends paid specifically with reference to the CS shares for the 2011, 2012 and 2013 financial years. This was followed by further correspondence from BHR’s solicitors. Eventually, a substantive response was received on 26 November 2014, this time on behalf of HPPL. (At one time, the same firm of solicitors acted for GHR and HPPL. It seems that, at around this time, GHR and HPPL had sought and obtained separate representation.) The letter in response said that the calculations in the correspondence sent on behalf of BHR proceeded “on substantially incorrect information and assumptions”.

15    Obviously not satisfied with this response, BHR and JLH commenced proceedings in the Supreme Court on 1 December 2014 seeking orders for preliminary discovery from GHR and HPPL (the Preliminary Discovery proceeding). As will be apparent, this proceeding was commenced before BHR’s appointment as trustee of the Trust and before the publication of Brereton J’s reasons in the Removal proceeding.

16    On 28 August 2015, White J made orders requiring GHR and HPPL to give discovery of, and to produce, certain classes of documents: Rinehart v Rinehart (2015) 108 ACSR 415; [2015] NSWSC 1201. In his reasons for judgment, White J noted (at [2]) that the Preliminary Discovery proceeding had been commenced to enable BHR and JLH to investigate and consider whether a claim should be brought against HPPL alleging underpayment of dividends in respect of the CS shares held by the Trust; whether a claim should be brought against GHR alleging inducement of breach of contract by HPPL and/or breach of trust if it had been the case that GHR had exercised control over HPPL to prevent the proper payment to the Trust of dividends in respect of the CS shares; and whether a claim should be brought against the directors of HPPL for breach of their statutory duties under the Corporations Act 2001 (Cth) (the Corporations Act). His Honour also noted (at [3]) that BHR and JLH wished to investigate whether HPPL might be liable to them for knowing involvement in a breach of trust by GHR in preventing the payment of proper dividends on the CS shares.

17    At [67] of his reasons for judgment, White J recorded his finding that, in their capacities as beneficiaries of the Trust, there was reasonable cause to believe that BHR and JLH might have a right of action against GHR and HPPL for short payment of dividends. In the course of those reasons, when dealing with a submission by GHR and HPPL that BHR and JLH had not demonstrated that they had made “all reasonable inquiries”, White J said:

93    In the circumstances of this case, the plaintiffs made reasonable inquiries by researching available information from the Rio Tinto group, examining the constitution and financial statements of HPPL and by asking the defendants to explain the position. I do not understand why the defendants, if acting reasonably, would not simply have provided the explanations and information the plaintiffs sought. The potential dispute relates to the affairs of a private company controlled by Mrs Rinehart. Her children are the beneficiaries in respect of a minority parcel of shares and the plaintiffs are two of those children. No evidence was adduced for the defendants to explain why the information the plaintiffs sought could not readily have been provided. Nor was there any evidence as to any harm feared if such information had been provided. Instead, the plaintiffs' inquiries were met with abuse and obstruction. The fact that the defendants can now point to further inquiries the plaintiffs could have made does not indicate that they failed to make reasonable inquiries by those they did make.

18    Between 25 September 2015 and 30 September 2016, HPPL produced documents in tranches pursuant to the orders made by White J. However, from as early as 31 October 2015, BHR commenced to raise questions with HPPL in respect of issues that had arisen following her review of the documents that had been produced. It is not necessary for me to detail that correspondence.

19    On 26 February 2016, a directions hearing was held in the Preliminary Discovery proceeding. At that time, counsel for BHR and JLH raised the issue of whether royalties payable under the 1968 Agreement should include royalties from iron ore mined from an area described as Eastern Range. There was no resolution of that question at the directions hearing but, subsequently, on 16 March 2016, the solicitors for HPPL wrote to the solicitors for BHR and JLH stating that HPPL was prepared to treat royalties paid on ore mined from a part of Eastern Range as part of the royalties to be used for calculating Mandatory CSS Dividends. The letter also stated that HPPL would make a back payment in respect of the short payment of dividends relating to royalties from this area.

20    Further correspondence took place between the solicitors for BHR and JLH and the solicitors for HPPL on this matter. Correspondence also took place on the question of the scope of the documents required to be produced in accordance with the orders for preliminary discovery that had been made. I will not summarise this correspondence other than to note that it reflects disputes between the relevant parties as to the royalties that should be used to calculate Mandatory CSS Dividends and also, once again, the scope of the documents required to be produced.

21    Further, on 4 April 2016, the solicitors for HPPL raised the contention that the documents produced on preliminary discovery could only be used by BHR in her capacity as a beneficiary and not as (then) trustee of the Trust. The letter continued by alleging that BHR had apparently breached the “implied undertaking” by using the documents in her capacity as trustee. The capacity in which BHR had received the documents, and the use to which they could be put, continued to be debated in correspondence. As that debate remained unresolved, BHR filed a notice of motion in the Preliminary Discovery proceeding on 8 August 2016 seeking an order that she be permitted to use the documents.

22    There are two things which should be emphasised. The first is that these events took place in the context of the Preliminary Discovery proceeding. The second is that a significant aspect of the debate, in that context, was whether the Mandatory CSS Dividends had been calculated on the correct royalty streams. On a number of occasions during this debate (including on 12 and 19 August 2016), the solicitors for HPPL stated that HPPL was willing to “engage cooperatively” in relation to all the issues that had been raised. HPPL’s solicitors said that HPPL was available to meet BHR and JLH, and their solicitors, “at a mutually convenient time if that would be of assistance”.

