Hancock Prospecting Pty Ltd v Rinehart (No 2) [2017] FCAFC 208

FEDERAL COURT OF AUSTRALIA

Hancock Prospecting Pty Ltd v Rinehart (No 2) [2017] FCAFC 208

Appeal from: Rinehart v Rinehart (No 3) [2016] FCA 539

File numbers: NSD 916 of 2016
NSD 922 of 2016

Judges: 

  • ALLSOP CJ
  • BESANKO
  • O’CALLAGHAN JJ

Date of judgment: 15 December 2017

Catchwords:
ARBITRATION  – stay of proceeding brought in Court in favour of arbitration – making of orders

COSTS – appropriate order for costs – whether costs of stay application below and on appeal should follow the event – whether costs below and on appeal should be payable forthwith

Legislation: Commercial Arbitration Act 2010 (NSW), s8

Cases cited:

  • AED Oil Ltd v Puffin FPSO Ltd (No 2) [2010] VSCA 109
  • Amcor Packaging (Australia) Pty Ltd v Baulderstone Pty Ltd [2013] FCA 253
  • Ansett Australia Ltd v Malaysian Airline System Berhad (No 2) [2008] VSC 156
  • Australian Maritime Systems Ltd v McConnell Dowell Constructors (Aust) Pty Ltd [2016] WASC 52 (S)
  • Comandate Marine Corp v Pan Australia Shipping Pty Ltd [2006] FCAFC 192; 157 FCR 45
  • Hancock Prospecting Pty Ltd v Rinehart [2017] FCAFC 170
  • John Holland Pty Limited v Kellogg Brown & Root Pty Ltd (No 2) [2015] NSWSC 564
  • Novawest Contracting Pty Ltd v Brimbank City Council [2015] VSC 679
  • Pipeline Services WA Pty Ltd v ATCO Gas Australia Pty Ltd [2014] WASC 10 (S)
  • Re Ikon Group Ltd (No 2) [2015] NSWSC 981

Date of hearing: Determined on the papers

Date of last submissions: 29 November 2017

Registry: New South Wales

Division: General Division

National Practice Area: Commercial and Corporations

Sub-area: Commercial Contracts, Banking, Finance and Insurance

ORDERS

NSD 916 of 2016
NSD 922 of 2016

BETWEEN:
HANCOCK PROSPECTING PTY LTD ACN 008 676 417(and others named in the schedule)
Applicants/Appellants

AND:
BIANCA HOPE RINEHART (and others named in the schedule)
Respondents

JUDGES:

  • ALLSOP CJ
  • BESANKO
  • O’CALLAGHAN JJ

DATE OF ORDER: 15 DECEMBER 2017

THE COURT ORDERS THAT:

  1. Leave to appeal be granted.
  2. The appeals be allowed.
  3. The cross-appeals be dismissed.
  4. The notices of contention be dismissed.
  5. The orders of the Court made on 26 May 2016 be set aside and in lieu thereof order:
    1. that the proceeding brought in the Court by the applicants being NSD 1124 of 2014 be stayed under s8(1) of the Commercial Arbitration Act 2010 (NSW) article CA Act) pending any arbitral reference between the parties or until further order, save and except for those claims made against those entities that are not parties to the relevant arbitration agreements, being Hope Downs Iron Ore Pty Ltd, Roy Hill Iron Ore Pty Ltd, Mulga Downs Investments Pty Ltd and Mulga Downs Iron Ore Pty Ltd; and
    2. the first and second applicants to the main proceedings (being the first and second respondents to the appeals) pay the costs of the moving parties to the interlocutory application filed on 3 November 2014 in proceedings NSD 1124 of 2014 in connection with paragraph 9 thereof and the costs of the moving parties to the interlocutory application filed on 24 December 2014 in those proceedings, subject to Hope Downs Iron Ore Pty Ltd, Roy Hill Iron Ore Pty Ltd, Mulga Downs Investments Pty Ltd, and Mulga Downs Iron Ore Pty Ltd paying the costs related to the question as to whether those entities are parties to the arbitration agreement pursuant to s 2 of the CA Act.
  6. The claims made by the applicants in the underlying proceedings against Hope Downs Iron Ore Pty Ltd, Roy Hill Iron Ore Pty Ltd, Mulga Downs Investments Pty Ltd and Mulga Downs Iron Ore Pty Ltd be stayed on the same terms as the stay in order 5.
    Subject to the stays in orders 5 and 6 above, the matter be remitted to the primary judge for any application properly available in the light of the stays.
  7. The first and second respondents pay the appellants’ costs of appeal including the costs of the application for leave to appeal, subject to Hope Downs Iron Ore Pty Ltd, Roy Hill Iron Ore Pty Ltd, Mulga Downs Investments Pty Ltd and Mulga Downs Iron Ore Pty Ltd paying the costs related to the question as to whether those entities are parties to the arbitration agreement pursuant to s 2 of the CA Act.
  8. Leave be granted nunc pro tunc to Wright Prospecting Pty Ltd to intervene on the condition that they bear their own costs of intervention.

