New South Wales
|Medium Neutral Citation:||Hancock v Hancock Prospecting Pty Limited  NSWSC 724|
|Hearing dates:||18–19 May 2022|
|Decision date:||03 June 2022|
|Jurisdiction:||Equity – Commercial Arbitration List|
|Decision:||(1) Summons dismissed; (2) Order that the plaintiffs pay the defendants’ costs of the proceedings (other than the cross-summons); (3) Order that each party bear its own costs of the cross-summons; (4) Direct that within seven days of the date of this judgment the parties bring in short minutes of order recording the terms of a suppression order to be made by the Court under s 7 of the Court Suppression and Non-publication Orders Act 2010 (NSW) (the Act) in respect of material placed before the Court, and any transcript produced, in connection with these proceedings; (5) Order pursuant to s 10 of the Act that until 4.00 pm on 10 June 2022 or further order this judgment and its contents are not to be disclosed, by publication or otherwise, to any person other than: (a) to the parties and their legal representatives; (b) to the Honourable Wayne Martin AC QC, Dr Michael Hwang SC and the Honourable Dr Kevin Lindgren AM QC. (6) Liberty to apply on 24 hours’ notice in relation to orders (4) and (5).|
|Catchwords:||COMMERCIAL ARBITRATION — Composition of arbitral tribunal — Grounds for challenge to arbitrator — Circumstances likely to give rise to justifiable doubts as to the person’s impartiality or independence — Whether there is a real danger of bias on the part of the presiding arbitrator CIVIL PROCEDURE — Hearings — Suppression and non-publication — Whether public interest in reasons for judgment outweigh public interest in suppression|
|Legislation Cited:||Commercial Arbitration Act 2012 (WA)Commercial Arbitration Bill 2011 (WA)Evidence Act 1995 (NSW)International Arbitration Act 1974 (Cth)Jurisdiction of Courts (Cross-vesting) Act 1987 (NSW)Jurisdiction of Courts (Cross-vesting) Act 1987 (WA)|
|Cases Cited:||Australian Securities and Investments Commission v Hellicar (2013) 247 CLR 345;  HCA 17Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337;  HCA 63Jones v Dunkel (1959) 101 CLR 298;  HCA 8R v Gough  AC 646Sino Dragon Trading Ltd v Noble Resources International Pte Ltd  FCA 1131|
|Texts Cited:||Explanatory Note, Commercial Arbitration Bill 2011 (WA)Legislative Council, Parliament of Western Australia, Standing Committee on Uniform Legislation and Statutes Review, Report 67 (November 2011)|
|Parties:||John Langley Hancock (First Plaintiff | First Cross-Defendant)|
Bianca Hope Rinehart (Second Plaintiff | Second Cross-Defendant)
Hancock Prospecting Pty Limited (First Defendant | First Cross-Claimant)
Hancock Minerals Pty Ltd (Second Defendant | Second Cross-Claimant)
Tadeusz Watroba (Third Defendant | Third Cross-Claimant)
Westraint Resources Pty Ltd (Fourth Defendant | Fourth Cross-Claimant)
HMHT Investments Pty Ltd (Fifth Defendant | Fifth Cross-Claimant)
Hope Downs Iron Ore Pty Ltd (Sixth Defendant | Sixth Cross-Claimant)
Roy Hill Iron Ore Pty Ltd (Seventh Defendant | Seventh Cross-Claimant)
Mulga Downs Iron Ore Pty Ltd (Eighth Defendant | Eighth Cross-Claimant)
Georgina Hope Rinehart (Ninth Defendant | Third Cross-Defendant)
150 Investments Pty Ltd (Tenth Defendant | Fourth Cross-Defendant)
Hope Rinehart Welker (Eleventh Defendant | Fifth Cross-Defendant)
Ginia Hope Frances Rinehart (Twelfth Defendant | Sixth Cross-Defendant)
The Hancock Family Memorial Foundation Limited (Thirteenth Defendant | Seventh Cross-Defendant)
Mulga Downs Investments Pty Ltd (Fourteenth Defendant)
CH Withers SC with AM Hochroth and TM Rogan (Plaintiffs | First and Second Cross-Defendants)
N Hutley SC with J Lockhart SC, J Hutton and K Sutton (First to Eighth and Fourteenth Defendants | First to Eighth Cross-Claimants)
P Brereton SC with C Bova SC, T O’Brien and D Farinha (Ninth and Tenth Defendants | Third and Fourth Cross-Defendants)
P Flynn SC with K Lindeman (Twelfth Defendant | Sixth Cross-Defendant)Solicitors:
YPOL Lawyers (Plaintiffs | First and Second Cross-Defendants)
Corrs Chambers Westgarth (First to Eighth and Fourteenth Defendants | First to Eighth Cross-Claimants)
Gilbert + Tobin (Ninth and Tenth Defendants | Third and Fourth Cross-Defendants)
Dentons (Twelfth Defendant | Sixth Cross-Defendant)
- By a summons filed on 12 April 2022, the plaintiffs, Mr John Hancock and Ms Bianca Rinehart, relying on s 13(4) of the Commercial Arbitration Act 2012 (WA) (the CA Act), seek a declaration that there are justifiable doubts as to the impartiality or independence of the Hon Mr Wayne Martin AC QC to be a member of the arbitral tribunal in an arbitration between them and the defendants conducted under the CA Act. They also seek an order terminating Mr Martin’s mandate as arbitrator. Mr Martin is the presiding arbitrator. The other two arbitrators are the Hon Dr Kevin Lindgren AM QC and Dr Michael Hwang SC.