23    On 7 September 2016, the solicitors for BHR and JLH wrote to the solicitors for HPPL and the solicitors for GHR. The stated purpose of the letter was to outline BHR’s and JLH’s position in relation to the underpayment of Mandatory CSS Dividends and to provide an opportunity to GHR and HPPL “to resolve the underpayment of dividends without the need for further litigation”. The letter set out various claims that BHR and JLH believed they had on that subject. These claims included claims that GHR had breached her duty as trustee of the Trust and that HPPL had been knowingly involved in those breaches. The letter also claimed that GHR had breached her duties as a director of HPPL. Further, the letter contained a number of claims with respect to GHR’s and HPPL’s compliance with the orders made in the Preliminary Discovery proceeding as well as GHR’s compliance with orders made in the Removal proceeding.

24    The letter contained the following summary of GHR’s and JLH’s position together with a proposal to resolve the various disputes that remained in connection with the Removal proceeding and the Preliminary Discovery proceeding:

5    We understand that the second defendant contends that the royalties received from two of the disputed areas of (described below as MBM Areas and Marandoo Area) are payable under the 1970 Agreement and 1990 Royalty Agreement and are therefore not received pursuant to the 1962 Agreement or 1968 Agreement and should not be taken into account in the calculation of the CS Share Compulsory Dividend.

6    The second defendant has not advanced any basis upon which the royalty received from the other area (ER246 Area) is not payable pursuant to the 1962 Agreement or 1968 Agreement. Whilst it has not conceded the point, that royalty (subject to confirmation of information concerning the amount outstanding including interest) is now being taken into account in the calculation of the CS Share Compulsory Dividend.

7    The second defendant’s contentions regarding the royalties received from the MBM Areas and Marandoo Area:

7.1    are incorrect;

7.2    are based upon an unduly narrow construction of the relevant provision of the HPPL Constitution which is not supported by the text, context or commercial purpose of that provision or the agreements which are referred to in it;

7.3    are contrary to the position previously adopted and advanced against Hamersley Iron Pty Ltd (Hamersley Iron); and

7.4    have been implemented at the direction of the first defendant to the detriment of the minority shareholders whilst benefiting the majority shareholder (also the first defendant and defaulting former trustee).

8    The discovery provided to date clearly demonstrates that the plaintiffs’ construction of Article 3A of the HPPL Constitution represents not only a fair and commonsense reading of that article but also accords with the view actually held by the second defendant as to how it should be read in the circumstances.

9    Even if (for argument’s sake) the construction contended for the by plaintiffs was only reasonably arguable, it is extraordinary that the second defendant would strive against that conclusion and troubling that the former trustee has acquiesced in and supported such approach.

10    Unfortunately, the genuineness of the position of the defendants in relation to these issues is marked by the fact that:

10.1    it was necessary for these proceedings to have been brought to ascertain the true position;

10.2    these proceedings exposed that at least one of the disputed royalties (received in respect of ER246 Area) was plainly received pursuant to the 1968 Agreement and that was known to be so (the preliminary discovery provided by the second defendant demonstrates that the asserted oversight of this payment by the defendants is without foundation); and

10.3    late on the evening after the removal of the former trustee, the second defendant proposed to amend Article 3A to specifically include the royalties received from the disputed areas in the calculation of the CS Share Compulsory Dividend, albeit with inappropriate conditions.

11    In the circumstances, we are instructed to allow your clients to resolve this matter through the following:

11.1    the CS Share Compulsory Dividend payable to the Trust to date be recalculated on the basis that the payments received by the second defendant from the MBM Areas, ER246 Area and Marandoo Area are taken into account and any outstanding amount (once agreed) be paid together with interest calculated on the prejudgment court rates;

11.2    the defendants agree that going forward the CS Share Compulsory Dividend will take into account the payments received by the second defendant from the MBM Areas, ER 246 Area and Marandoo Area and (without accepting that it is necessary to do so but in the interests of clarification) Article 3A of the HPPL Constitution be amended to make the position clear;

11.3    increase the CS Share Compulsory Dividend to comprise a minimum of two thirds of the applicable royalties, as the majority shareholder and directors have already determined is possible and appropriate;

11.4    the defendants agree to an order to pay the plaintiffs’ costs of and incidental to these proceedings in addition to the costs orders made to date as agreed or assessed; and

11.5    the parties agree that there be no further orders as to costs in these proceedings (the defendants will bear their own costs of complying with the preliminary discovery orders). However, the plaintiffs reserve their position on costs if the above proposal is not agreed.

25    The letter is a very detailed one, setting out the basis of BHR’s and JLH’s claims. It is expressed to have been sent in response to HPPL’s stated willingness to “engage cooperatively” to discuss the matters in issue between the parties. The letter expressed the not unreasonable assumption that the correspondence communicating HPPL’s willingness in this regard had been sent with the authority, and at the direction, of GHR.

26    The letter concluded as follows:

52    We request you let us know your clients’ response in relation to the proposal set out in paragraph 11 above by 4pm on 21 September 2016.

53    If we do not receive a productive response from your clients by the above deadline, the plaintiffs will proceed without further notice and we will assume (unless you tell us otherwise) that you have instructions to accept service.

54    This letter proceeds on the basis that your clients maintain their position on the issues concerning the use of the documents produced pursuant to the preliminary discovery orders and the implied undertaking. The plaintiffs maintain their position in that regard and will be pursuing their notice of motion on that topic.

55    Our clients otherwise reserve all of their rights.

[Emphasis in original]

27    HPPL’s response to this letter was to commence the present proceeding in this Court on 21 September 2016, the day on which a substantive response to the letter had been sought.

28    At the first case management hearing on 7 November 2016, senior counsel for HPPL accepted that it was appropriate that BHR seek judicial advice from the Supreme Court as to whether, as trustee of the Trust, she should defend the present proceeding. Senior counsel also indicated HPPL’s preparedness to consent to an order releasing BHR, in her personal capacity, from the “implied undertaking” so that she could seek and obtain that advice.