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

REASONS FOR JUDGMENT
THE COURT:

  1. On 27 October 2017 (Hancock Prospecting Pty Ltd v Rinehart [2017] FCAFC 170) the Court published reasons including proposed draft orders dealing with the appeal arising from orders made by the primary judge on the application by (to use the relevant definitions in the earlier judgment) the HPPL Parties, Mrs Rinehart and 150 Investments to stay proceedings brought by Mr John Hancock and Ms Bianca Rinehart against the HPPL Parties, Mrs Rinehart, and 150 Investments and other parties.
  2. We do not rehearse the detailed background that is in the earlier judgment.
  3. Two issues arise: first, whether costs should be awarded against the first and second respondents (Bianca and John) in the application below, as well as on appeal, or whether the costs below be reserved to a time in the future; and secondly, whether costs (on appeal and below) should be payable forthwith.
  4. Short submissions have been filed on these two questions. Our views are that the first and second respondents should pay the costs of both the appeal and the application below, but that no order for payment forthwith should be made.
  5. Briefly our reasons are as follows. As to the first issue, the costs of the application and the appeals from it are related to the issues whether there should be a stay of the Court proceedings to refer the dispute to arbitration, and, as part of that question, whether there was any properly formulated attack on the arbitration agreements, and if so, what that attack was.  These are issues different from whether or not the underlying claims are valid or not. The primary judge correctly approached the matter on the basis that the underlying claims were not to be decided.  That is how the matter was approached on appeal.  The respondents to the appeal contested and lost the stay and arbitration issues.  Costs of that should follow the event.  There is ample authority for treating the stay as separate in this way: Ansett Australia Ltd v Malaysian Airline System Berhad (No 2)[2008] VSC 156 at [20]; Amcor Packaging (Australia) Pty Ltd v Baulderstone Pty Ltd [2013] FCA 253 at [49]; Pipeline Services WA Pty Ltd v ATCO Gas Australia Pty Ltd [2014] WASC 10 (S) at [33]; Re Ikon Group Ltd (no 2) [2015] NSWSC 981 at [25]; Norwest Contracting Pty Ltd v Brimbank City Council [2015] VSC 679 at [34]; Australian Maritime Systems Ltd v McConnell Dowell Constructors (Aust) Pty Ltd [2016] WASC 52 (S) at [27]; John Holland Pty Limited v Kellogg Brown & Root Pty Ltd (No 2) [2015] NSWSC 564 at [46]-[47]; Comandate Marine Corp v Pan Australia Shipping Pty Ltd [2006] FCAFC 192; 157 FCR 45 at 110-11 [253] and 111 [255]; and AED Oil Ltd v Puffin FPSO Ltd (No 2) [2010] VSCA 109 at [3] and [12].
  6. As to the second issue, there is no reason why in justice these costs should be paid forthwith.  The costs will be large. That is a result of how both sides have treated the applications.  With some exception in oral address, no stone has been left unturned, no opportunity for opposition passed up, and no proposition in writing expressed otherwise than to the fullest.  Should the costs be payable forthwith that would raise the real risk of stultification of the substantive complaints of the first and second respondents to the appeal.  That would be a matter of some real injustice.  If the first and second respondents’ complaints are legitimate (whether to be vindicated in an arbitration or court proceeding) they would amount to very serious wrongs.
  7. There were two interlocutory applications before the primary judge that sought to stay the proceeding brought in the Court by Ms Rinehart and Mr Hancock.  The first was filed on 3 November 2014 by the HPPL parties. Paragraph 9 of that application sought an order that the proceeding be stayed.  The remainder of that application sought suppression orders in respect of documents filed in the proceedings.  The second application was filed on 24 December 2014 by Mrs Rinehart and 150 Investments.  It sought orders staying the proceeding brought in Court by Ms Rinehart and Mr Hancock and, in its own terms, referring the proceeding or aspects of the proceeding to arbitration.  In making orders as to costs below, it is important to recognise that there were two interlocutory applications. The costs of both of these applications were reserved in the orders made by the primary judge on 26 May 2016.
  8. Thus, the orders we would make are as follows:
    1. Leave to appeal be granted.
    2. The appeals be allowed.
    3. The cross-appeals be dismissed.
    4. The notices of contention be dismissed.
    5. The orders of the Court made on 26 May 2016 be set aside and in lieu thereof order:
      (a) that the proceeding brought in the Court by the applicants being NSD 1124 of 2014 be stayed under s8(1) of the Commercial Arbitration Act2010 (NSW) (CA Act) pending any arbitral reference between the parties or until further order, save and except for those claims made against those entities that are not parties to the relevant arbitration agreements, being Hope Downs Iron Ore Pty Ltd, Roy Hill Iron Ore Pty Ltd, Mulga Downs Investments Pty Ltd and Mulga Downs Iron Ore Pty Ltd; and
      (b) the first and second applicants to the main proceedings (being the first and second respondents to the appeals) pay the costs of the moving parties to the interlocutory application filed on 3 November 2014 in proceedings NSD 1124 of 2014 in connection with paragraph 9 thereof and the costs of the moving parties to the interlocutory application filed on 24 December 2014 in those proceedings, subject to Hope Downs Iron Ore Pty Ltd, Roy Hill Iron Ore Pty Ltd, Mulga Downs Investments Pty Ltd, and Mulga Downs Iron Ore Pty Ltd paying the costs related to the question as to whether those entities are parties to the arbitration agreement pursuant to s2 of the CA Act.
    6. The claims made by the applicants in the underlying proceedings against Hope Downs Iron Ore Pty Ltd, Roy Hill Iron Ore Pty Ltd, Mulga Downs Investments Pty Ltd and Mulga Downs Iron Ore Pty Ltd be stayed on the same terms as the stay in order 5.
      Subject to the stays in orders 5 and 6 above, the matter be remitted to the primary judge for any application properly available in the light of the stays.
    7. The first and second respondents pay the appellants’ costs of appeal including the costs of the application for leave to appeal, subject to Hope Downs Iron Ore Pty Ltd, Roy Hill Iron Ore Pty Ltd, Mulga Downs Investments Pty Ltd and Mulga Downs Iron Ore Pty Ltd paying the costs related to the question as to whether those entities are parties to the arbitration agreement pursuant to s2 of the CA Act.
    8. Leave be granted nunc pro tunc to Wright Prospecting Pty Ltd to intervene on the condition that they bear their own costs of intervention.