- The proceedings are brought in reliance on s 4(3) of the Jurisdiction of Courts (Cross-vesting) Act 1987 (WA) and s 9(a) of the Jurisdiction of Courts (Cross-vesting) Act 1987 (NSW), which give this Court jurisdiction vested in the Supreme Court of Western Australia. No objection was taken to this Court hearing the application.
Background to the arbitration
- The plaintiffs’ claims in the arbitration are complicated. Many of the assertions made by them are vigorously contested by the defendants. What follows is a simplified account of the plaintiffs’ claims which is sufficient to understand the basis of the plaintiffs’ application.
- The plaintiffs claim that their mother, the ninth defendant, Mrs Georgina Rinehart (Gina), in breach of various duties she owed, engaged in or procured a series of transactions by which she, or companies controlled by her, obtained ownership of or control over certain valuable mining assets that her father, Mr Lang Hancock (Lang), had bestowed on her four children, including the plaintiffs. The other two children are defendants in this proceeding and respondents in the arbitration.
- The children’s rights are said to arise from a handwritten agreement entered into in June 1988 (the 1988 Agreement) between Gina and Lang concerning the ownership of two companies, Hancock Prospecting Pty Limited (the first defendant) (HPPL), and The Hancock Family Memorial Foundation Ltd (the thirteenth defendant) (HFMF). The Hancock group of companies, which include HPPL and HFMF, owned (and continue to own) rights in respect of large iron ore deposits in Western Australia. Lang controlled the group until his death on 27 March 1992.
- At the time that it is alleged that the 1988 Agreement was entered into, Gina and Lang were in dispute. Gina, who at the time held a third of the shares in HPPL, claimed that, following the death of Lang’s second wife (and Gina’s mother) and Lang’s marriage to Ms Rose Porteous (Rose), Lang, in breach of his duties, diverted assets, opportunities and income of HPPL to HFMF and subsidiaries of HFMF, including a company then known as Hancock Resources Limited (HRL), which Lang controlled eventually through a company known as Zamoever Pty Ltd. He did so, Gina alleges, to fund an extravagant lifestyle that he had Rose had adopted.
- The plaintiffs claim that the purpose of the 1988 Agreement was to resolve the dispute between Gina and Lang. They contend that, in accordance with the agreement, Lang established two trusts in favour of his grandchildren known as the Hope Margaret Hancock Trust (the HMH Trust) and the Hancock Family Memorial Foundation Trust (the HFMF Trust).
- Under the terms of the 1988 Agreement, it is said that Lang agreed to hold his late wife’s one third interest in HPPL on trust (the HMH Trust) and that, on his death, a 17.7 percent interest in HPPL would pass to Gina and the balance (amounting to 15.6 percent) would be held on trust for the four children until the youngest turned 25. That trust was, in fact, established by a deed of settlement dated 27 December 1988. The plaintiffs contend that the second trust over all the shares in HFMF arose from the 1988 Agreement itself. In accordance with the agreement, it is said that Lang agreed to transfer his one third share of HPPL to HFMF and to declare that he held his interest in HFMF on trust for the children. The result of the two trusts is said to be that, on Lang’s death, the children obtained a 49 percent interest in HPPL and Gina obtained a 51 percent interest. In addition, it is alleged that at the time, HFMF, through HRL, owned a number of valuable mining tenements, including the Hope Downs Tenements, with the result that, on Lang’s death, the children would obtain the right to those tenements as well. The plaintiffs also claim that the HFMF Trust was confirmed by a deed executed by Lang on 20 March 1992 (the 1992 Deed) by which Lang declared that he held the whole of his interest in Zamoever on trust for the children. Following Lang’s death on 27 March 1992, it is said that Gina became the trustee of the two trusts.