29    The application for judicial advice was heard expeditiously on 2 March 2017 and, on 15 March 2017, Rein J made an order pursuant to s 63(1) of the Trustee Act 1925 (NSW) that BHR would be justified in defending the present proceeding. His Honour also made an order that BHR would be justified in commencing and prosecuting a proceeding alleging the causes of action set out in a draft statement of claim prepared on BHR’s behalf, or other causes of action substantively the same. On 22 March 2017, his Honour published amended reasons for judgment (originally given on 15 March 2017): Bianca Hope Rinehart trading as Trustee of the Hope Margaret Hancock Trust [2017] NSWSC 282.

the trust proceeding

30    On 21 March 2017, in her capacity as trustee of the Trust, BHR commenced proceedings in the Supreme Court against GHR, HPPL, Tadeusz Watroba and Jay Elliot Newby (the Trust proceeding). I am informed (and there appears to be no dispute) that, at material times, Mr Watroba was an executive director of HPPL and that Mr Newby was the Chief Financial Officer of the company.

31    One issue in the Trust proceeding, as foreshadowed in the letter of 7 September 2016 (see [24] above) is whether royalties received from mining in the MBM Area and the Marandoo Area must be taken into account in calculating Mandatory CSS Dividends. This will raise the question of the proper construction of Article 3A of the Articles, including the meaning of “pursuant to” when used in Article 3A(B) with respect to the agreements referred to in Article 3A(H), namely the 1962 Agreement and the 1968 Agreement. This is the very question at issue in the present proceeding, in which HPPL seeks the following declaratory relief:

1    A declaration pursuant to section 21 of the Federal Court of Australia Act 1976 (Cth) that:

a.    royalties payable in respect of the MBM Area are not payable under the 1962 Agreement or the 1968 Agreement;

b.     royalties payable in respect of the MBM Area do not form part of the "net royalties"    referred to in Article 3A of HPPL's Articles of Association;

c.     royalties payable in respect of the Marandoo Area are not payable under the 1962 Agreement or the 1968 Agreement; and

d.     royalties payable in respect of the Marandoo Area do not form part of the "net royalties" referred to in Article 3A of HPPL's Articles of Association.

32    As explained in oral submissions, and also in the correspondence, the MBM Area comprises mining operations at Eastern Range and in an area called Channar. Thus, in this proceeding, as well as in the Trust proceeding, BHR, as trustee of the Trust, says that, because of the operation of Article 3A, the royalty streams out of which Mandatory CSS Dividends must be paid include royalties from iron ore mined at Eastern Range and Channar (the MBM Area) and at Marandoo. For its part, HPPL says that the royalty streams do not include royalties from Eastern Range, Channar or Marandoo, with the exception of a “sliver” of land at Eastern Range, identified as being on the Paraburdoo side of the intersection of the boundary of ML4SA (being Eastern Range) and ML246SA (being Paraburdoo). It is to be noted that there is no dispute that royalties received from operations at Paraburdoo are included in the royalty streams to be used for the payment of Mandatory CSS Dividends. HPPL has signified, through its solicitors, that it is “prepared to treat royalties paid on ore won from the [s]liver as being included for the purposes of calculating the CS dividend”. However, HPPL has also informed BHR that it “does not concede that this portion of the Eastern Range royalty is properly payable as a dividend under Article 3A”.

33    This, therefore, identifies what appears to be the metes and bounds of the present proceeding in this Court and also one of the issues raised by BHR in the Trust proceeding. However, as I have foreshadowed, the Trust proceeding is broader in scope. In the course of oral submissions, I was taken through the statement of claim filed in the Trust proceeding. The statement of claim is 182 pages in length and contains 682 paragraphs, a large number of which are divided into sub-paragraphs. The pleading is complex.

34    By way of broad overview, and as I have already noted, BHR alleges that GHR breached her duties as trustee of the Trust and as a director of HPPL. The asserted breaches cover a broad range of alleged misconduct by GHR associated with her control and management of HPPL and also in her role as trustee of the Trust. A significant plank in BHR’s case is that, at all relevant times prior to 28 May 2015 (when GHR was replaced as trustee), including on each occasion on which HPPL determined whether or not to pay dividends, and in what amount, GHR was in a position of actual conflict between her duties as a director of HPPL and her duties as trustee of the Trust and took no steps to avoid that conflict or to obtain the informed consent of the beneficiaries to such conflict. Further, in relation to the Mandatory CSS Dividends, BHR alleges not only that the royalty streams from Eastern Range, Channar and Marandoo should have been included for the purposes of calculation (on the basis of the proper construction and application of Article 3A), but also that GHR caused HPPL to calculate the Mandatory CSS Dividends in the way it did to minimise the amount of dividends payable to the beneficiaries and thereby to prevent or limit funds being made available to them to challenge GHR’s control over HPPL and the Trust, to scrutinise the affairs of the Trust, and to scrutinise GHR’s conduct as trustee. There is a range of other alleged misconduct pleaded against GHR in relation to the payment or non-payment of dividends by HPPL (both Mandatory CSS Dividends and discretionary dividends) and in relation to depriving the beneficiaries of their rights, including by modifying Article 3A to cut down the rights which, originally, the beneficiaries had been granted in respect of remedying the non-payment of dividends.

35    As I have noted, the Trust proceeding has been commenced not only against GHR and HPPL but also against Mr Watroba and Mr Newby. I mention Mr Watroba in particular because the claim against him featured in BHR’s submissions in the transfer application. BHR alleges that Mr Watroba, as a director of HPPL, acted with GHR to cause HPPL to calculate the Mandatory CSS Dividends in the way it did, and to engage in other conduct concerning the non-declaration and non-payment of discretionary dividends. BHR alleges that, in doing so, Mr Watroba acquiesced in, did not seek to prevent, and was complicit in, GHR’s decisions in that regard, to the extent that he ceded control of the management of HPPL to GHR. BHR alleges that Mr Watroba thereby was involved in GHR’s alleged contraventions as a director, within the meaning of s 79 of the Corporations Act. BHR also relies on Mr Watroba’s conduct in this regard as a reason why relief should be granted under s 233 of the Corporations Act to prevent Mr Watroba from continuing to be involved in the management of HPPL or its related bodies corporate.