I certify that the preceding eight (8) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Chief Justice Allsop and Justices Besanko and O’Callaghan.

Associate:

Dated:        15 December 2017

SCHEDULE A – SCHEDULE OF PARTIES

Party

NSD1124/2014

(Underlying Proceeding)

NSD916/2016

(HPPL’s Appeal)

NSD922/2016

(Mrs Rinehart’s Appeal)

BIANCA HOPE RINEHART

First Applicant

First Respondent/First Cross-Appellant

First Respondent/First Cross-Appellant

JOHN LANGLEY HANCOCK

Second Applicant

Second Respondent/Second Cross-Appellant

Second Respondent/Second Cross-Appellant

GEORGINA HOPE RINEHART (IN HER PERSONAL CAPACITY AND AS TRUSTEE OF THE HOPE MARGARET HANCOCK TRUST AND AS TRUSTEE OF THE HFMF TRUST

First Respondent

Third Respondent

First Applicant

HANCOCK PROSPECTING PTY LTD ACN (008 676 417)

Second Respondent

First Applicant

Third Respondent

HANCOCK MINERALS PTY LTD (ACN 057 326 824)

Third Respondent

Second Applicant

Fourth Respondent

HANCOCK FAMILY MEMORIAL FOUNDATION LTD (ACN 008 499 312)

Fourth Respondent

Fourth Respondent

Eleventh Respondent

TADEUSZ JOSEF WATROBA

Fifth Respondent

Third Applicant

Fifth Respondent

WESTRAINT RESOURCES PTY LTD (ACN 009 083 783)

Sixth Respondent

Fourth Applicant

Sixth Respondent

HMHT INVESTMENTS PTY LTD (ACN 070 550 104)

Seventh Respondent

Fifth Applicant

Seventh Respondent

150 INVESTMENTS PTY LTD (ACN 070 550 159)

Eighth Respondent

Fifth Respondent

Second Applicant

HOPE RINEHART WELKER

Ninth Respondent

Sixth Respondent

Twelfth Respondent

GINIA HOPE FRANCES RINEHART

Tenth Respondent

Seventh Respondent

Thirteenth Respondent

MAX CHRISTOPHER DONNELLY (IN HIS CAPACITY AS TRUSTEE OF THE BANKRUPT ESTATE OF THE LATE LANGLEY GEORGE HANCOCK)

Eleventh Respondent

Eighth Respondent

Fourteenth Respondent

HOPE DOWNS IRON ORE PTY LTD (ACN 071 514 308)

Twelfth Respondent

Seventh Applicant

Ninth Respondent

ROY HILL IRON ORE PTY LTD (ACN 123 722 038)

Thirteenth Respondent

Sixth Applicant

Eighth Respondent

MULGA DOWNS INVESTMENTS PTY LTD (ACN 132 484 050)

Fourteenth Respondent

Ninth Respondent

Fifteenth Respondent

MULGA DOWNS IRON ORE PTY LTD (ACN 080 659 150)

Fifteenth Respondent

Eighth Applicant

Tenth Respondent