- Following Lang’s death, Rose commenced proceedings in the Supreme Court of Western Australia, CIV 2121 of 1992 (CIV 2121), against HFMF, HPPL, Gina and two BHP companies claiming, among other things, that the 1992 Deed was void or voidable, with the result that the shares in Zamoever remained part of Lang’s estate. Gina and HPPL filed a counterclaim in those proceedings in which they contended that HRL held its interests in seven of the nine Hope Downs Tenements on a constructive trust for HPPL. That constructive trust was said to arise because those assets were among those that Lang had improperly diverted from HPPL. The plaintiffs make two points about the counterclaim. First, they say that to Gina’s knowledge the allegation in the counterclaim was false because the claim that Lang had breached his duties had been released by the 1988 Agreement and the 1992 Deed. Second, they make much of the fact that the courterclaim only related to 7 of the 9 Hope Down Tenements.
- The plaintiffs also claim that Gina breached duties she owed relevantly in two other ways. First, it is alleged that she caused a deed known as the Debt Reconstruction Deed to be entered into on 24 October 1995 by which HFMF obtained $9.3 million in exchange for its shares in HPPL, which were cancelled. That transaction is said to have occurred at a gross undervalue. It is alleged that approximately three years earlier Gina had engineered a situation in which HFMF was required to give up its shares in HPPL which itself involved breaches of duty by her. However, as will become apparent, that conduct is irrelevant to the challenge and nothing more needs to be said about it. The effect of the Debt Reconstruction Deed was to increase Gina’s share of HPPL and to decrease the children’s share.
- Second, by a Deed of Compromise of Litigation made on 20 February 1996, HRL and HPPL compromised the counterclaim on the basis that HRL acknowledged that it “does not have and never has had any beneficial estate or interest in the [Hope Downs] Tenements …” and that “in consequence of the November 1992 Deed … it holds and has always held the [Hope Downs] Tenements … upon trust for HPPL”.
- The result of these transactions was that the children’s interest in HPPL was diluted and the children lost their interest in the Hope Downs Tenements (except to the extent that they continue to hold an interest in HPPL).
Relevant provisions of the CA Act
- Section 12 of the CA Act relevantly provides:
12. Grounds for challenge (cf. Model Law Art 12)
(1) When a person is approached in connection with the person’s possible appointment as an arbitrator, the person must disclose any circumstances likely to give rise to justifiable doubts as to the person’s impartiality or independence.
(2) An arbitrator, from the time of the arbitrator’s appointment and throughout the arbitral proceedings, must without delay disclose any circumstances of the kind referred to in subsection (1) to the parties unless they have already been informed of them by the arbitrator.
(3) An arbitrator may be challenged only if circumstances exist that give rise to justifiable doubts as to the arbitrator’s impartiality or independence, or if the arbitrator does not possess qualifications agreed to by the parties.
(5) For the purposes of subsection (1), there are justifiable doubts as to the impartiality or independence of a person approached in connection with a possible appointment as arbitrator only if there is a real danger of bias on the part of the person in conducting the arbitration.
(6) For the purposes of subsection (3), there are justifiable doubts as to the impartiality or independence of an arbitrator only if there is a real danger of bias on the part of the arbitrator in conducting the arbitration.
Note for this section:
This section (other than subsections (5) and (6)) is substantially the same as Art 12 of the Model Law. Subsections (5) and (6) provide that the test for whether there are justifiable doubts as to the impartiality or independence of a person or arbitrator is whether there is a real danger of bias.
- Section 13 of the CA Act provides:
13. Challenge procedure (cf. Model Law Art 13)
(1) The parties are free to agree on a procedure for challenging an arbitrator, subject to subsection (4).
(2) Failing such agreement, a party who intends to challenge an arbitrator must, within 15 days after becoming aware of the constitution of the arbitral tribunal or after becoming aware of any circumstance referred to in section 12(3), send a written statement of the reasons for the challenge to the arbitral tribunal.
(3) Unless the challenged arbitrator withdraws from office or the other party agrees to the challenge, the arbitral tribunal must decide on the challenge.