BHR’s Submissions

36    Against this background, BHR submitted that the transfer application should be granted for a number of reasons.

37    First, BHR submitted that a substantial saving in legal costs and court resources would be achieved by transferring the proceeding to the Supreme Court. In support of this submission, BHR referred to the fact that the proceeding is a “subset” of the broader dispute to which I have referred concerning GHR’s governance of HPPL and the Trust. BHR explained that the construction of Article 3A and the payment of Mandatory CSS Dividends would arise in different ways in litigating the broader dispute. BHR submitted that all of the evidence and submissions that she would rely on in the present proceeding in defence of the claim brought by HPPL would also be relied on by her in the Trust proceeding, irrespective of the findings that might be made in the present proceeding. Thus, she submitted, transferring the present proceeding to the Supreme Court would save legal costs “by avoiding the parties doing the same thing twice” and “will save [c]ourt resources by avoiding two courts considering the same documents, submissions and issues”.

38    Secondly, BHR submitted that, as a result of the overlap between the present proceeding and the Trust proceeding, there is a risk of inconsistent findings or inconsistent judgments. She submitted that the most obvious way that this might occur related to what she described as “the ER246 issue”. As I understand it, this issue concerns whether the royalty streams for calculating Mandatory CSS Dividends should include royalties from ore mined at the “sliver” of land at the intersection of Eastern Range and Paraburdoo which I have mentioned at [32] above. BHR argued that it seemed possible that if this Court were to give judgment first, it might make a finding that did not create an issue estoppel in respect of “the ER246 issue”. She argued that the Supreme Court might then make a decision “in tension” with this Court’s decision. Although accepting that such an eventuality was not certain to occur, BHR submitted that the risk that it might occur supported an order granting the transfer application.

39    In written submissions, BHR also argued that:

40    There are other ways in which there might be inconsistency of a more indirect kind. Suppose for example that this Court considered that [BHR’s] construction of Article 3A is plainly correct. The judge in the [Trust proceeding] will still need to determine whether [GHR] acted in bad faith or negligently in not taking any action against HPPL as trustee in respect of HPPL’s calculation of the Mandatory CSS Dividends. That judge might consider that [BHR’s] construction would have appeared to [GHR] to be so plainly incorrect that [GHR] cannot be faulted for not taking any action against HPPL. A finding of that kind might be taken to suggest an implicit disagreement between two superior Court judges. That kind of suggestion diminishes the public confidence in the judicial system. The risk of it should be avoided if possible, and it can be avoided in this case.

40    In oral submissions, BHR relied on a further example. She pointed to the claims made against Mr Watroba in the Trust proceeding (particularly in relation to the calculation of Mandatory CSS Dividends) and noted that he is not a party in the present proceeding. BHR submitted that, whatever findings might be made in the present proceeding concerning the proper construction and application of Article 3A so far as it concerns Mandatory CSS Dividends, Mr Watroba would not be bound by those findings and would be at liberty to litigate, in his own interests, issues that, otherwise, had been determined between the parties in the present proceeding.

41    Thirdly, BHR submitted that the risk of multiple appeals in multiple courts would be avoided by transferring the present proceeding to the Supreme Court. BHR submitted that, given the history of litigation between the parties, there was, at least, a strong possibility that any decision in either proceeding would be appealed. She referred (in a way not entirely clear to me) to the possibility of the correctness of a decision in this Court acting as the catalyst for an appeal on the same issue in the Trust proceeding.

42    Fourthly, BHR submitted that I should not accept that there is any particular urgency concerning the determination of the issues raised in the present proceeding. She pointed to the paucity of evidence adduced by HPPL on this question, despite the fact that it had urged expedition. BHR pointed to HPPL’s previous conduct in determining and paying dividends and submitted, by reference to a chronology, that the proposition that there is any urgency in the matter was inconsistent with HPPL’s conduct over a great many years when it could have moved, but did not move, to have determined the question of the correct royalty streams to be used for calculating Mandatory CSS Dividends. Further, BHR submitted that, because HPPL had not sought to clarify, in legal proceedings, the position concerning royalties from “ER246”, it had no genuine concern as to “certainty of dividends” or, alternatively, it knew that it had no legitimate basis to contend that royalties from “ER246” were not received pursuant to the 1968 Agreement. In oral submissions, BHR suggested that she was the only party in the present proceeding with a genuine interest in having the correct basis for calculating Mandatory CSS Dividends determined – an interest, she said, that was best promoted by transferring the present proceeding to the Supreme Court despite HPPL’s opposition to that course.

43    Fifthly, BHR submitted that I should not accept that a transfer of the present proceeding to the Supreme Court would result in undue delay. In this connection, BHR referred to the fact that, upon receiving judicial advice in March this year, she promptly commenced the Trust proceeding and brought the transfer application.

44    Sixthly, BHR submitted that the commencement of multiple proceedings was inevitable, following HPPL’s decision to commence the present proceeding in this Court. She submitted that it would not have been possible to bring, by way of cross-claim in this Court, all the claims now made in the Trust proceeding because some of the claims in the Trust proceeding are not related to the subject of the present proceeding: see r 15.01(b) of the Federal Court Rules 2011 (Cth) (FCR).

45    Seventhly, and relatedly, BHR submitted that there were good reasons why, in any event, it was appropriate for her to commence the Trust proceeding in the Supreme Court, rather than in this Court. At its core, the Trust proceeding is a case about GHR’s governance of HPPL and the Trust. BHR submitted that the Supreme Court has exercised supervisory jurisdiction over the Trust and GHR’s conduct as trustee since 2011, including by giving approximately 50 judgments. BHR submitted that it is appropriate that such supervision continue.