(4) If a challenge under any procedure agreed on by the parties or under the procedure of subsections (2) and (3) is not successful, the challenging party may request, within 30 days after having received notice of the decision rejecting the challenge, the Court to decide on the challenge.
(5) A decision of the Court under subsection (4) that is within the limits of the authority of the Court is final.
(6) While a request under subsection (4) is pending, the arbitral tribunal, including the challenged arbitrator, may continue the arbitral proceedings and make an award.
Note for this section:
Section 13 (other than subsection (5)) is substantially the same as Art 13 of the Model Law. Subsection (5) makes it clear that, although a decision of the Court is generally final, review of a decision of the Court that is not made within the limits of its powers and functions is not precluded.
“Model Law” is defined in s 2 to mean “the UNCITRAL Model Law on International Commercial Arbitration (as adopted by the United Nations Commission on International Trade Law on 21 June 1985, and as amended by the United Nations Commission on International Trade Law on 7 July 2006)”. The Model Law has been adopted in each Australian jurisdiction.
- The “real danger of bias” test set out in ss 12(5)–(6) reflects the test adopted by the House of Lords in R v Gough  AC 646 (Gough). It appears to set a higher threshold for removal than the Australian common law test for apprehend bias set out in Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337;  HCA 63 (Ebner). In that case, a majority of the High Court stated the test in terms of whether the “fair-minded lay observer might reasonably apprehend that the judge might not bring an impartial mind to the resolution of the question the judge is required to decide”: at  per Gleeson CJ, McHugh, Gummow and Hayne JJ.
- The view that the test set out in the CA Act was intended to adopt a higher threshold than the common law test in Australia is supported by the report of the Standing Committee on Uniform Legislation and Statutes Review on the Commercial Arbitration Bill 2011 (WA): Legislative Council, Parliament of Western Australia, Standing Committee on Uniform Legislation and Statutes Review, Report 67 (November 2011). It gave the following explanation for the decision to adopt the test in Gough:
7.39 The following information regarding the “real danger” of bias test is extracted from various submissions made to the Commonwealth’s overhauling of its International Arbitration Act 1974 in 2010.
7.39.1 The “real danger” test is a significant shift in the law from the current test for bias in Australia (the reasonable observer test) found in R v Sussex Justices; Ex Parte McCarthy:
whether a fair minded lay observer might reasonably apprehend that the judge might not bring an impartial mind to the resolution of the question the judge is required to decide.
7.39.2 Australian courts used this test to determine bias challenges to arbitrators, including challenges brought under the International Arbitration Act 1974 Cth. However, at the suggestion of a submission made during consideration of UNCITRAL Model Law amendments to the International Arbitration Act 1974 (Cth) in 2009 for the imposition of a higher bias threshold for arbitrators, a “real danger” test or the “Gough test” as it is called was enacted. This test appears in both NSW’s enactment and the Bill.
7.39.3 Gough was convicted of conspiracy to rob and sentenced to 15 years imprisonment. He appealed, amongst other things, that there was a material irregularity in the conduct of the trial in that one of the jurors was the next door neighbour of his brother. The House of Lords in dismissing the appeal held:
the test to be applied in all cases of apparent bias was the same, whether concerning justices, members of inferior tribunals, arbitrators or jurors… namely whether in all the circumstances of the case, there appeared to be a real danger of bias, concerning the members of the tribunal in question that justice required that the decision should not stand.
7.39.4 The “real danger” test makes it harder to challenge an arbitrator in Australia. Brown and Luttrell [The Honourable Neil Brown QC FC and Inst A, Arbitrator & Mediator; and Sam Luttrell, Solicitor, Law Lecturer, Murdoch University, Perth, who made a joint submission in relation to the review of the Commonwealth legislation], who successfully submitted for a change in the test, argued that adopting a stricter test is considered to be a positive step because bias challenges are an increasingly common procedural tactic in high value international arbitrations; limiting the prospect of bias challenge would make Australia more attractive as a seat for international arbitration. (footnotes omitted.)
- In Sino Dragon Trading Ltd v Noble Resources International Pte Ltd  FCA 1131 (Sino Dragon Trading) it was submitted that the Model Law had, in fact, preserved the Ebner test. That case relevantly involved a challenge to an award under art 34(2)(b)(ii) of the Model Law which required consideration of s 18A of the International Arbitration Act 1974 (Cth) (the equivalent provision of s 12 of the CA Act). Dismissing the challenge, Beach J rejected the suggestion that the Ebner test had been preserved by art 34(2)(b)(ii) of the Model Law (which is enacted in s 34(2)(b)(ii) of the CA Act), which provides that an arbitral award may be set aside if “the award is in conflict with the public policy of this State”: at ff.
- The conclusion that the legislature intended to adopt the Gough test exclusively is also supported by the Explanatory Note, which expressly states that the test in s 12 “is based on the test for bias applied by the House of Lords in R v Gough  AC 646”: see Explanatory Note, Commercial Arbitration Bill 2011 (WA) at cl 12.
- Unlike the Ebner test, the test stated by s 12 requires a real danger of actual bias. Moreover, the test is stated as a purely objective one. The question is whether objectively the required condition is met, not whether it is met from the perspective of a reasonable lay person. That conclusion follows from the plain language of the section. It is also said to follow as a corollary to the adoption of the Gough test, which itself is said to require the question to be answered “from the perspective of the Court as opposed to merely that of a reasonable lay person”: Sino Dragon Trading at .
- The test, at least in the present context, must also be understood as a test concerning a person in the position of the arbitrator being challenged. The test is concerned with the objective likelihood of there being a real risk that someone in the position of the arbitrator would not be able to bring an impartial mind to (all of) the questions to be determined. The test should not be understood as requiring an investigation into the particular attitudes or propensities of the arbitrator under challenge.
- As explained by Lord Goff (with whom the other members of the House of Lords agreed) in Gough at 670, the first task of the Court is “to ascertain the relevant circumstances from the available evidence …”. The second task is to ask “having regard to those circumstances, [whether] there was a real danger of bias on the part of the relevant member of the tribunal in question, in the sense that he might unfairly regard (or have unfairly regarded) with favour, or disfavour, the case of a party to the issue under consideration by him …”. One point that follows from this statement of principle is that the question is not whether there is a real danger that facts may emerge during the course of the case that could have the required consequence. Rather, the question is whether on the known facts there is a real danger that the member of the tribunal could be affected in the way indicated.
- Although at various times the parties took opposing views on what was required of the Court by s 13(4) of the CA Act, by the time of the final hearing there was little between them on that issue. It appeared to be accepted that the task for the Court under s 13(4) was precisely the same as the task of the Tribunal under s 13(3). It was to decide “the challenge”. “The challenge” was the challenge to the member’s impartiality based on the circumstances identified in the reasons for challenge that the party making the challenge was required to provide in accordance with s 13(2). The Court was entitled to have regard to whatever evidence was before it that was relevant to the challenge. That included the reasons of the Arbitral Tribunal. However, it appears to be accepted that those reasons were not admissible to prove the truth of any facts found by the Tribunal: see Evidence Act 1995 (NSW) s 91(1). The defendants also accepted that it was open to the plaintiffs to put their case differently before the Court provided they did not go beyond the circumstances they relied on before the Tribunal.
Background to the challenge
- The plaintiffs’ challenge to Mr Martin was made by letter to the Tribunal dated 22 February 2022. It is accepted that the challenge was made within time. It arose from three circumstances. First, Blake Dawson Waldron (BDW) acted for HPPL and Gina in CIV 2121 from 9 June 1993 to 14 November 1995 (when Freehill Hollingdale and Page took over the conduct of the matter on behalf of HPPL and Gina). The employed solicitor at BDW with the day-to-day carriage of the matter was Ms Margret O’Halloran, who was in a relationship with Mr Martin at the time and who has been his wife since 1996. Ms O’Halloran was admitted as a solicitor on 2 September 1992. The plaintiffs submit that of most significance is the fact that (1) Ms O’Halloran attended a series of meetings on 9 September 1994, and kept a file note of those meetings, at which HRL agreed to give up its interest in the Hope Downs Tenements and (2) Ms O’Halloran was responsible for preparing a version of the Deed of Compromise of Litigation.
- The second circumstance is that the price of $9.3 million that was paid to HFMF in exchange for its shares in HPPL was based on a valuation of those shares by Coopers & Lybrand of between $7.8 million and $10.8 million. The amount of $9.3 million was the midpoint. That advice, in turn, was based on an opinion given by BDW in a letter dated 2 June 1995 that HPPL had a discretion not to pay any dividends on the classes of share held by HFMF in HPPL.
- The third circumstance is that Ms O’Halloran briefed Mr Martin in August 1995 on an application concerning discovery and interrogatories in separate proceedings brought by HPPL and HFMF against Rose and associated entities.