46    In this connection, BHR also referred to the fact that, although in the Removal proceeding GHR was ordered to provide an account in common form, BHR was now seeking an order that GHR provide an account on the basis of wilful default. BHR also said that she was considering whether GHR should be cross-examined on her affidavit made in respect of the account ordered in the Removal proceeding.

47    BHR also referred to the fact that, in recent correspondence, HPPL had raised the prospect that the Trust proceeding might be defended partly on the basis of a deed referred to as the Hope Downs Deed. BHR submitted that, if so, there is a question whether, by executing the Hope Downs Deed, GHR breached her duties as trustee. BHR contends that GHR had received conflicting advice on whether her execution of the deed was a breach of trust. One piece of advice was given by counsel who is now a Judge of this Court. BHR submitted that, if GHR proposes to rely on that advice, the circumstances in which the advice was sought and given, and the content of the advice, might result in the Judge being called as a witness in the Trust proceeding. BHR submitted that, in those circumstances, it was preferable that the Trust proceeding be heard in the Supreme Court.

48    Eighthly, BHR submitted that precedence should not be given to HPPL’s choice to commence its proceeding in this Court because, at the time of commencement, HPPL knew of the claims articulated in the letter of 7 September 2016 but had only sought to litigate “a small fraction of the dispute between the parties”.

49    Finally, BHR submitted that the proceeding in this Court is at an early stage. BHR submitted that, although the Court has ordered BHR to file her defence and ordered HPPL to file and serve its affidavit evidence, those orders were sought by HPPL at a time when HPPL knew that the transfer application was on foot.

HPPL’s submissions

50    HPPL submitted that the transfer application should be refused for, essentially, six reasons.

51    First, HPPL submitted that the Trust proceeding was commenced after the present proceeding and there is no reason why the Supreme Court is a more appropriate forum than this Court to hear the matter framed by the Fast Track Statement in relation to the construction and application of Article 3A of the Articles. HPPL submitted that it cannot be in the interests of justice to transfer a proceeding solely on the basis of the choice of forum made by BHR after the present proceeding had been commenced. HPPL submitted that BHR’s submissions concerning the benefit of having the Trust proceeding and the present proceeding heard together or consolidated were “passing strange in light of her decision to commence in the Supreme Court rather than in this Court”.

52    Secondly, HPPL submitted that, whilst it is likely that the Trust proceeding will not be determined for a significant period of time, the parties’ positions on “the more narrow issue” in the present proceeding “are well advanced”. Amongst other things, HPPL submitted that BHR had been provided with about 21,000 documents as a result of the production made in the Preliminary Discovery proceeding; BHR had been provided with judicial advice that she is justified in defending the present proceeding; and HPPL would shortly file its evidence in accordance with the Court’s orders made on 23 March 2017. HPPL suggested that there was no reason why the present proceeding could not be set down for hearing later this year, subject to the Court’s availability. HPPL submitted that it is desirable to have the issues raised in the present proceeding determined as soon as possible so that HPPL knows whether its calculation of Mandatory CSS Dividends is correct.

53    Relatedly, HPPL referred to the prospect that it will seek a stay of the Trust proceeding pursuant to s 8 of the Commercial Arbitration Act 2010 (NSW) pending the resolution of other proceedings in this Court (NSD 1124 of 2014) as well as the present proceeding. This submission was not developed in any meaningful way. Moreover, HPPL did not suggest that the existence of proceeding NSD 1124 of 2014 in this Court was itself a reason for retaining the present proceeding in this Court.

54    Thirdly, HPPL submitted that the determination of the issues raised in the present proceeding, which involve a discrete question of construction of Article 3A, will assist in narrowing the broader issues in dispute between the parties. In oral submissions, senior counsel for HPPL referred to the present proceeding as raising “an a priori question to many of … [the] allegations” raised in the Trust proceeding. If the Court were to find that HPPL’s construction of Article 3A is correct then, according to HPPL, the “cascading issues” set out in BHR’s submissions “will fall away”. Further, HPPL submitted that the determination of the issues raised in the present proceeding will be based on documentary evidence and will not depend on contested factual evidence from witnesses. Thus, according to HPPL, the efficient determination of the issues raised in the present proceeding would assist the efficient determination of the Trust proceeding and may result in a substantial saving of legal costs and court resources.

55    Fourthly, HPPL submitted that there is no risk of inconsistent findings in the present proceeding and the Trust proceeding. HPPL submitted that, in the likely event that the present proceeding were to be determined before the Trust proceeding, the parties would be bound by the judgment given in this proceeding. HPPL dismissed the possibility that, for example, the “ER246 issue” could present a risk of inconsistent judgments.

56    Fifthly, HPPL submitted that the risk of multiple appeals is no more acute than in any other case where parties have separate disputes or if, in the Trust proceeding, the matter of construction raised in the present proceeding were to be determined as a separate question.

57    Sixthly, HPPL relied on the fact that Western Australia is its principal place of business and that its Articles, the 1962 Agreement and the 1968 Agreement were all entered into in Western Australia. HPPL submitted that, whilst not decisive, these factors indicate that it is more appropriate that the present proceeding be conducted in this Court, as a national court, rather than the Supreme Court.

The position of the other respondents

58    GHR and 150 Investments have played no visibly active role in the present proceeding. However, on the morning of the hearing of the transfer application, the solicitors for GHR and 150 Investments wrote to the Court stating that their clients supported, adopted and were content to rely on HPPL’s submissions. The receipt of this correspondence was brought to the attention of the other parties at the commencement of the hearing.

Relevant principles

59    The transfer application was originally sought on the basis of s 5(4) of the Jurisdiction  of  Courts (Cross-vesting) Act 1987 (Cth) (the Cross-vesting Act), which provides:

Where:

(a)    a proceeding (in this subsection referred to as the relevant proceeding) is pending in the Federal Court or the Family Court (in this subsection referred to as the first court); and

(b)    it appears to the first court that:

(i) the relevant proceeding arises out of, or is related to, another proceeding pending in the Supreme Court of a State or Territory and it is more appropriate that the relevant proceeding be determined by that Supreme Court;

    (ii)    having regard to:

    (A) whether, in the opinion of the first court, the relevant proceeding or a substantial part of it would have been incapable of being instituted in that court, apart from this Act and any law of the Australian Capital Territory or the Northern Territory relating to cross-vesting of jurisdiction; and

    (B) whether, in the opinion of the first court, the relevant proceeding or a substantial part of it would have been capable of being instituted in the Supreme Court of a State or Territory, apart from this Act and any law of a State or Territory relating to cross-vesting of jurisdiction; and

    (C)    the extent to which, in the opinion of the first court, the matters for determination in the relevant proceeding are matters arising under or involving questions as to the application, interpretation or validity of a law of the State or Territory referred to in sub-subparagraph (B) and not within the jurisdiction of the first court apart from this Act and any law of the Australian Capital Territory or the Northern Territory relating to cross-vesting of jurisdiction; and

    (D)     the interests of justice;

    it is more appropriate that the relevant proceeding be determined by that Supreme Court; or

    (iii)    it is otherwise in the interests of justice that the relevant proceeding be determined by the Supreme Court of a State or Territory;

the first court shall transfer the relevant proceeding to that Supreme Court.

60    At the commencement of the hearing of the transfer application, BHR sought leave (which was granted unopposed) to file an amended interlocutory application seeking to base the transfer application alternatively on s 1337H of the Corporations Act, which relevantly provides:

(1)    This section applies to a proceeding (the relevant proceeding ) in a court (the transferor court ) if:

(a)    the relevant proceeding is:

    (i) a proceeding with respect to a civil matter arising under the Corporations legislation; or

    (ii)     a subsection 1337B(3) proceeding; and

    (b)     the transferor court is:

    (i)     the Federal court; or

    (ii)     a State or Territory Supreme Court.

(2)     Subject to subsections (3), (4) and (5), if it appears to the transferor court that, having regard to the interests of justice, it is more appropriate for:

    (a)     the relevant proceeding; or

    (b)     an application in the relevant proceeding;

to be determined by another court that has jurisdiction in the matters for determination in the relevant proceeding or application, the transferor court may transfer the relevant proceeding or application to that other court.

…

61    HPPL contended that the applicable provision for the transfer of the present proceeding to the Supreme Court is s 1337H. Whilst in her written submissions BHR said that HPPL’s claim in the present case does not arise under the Corporations Act – with the consequence that s 1337H would not apply – her contention was not developed. BHR was content to rely on either provision. She argued that the criteria for an application based on s 1337H of the Corporations Act are broadly consistent with the criteria for an application based on s 5(4) of the Cross-vesting Act. BHR’s apparent ambivalence on this question is somewhat surprising. If, as she contends, HPPL’s claim in the present proceeding does not arise under the Corporations Act, this would mean, more generally, that the Court would not have jurisdiction in the matter at all: see, generally, s 39B of the Judiciary Act 1903 (Cth) and, in particular, s 39B(1A)(c) thereof concerning the Court’s jurisdiction in matters arising under any laws made by the Parliament. The latter contention was flagged by BHR at the first case management hearing with a view to reserving her position on that question. Until now, that question has not resurfaced.

62    I am satisfied that the Court does have jurisdiction in the matter, for the reasons articulated by HPPL in its written submissions. In order for a matter to arise under a law made by the Parliament – here the Corporations Act – it is sufficient that the right or duty in question owes its existence to the law or depends on the law for its enforcement: R v Commonwealth Court of Conciliation and Arbitration; Ex parte Barrett (1945) 70 CLR 141 at 154; Re McJannet; Ex parte the Australian Workers’ Union of Employees, Queensland & Ors (No 2) (1997) 189 CLR 654 at 656-657; LNC Industries Ltd v B.M.W. (Australia) Ltd (1983) 151 CLR 575 at 581-582.

63    The present proceeding concerns the construction and application of the Articles, which have contractual force as between HPPL and its members by reason of s 140(1) of the Corporations Act. I am satisfied that the proceeding concerns a matter arising under the Corporations Act and, more specifically, is with respect to a civil matter arising under the Corporations legislation within the meaning of s 1337B(1) of the Corporations Act. The consequence is that, not only does the Court have jurisdiction in the matter, but Div 1 Pt 9.6A of the Corporations Act operates to the exclusion of the Cross-vesting Act: s 1337A(2)(a) of the Corporations Act. Thus, the only provision relevant to the transfer application is s 1337H of the Corporations Act; 5(4) of the Cross-vesting Act has no relevant application.

64    HPPL sought to distinguish s 1337H(2) of the Corporations Act and s 5(4) of the Cross-vesting  Act on the basis that the former provides a discretion to transfer, whereas the latter mandates transfer once the relevant criteria are satisfied: BHP Billiton Limited v Schultz (2004) 221 CLR 400; [2004] HCA 61 at [14] per Gleeson CJ, McHugh and Heydon JJ.

65    There is authority to the effect that s 1337H(2) of the Corporations Act, unlike s 5(4) of the Cross-vesting Act, contains a residual discretion not to transfer a proceeding even though the requirements for transfer are made out: Re Westgate Wool Co Pty Ltd (in liq) (2006) 206 FLR 190; [2006] SASC 372 at [31]. The circumstances in which such a discretion would be exercised are not clear to me. Whilst I acknowledge the permissory terms in which s 1337H(2) is cast (“…the transferor court may transfer the relevant proceeding…”), I would have thought that any relevant circumstance tending against the exercise of the discretion in favour of transfer would have fallen into the mix of factors to be taken into account in determining where the interests of justice lie, rather than standing outside those factors. I need not dwell on that matter because, in the present case, HPPL did not suggest that there were any separate considerations standing outside the considerations relevant to where the interests of justice lie.