- By Procedural Order 31 the Arbitral Tribunal dismissed the challenge to Mr Martin. It gave comprehensive reasons for doing so. Mr Martin did not participate in the Tribunal’s consideration of the issue. However, he stated that he concurred with the result.
- It is convenient to deal first with the second and third issues raised by the plaintiffs, since they are straightforward.
- The issue in relation to BDW’s advice is whether there is a real danger that Mr Martin will not be able to consider impartially the plaintiffs’ submission that the advice was fundamentally flawed. That danger is said to arise from the fact that it is possible that Ms O’Halloran had some involvement in its preparation and Mr Martin may consciously or subconsciously be reluctant to reach a conclusion that his wife was involved in the preparation of defective advice.
- In my opinion, a complete answer to this point is that there is no evidence that Ms O’Halloran had any involvement in the preparation of the advice. She is not stated to be an author of the advice. A subpoena was served on BDW (now Ashurst) seeking “the time records and invoices (including itemised invoices) recording work undertaken by O’Halloran during the period between 1 March 1995 and 2 June 1995 (inclusive)” on the relevant file. No documents were produced in answer to that subpoena.
- The plaintiffs submit that the advice was given by Mr Carrington, the partner for whom Ms O’Halloran worked on CIV 2121, and consequently it can or might be inferred that Ms O’Halloran had some involvement in the preparation of the advice. In my opinion, no such inference can be drawn. It is common in large law firms for more than one employed solicitor to work for a partner, even on the same matter. Moreover, such an inference seems to be inconsistent with the relevant time records. Finally, even assuming that Ms O’Halloran had some involvement in the preparation of the advice, there is no reason to think that the advice was hers or even that she agreed with it. Accordingly, there is no real danger that Mr Martin would have a difficulty in reaching the conclusion for which the plaintiffs contend because that conclusion might reflect poorly on his wife.
- As to the brief sent to Mr Martin, Mr Martin unsurprisingly disclosed to the parties that he had no recollection of being briefed on the matter by Ms O’Halloran. There is no evidence of what the brief contained or what Mr Martin was told.
- In some of the submissions made by the plaintiffs, the plaintiffs sought to attach significance to the fact that it was Ms O’Halloran who briefed Mr Martin. Why that should be so was never made clear. The question in this context is whether, as a consequence of being briefed, Mr Martin became privy to some information not otherwise available to him in the arbitration that was sufficiently relevant to some issue in the arbitration that there is a real danger that Mr Martin’s consideration of that issue would be affected by that information. The source of that information is irrelevant.
- Since Mr Martin has no present recollection of being briefed and since there is no evidence concerning the information he was given, there is no basis from which a conclusion of real danger of bias could be reached.
- The plaintiffs submit that there is a risk Mr Martin’s memory will be refreshed during the course of the arbitral hearing and if that occurred it would have serious consequences for the parties both in terms of wasted time and wasted costs.
- In my opinion, there are two answers to that point. The first is that in the circumstances the risk appears to be small. The relevant events occurred 27 years ago. The evidence is that Mr Martin was briefed in relation to one procedural aspect of the case (that is, discovery and interrogatories). It seems implausible that Mr Martin’s recollection of those events will be refreshed by anything that happens in the arbitration given their subject-matter and how long ago the events occurred.
- More fundamentally, however, what might occur in the future is not relevant to the question whether there are grounds for challenge now. Whether there are grounds for challenge now must be judged by reference to the circumstances as they currently exist. The current position is that Mr Martin is not privy to any information which may affect his ability to consider impartially the plaintiffs’ case. If he becomes aware of information because his memory is refreshed, he is obliged by s 12(2) of the CA Act to disclose that information without delay to the parties. Whether a party will wish to make a challenge to Mr Martin in the light of that disclosure and whether that challenge should be upheld will depend on the circumstances as they are known at the time.
- The remaining issue is more complicated. The plaintiffs put their case in three ways. First, they submitted that the relevant circumstances may mean that Mr O’Halloran will be a witness in the arbitration, although their enthusiasm for that submission had diminished by the time of the final hearing. If that were to occur, it appears to be common ground that Mr Martin could not sit. Second, the plaintiffs submit that there is a real danger that Mr Martin will not be able to consider impartially submissions that they intend to make about CIV 2121 and the events relating to it because of Ms O’Halloran’s involvement in those events. Third, they submit that if Ms O’Halloran is not called by the defendants to give evidence they will submit that the Tribunal should draw inferences against the defendants in accordance with the principles stated in Jones v Dunkel; (1959) 101 CLR 298;  HCA 8. They submit that there is a real danger that Mr Martin will not be able to consider those submissions impartially.