66    Section 1337L of the Corporations Act provides that, in deciding whether to transfer a proceeding under s 1337H, a court must have regard to the principal place of business of any body corporate concerned in the proceeding; the place or places where the events that are the subject of the proceeding took place; and the other courts that have jurisdiction to deal with the proceeding. As I have noted, HPPL places reliance on the fact that Western Australia is the principal place of business for HPPL and the fact that the Articles, the 1962 Agreement and the 1968 Agreement were all entered into in Western Australia.

67    In Yara Pilbara Fertilisers Pty Ltd [formerly known as Burrup Fertilisers Pty Ltd] v Oswal (No 8) [2015] FCA 49, McKerracher J summarised the guiding principles to be applied on a transfer application as follows:

24    The leading authority which canvasses many of the issues to be taken into account is BHP Billiton Limited v Schultz (2004) 221 CLR 400. As the case law reflects, it is necessary to conduct a balancing exercise between relevant factors that inform as to whether or not it is in the interests of justice to transfer a proceeding. The weighing of considerations, such as cost, expense and convenience, even when they conflict, is a familiar aspect of the kind of case management involved in many cross-vesting applications: BHP per Gleeson CJ, McHugh and Heydon JJ (at [19]). While BHP considered the cross-vesting regime, for practical purposes the criteria for determining whether a proceeding should be transferred are broadly consistent with the criteria for determining cross-vesting: see Dwyer v Hindal Corporate Pty Ltd (2005) 52 ACSR 335 per Debelle J (at [13]). The question is essentially practical, or in the words used in BHP, it is essentially a “nuts and bolts” management decision as to which court, in the pursuit of the interests of justice, is the more appropriate to hear and determine the substantive dispute: BHP per Gleeson CJ, McHugh and Heydon JJ (at [13]); Bankinvest AG v Seabrook (1988) 14 NSWLR 711 per Street CJ (at 713-714). The ‘interests of justice’ is an expression to be interpreted broadly: BHP per Gleeson CJ, McHugh and Heydon JJ (at [15]).

25    The Court should not approach the transfer question with any presumption as to where the interests of justice lie: BHP per Gleeson CJ, McHugh and Heydon JJ (at [25]). It is not a circumstance in which an applicant has an onus of persuasion analogous to an onus of proof: BHP per Gummow J (at [71]). The disposition of an application for transfer of a proceeding does not require weight to be given to the plaintiff's choice of forum, which is essentially a neutral factor: BHP per Kirby J (at [168]) and per Gummow J (at 77).

26    As I noted in Commissioner of Taxation v Residence Riverside Proprietary Limited as Trustee for the D& J Discretionary Trust and as Trustee for the D& J Investment Trust [2013] FCA 720 (at [17]), this Court has previously recognised many factors as being relevant to the decision, which will vary in weight from case to case, including:

(1)    the stage of the proceedings in the respective courts;

(2)    the commonality or diversity of the parties;

(3)    the nature of the proceedings;

(4)    the commonality or diversity of issues;

(5)    the risk of conflicting findings of fact or conflicting orders;

(6)    a costs benefit analysis;

(7)    the potential unnecessary drain on judicial and other public and private resources; and

(8)    whether there is any particular judicial expertise residing in one court of the other.

68    HPPL drew attention to Spigelman CJ’s observation in James Hardie & Coy Pty Ltd v Barry (2000) 50 NSWLR 357; [2000] NSWCA 353 at [20] that the interests of justice lie with the efficient and expeditious disposal of the proceedings. On the question of onus, it also relied on his Honour’s observation at [100] that where the application involves the exercise of a judicial discretion according to proper principle, it is natural to regard the applicant as carrying at least the persuasive onus with respect to how that discretion should be exercised, even if the applicant does not, strictly speaking, bear an onus of proof.

Consideration

69    I accept HPPL’s submission that the present proceeding raises a discrete question, although I do not think that that question is a short one or one that is as straightforward as senior counsel for HPPL suggested in oral submissions. Indeed, senior counsel went so far as to suggest that the case is really a simple one. I think, with respect, that those submissions do not grapple with what I apprehend will be a complex task of piecing together distant events to understand, fully, the proper construction of Article 3A when it refers to net royalties received “pursuant to” the 1962 Agreement and 1968 Agreement. HPPL might be correct to say that the issues raised in the present proceeding will be based on documentary evidence rather than contested factual evidence from witnesses but, if so, that does not mean that the case will be without complexity and will not raise difficulties in the fact-finding necessary to construe the article in question. The fact that about 21,000 documents were produced pursuant to the orders made in the Preliminary Discovery proceeding gives a broad indication of the task, even if a large number of those documents do not directly relate to the question of construction at hand. Indeed, following the hearing of the transfer application, at a time when HPPL had filed its affidavit evidence as directed by the orders made on 23 March 2017, BHR pointed to the fact that HPPL’s affidavit evidence included an expert’s report. The correspondence on that matter (which I admitted into evidence with the agreement of the parties: see Exhibit D) shows that there is a debate between the parties as to whether the matters raised in the expert’s report are complex or, indeed, contentious. I do not propose to step into that debate. However, the fact that this debate has even erupted shows that the construction and application of Article 3A, in its correct factual setting, is far from straightforward.