- I do not accept the first of these submissions. The defendants have stated that they do not intend to call Ms O’Halloran (or indeed anyone from BDW). The plaintiffs are not prepared to concede that they will not call Ms O’Halloran as a witness. However, the chances of them doing so are negligible. Moreover, like the submission that Mr Martin’s recollection may be refreshed in the future, this submission is concerned with circumstances that might arise, not with circumstances as they exist now. The question whether the challenge to Mr Martin should be upheld must depend on circumstances as they are known to exist now, not speculative possibilities concerning the future.
- The second point raised by the plaintiffs goes to the heart of their case. It was put in various ways at various levels of generality but in substance the submission is that in the arbitration they allege that one of the ways that Gina sought to improve her position in the Hancock group to the detriment of her children was by asserting in the counterclaim filed in CIV 2121 that a number of the Hope Downs Tenements were held on trust for HPPL and by eventually resolving that dispute by transferring all of the tenements to HPPL. The plaintiffs’ case is that there is a real danger that Mr Martin will not be able to consider that submission impartially because his wife was intimately involved in the counterclaim and its settlement. That risk is said to arise from the fact that Mr Martin might consciously or unconsciously think that the findings for which the plaintiffs contend may reflect poorly on his wife.
- The question, therefore, is what submissions might reasonably be put consistently with the pleadings and evidence concerning CIV 2121 that might reflect, or might be thought to reflect, poorly on Ms O’Halloran so as to give rise to a real danger that Mr Martin will not be able to consider those submissions (and the evidence on which they were based) impartially.
- There is a suggestion in some of the plaintiffs’ submissions that they will be making submissions to the Tribunal that are critical of Ms O’Halloran’s professional conduct. But how those submissions could be made is not clear. No allegation is made against BDW, let alone Ms O’Halloran, in the arbitration and any submission that BDW or Ms O’Halloran did anything wrong would be irrelevant to the issues to be resolved by the Tribunal. The risk, if there is one, is that it might be inferred that Ms O’Halloran failed in her professional duties because of some other finding that the Tribunal is asked to make.
- During the course of the hearing, the plaintiffs identified four findings of that type that the Tribunal will be asked to make. The first is a finding that there was no foundation for the constructive trust claim. The second is a finding that the decision to exclude two of the Hope Downs tenements (the Balance Tenements) from the counterclaim was a deliberate decision because it was known that there was no basis for the inclusion of those tenements. The third is a finding that HRL did not have the benefit of independent legal advice at the meeting on 9 September 1994 at which HRL agreed to give up its most valuable assets, the Hope Down Tenements, and the persons who conducted the negotiations at that meeting on behalf of HRL were also important officers and senior executives of HPPL and were therefore in a position of conflict. The fourth concerned the preparation of a predecessor of the Deed of Compromise of Litigation and, in particular, the inclusion in that Deed of Recital C which is said incorrectly to record that HPPL had a claim in respect of all of the Hope Down Tenements. That recital, it is said, was included on the express instructions of Gina and/or HPPL.
- It is not easy to see how acceptance of the first submission might be thought to reflect poorly on Ms O’Halloran. Lawyers frequently advance cases on behalf of clients that fail or are even likely to fail. To the extent relevant, the focus of the arbitration will be on what Gina knew and believed, not on what BDW, let alone what Ms O’Halloran, knew and believed. Consequently, it is difficult to see how any finding in relation to Gina’s purpose in pursuing the counterclaim (assuming that the decision was made by her to pursue it) carries with it any purpose or knowledge on the part of BDW or Ms O’Halloran other than to act on their clients’ instructions consistently with their professional duties. The plaintiffs do not point to anything inherent about the claim that some of the Hope Downs Tenements were held on trust for HPPL that would reflect poorly on the solicitors advancing that claim. As Mr Brereton SC, who appeared for Gina, pointed out, Gina and HPPL still intend to advance before the Tribunal the case that the Hope Downs Tenements were held on trust for HPPL. However, there is no suggestion that doing so reflects poorly on the lawyers who now advance that case. Accordingly, there cannot be a real risk that Mr Martin would be unable to consider that claim impartially because of Ms O’Halloran’s role in CIV 2121.