70    Be that as it may, I also accept that, within the context of the Trust proceeding, a resolution of the issues raised in the present proceeding may well assist in narrowing the broader issues in dispute between the parties. HPPL may well be correct when it says that the efficient determination of the issues raised in the present proceeding would assist the efficient determination of the Trust proceeding and may result in a substantial saving of legal costs and court resources. But assuming those observations to be correct, as they well might be, it does not follow that those advantages can only be secured by the present proceeding remaining in this Court. If those advantages are real and capable of attainment, they can just as readily be realised by transferring the present proceeding to the Supreme Court, where the standard principles of case management can be equally deployed to ensure that the Trust proceeding is conducted as quickly, inexpensively and as efficiently as the just determination of the case requires. Indeed, to my mind, it makes no sense that an apparently anterior but nevertheless central question in a case raising a broad range of issues for determination in one court should be treated, effectively, as a separate question for resolution in another court having the same jurisdiction as the first court to hear and determine that separate question. It seems to me that fragmentation of that kind can only lead to manifest inefficiency and certainly greater cost brought about by the inevitable and unnecessary duplication of work. In this connection, I accept the thrust of BHR’s submission that, regardless of the findings that might be made if the present proceeding were to be heard and determined in this Court, much of the evidence to be relied on is likely to be relied on (BHR says will be relied on) in the Trust proceeding, including in relation to GHR’s state of mind at relevant times. There is also the real likelihood of delay arising from an inability to co-ordinate court events optimally while (what is essentially) one dispute straddles two courts. Such fragmentation is not conducive to efficient case management or to outcomes that serve the interests of justice.

71    These considerations are sufficient to demonstrate, clearly to my mind, that the interests of justice lie in transferring the present proceeding to the Supreme Court. I shall, nonetheless, deal briefly with some of the remaining submissions advanced by the parties which, in my view, do not lead to a different conclusion.

72    First, in considering the present application, the history of the dispute between the parties should not be ignored. The Supreme Court has been the seat of the litigation between the main protagonists touching on the conduct alleged against GHR in relation to HPPL’s dealings with the Trust, including importantly the calculation and payment (or non-payment) of dividends to the Trust by HPPL. The fact that HPPL, as the moving party in this Court, has chosen to litigate, here, that part of the dispute concerning the construction and application of Article 3A, should not be given undue emphasis. I do not accept that HPPL’s decision gives precedence to this Court in adjudicating on that particular matter. One of the important reasons for BHR and JLH seeking and obtaining orders for preliminary discovery was to investigate the payment of Mandatory CSS Dividends, including GHR’s and HPPL’s conduct in relation thereto. Over the course of one year, a large number of documents were produced in response to the orders made in the Preliminary Discovery proceeding. The analysis of those documents led to the letter of 7 September 2016 being sent. I think it is likely that BHR would have commenced the Trust proceeding in the Supreme Court earlier (subject to obtaining judicial advice) had she realised that HPPL’s offer of cooperative engagement to discuss the matters in dispute would not be realised. I accept that BHR’s choice to commence the Trust proceeding in the Supreme Court was an appropriate one in light of the issues raised and in light of the history of the litigation to which I have referred. The fact that HPPL moved first gives it no real advantage in the present application when one has regard to the overlapping and inter-related issues arising in each proceeding and the history of the dealings between the parties on those issues.

73    Secondly, the fact that BHR has been ordered to file a response to the Fast Track Statement, and the fact that HPPL has been ordered to file its affidavit evidence, are really neutral considerations. Those orders were sought by HPPL at a time when the transfer application was already on foot and at the same time as the order appointing the hearing date of the transfer application was made. At that time, HPPL accepted the possibility that, in seeking those orders, the transfer application might be granted over its opposition.

74    Relatedly, I do not accept the suggestion in HPPL’s submissions that the present proceeding is, itself, “well advanced”. The present proceeding has progressed, but it is not ready for hearing. Further, the steps taken in the proceeding to date are steps that would need to have been taken in any event, regardless of the forum chosen by HPPL. Those steps will not be wasted by transferring the present proceeding to the Supreme Court, as HPPL accepted at the case management hearing on 23 March 2017.

75    Thirdly, I do not accept that transferring the present proceeding to the Supreme Court will result in delay. On the contrary, I am persuaded that, by transferring the proceeding, so that all aspects of the one dispute are before one court, the likelihood of delay will be avoided. Further, as I have said, if there is utility and efficiency in having that part of the dispute defined by the Fast Track Statement heard before other issues in the Trust proceeding, then that utility and efficiency can just as readily be achieved in the Supreme Court.

76    Fourthly, I have had regard to the requirements of s 1337L of the Corporations Act and the fact that Western Australia is the principal place of business of HPPL, as well as the fact that the Articles, the 1962 Agreement and the 1968 Agreement were all entered into in Western Australia. However, I consider these to be neutral considerations. For whatever reason, the parties have chosen to litigate their present disputes in New South Wales, either in the Supreme Court or through the New South Wales District Registry of this Court, not in Western Australia. The “Western Australian factors” to which I have referred appear to have played no part in their respective choices of forum. In these circumstances, the fact that this Court is a national court does not stand as a persuasive reason not to transfer the present proceeding to the Supreme Court when other considerations point convincingly to the desirability of transfer.

77    Fifthly, contrary to BHR’s submission, I am not persuaded that, should the present proceeding remain in this Court, there would be any particular risk of inconsistent findings or inconsistent judgments. Nonetheless, I do accept the wisdom that it is desirable that one court make all findings of fact that are necessary to quell the controversy between the parties that is reflected in the Trust proceeding. As regards Mr Watroba, I accept that any concern that he might be able to litigate, in the Trust proceeding, issues determined in the present proceeding, could be accommodated by joining him as a party to the present proceeding. However, it is likely that the need to do so will be obviated by ordering the transfer that is sought. Much will depend on how the Supreme Court then chooses to deal with the two proceedings.

78    Sixthly, I am unpersuaded by BHR’s submission that, should the present proceeding remain in this Court, there would be a heightened risk of multiple appeals. I accept HPPL’s submission that the risk of multiple appeals is no more acute than in any other case where the parties have separate disputes or where judgments are given on separate questions. However, it does not follow from my rejection of BHR’s submission, and my acceptance of HPPL’s submission, that the present proceeding should remain in this Court.

Disposition

79    For these reasons, I am satisfied that, having regard to the interests of justice, it is more appropriate for the present proceeding to be determined by the Supreme Court. Orders providing for that transfer will be made accordingly.

Associate:

Dated:    17 May 2017