- Nor is it easy to follow the plaintiffs’ submission in relation to the Balance Tenements. The defence and counterclaim were signed by counsel, not Ms O’Halloran. It is natural, therefore, to infer that it was counsel, not Ms O’Halloran, who took responsibility for their final form. The plaintiffs’ case is that the counterclaim properly excluded the Balance Tenements. Consequently, it is difficult to see how the finding for which the plaintiffs contend in the arbitration in relation to the drafting of the counterclaim could reflect poorly on Ms O’Halloran.
- The predecessor to the Deed of Compromise of Litigation did include reference to the Balance Tenements. Its status, however, is unclear. It was only executed by HRL — on 14 February 1995, according to a handwritten note on the front cover. It appears to have been superseded by the Deed of Compromise of Litigation.
- Two points may be made about the earlier document. First, the defence (unlike the counterclaim) in CIV 2121 did suggest that HPPL made a claim in respect of the Balance Tenements as well, so in that respect Recital C appears to be correct. More importantly, no allegation is made in the arbitration in relation to that document. The important document is the Deed of Compromise of Litigation. That deed was prepared by Freehill Hollingdale and Page. It contains a recital to similar effect as Recital C in the earlier deed. It is difficult to see how any submission that the plaintiffs might want to make about the later deed could reflect poorly on Ms O’Halloran.
- The plaintiffs submit that the 1995 Deed will need to be considered as part of evaluating the evidence in the case. But the question remains what submission the plaintiffs might want to put about that piece of evidence that could not be evaluated impartially by Mr Martin because Ms O’Halloran was responsible for drafting it. The submission seems to be that, contrary to the recital, HPPL never claimed an interest in the Balance Tenements. As I have said, that submission is difficult to reconcile with the defence. On any view, there appears to be at least some basis for the recital. In any event, the real question is not whether as at February 1995 HPPL had made a claim in respect of the Balance Tenements but whether it was entitled to obtain them as happened as a consequence finally of the Deed of Compromise of Litigation. That is the important question in the arbitration. Whether HPPL had a legitimate claim to all of the Hope Downs Tenements will ultimately depend on an assessment of a series of events dating back before Lang’s death. Despite extensive submissions, the plaintiffs never clearly identified how they say Recital C in the deed sheds any light on those events.
- That leaves the series of meetings that occurred on 9 September 1994. The plaintiffs contend that at those meetings HRL and HFMF were not independently represented. In some of their submissions, they claim that the meetings during which the terms on which HPPL would obtain the Hope Downs Tenements were a sham, apparently for that reason. However, these submissions must be considered in context. There is no allegation in the arbitration that the meetings were a sham. Indeed, as a number of the defendants point out, the 9 September 1994 meetings do not assume any significance in the plaintiffs’ pleaded case in the arbitration at all. The meetings were not just concerned with settlement of the counterclaim. They were also concerned with the terms on which HPPL would provide financial support to HRL in connection with the settlement of another claim that apparently required urgent resolution. BDW and Ms O’Halloran were plainly acting for HPPL and Gina in the counterclaim and at the meetings on 9 September. Throughout the meetings, HPPL and Gina were represented by Mr Carrington, Ms O’Halloran’s supervising partner. At the meetings, HRL was represented by Mr Macnish of Cocks Macnish. In that context, it was plainly his responsibility to protect the interests of HRL. BDW and Ms O’Halloran’s professional obligations were to advance the interests of Gina and HPPL. Consequently, it is difficult to see how any submission that the interests of HRL were not properly protected could reflect poorly on Ms O’Halloran.
- Related to the previous point, the plaintiffs submit that, contrary to HPPL’s defence in the arbitration, they will submit in the arbitration that the meetings between HPPL and HRL on 9 September were not an arms-length negotiation because the principal representative of HRL, Mr Schwab, was also the director and Chief Executive Officer of HPPL at the time. The submission is that there is a real risk that Mr Martin will unconsciously, at least, resist accepting that submission because it would involve an implied criticism of Ms O’Halloran for not drawing that state of affairs to the parties’ attention
- I do not accept that submission. I do not think that there is a realistic possibility that anyone with legal training might think that Ms O’Halloran had some responsibility or obligation to draw that matter to anyone’s attention when (1) HRL was separately represented; (2) Ms O’Halloran was acting for the opposing party; and (3) Ms O’Halloran’s supervising partner was closely involved in the negotiations. The implicit assumption in much of the plaintiffs’ submissions on this aspect of the case is that the lawyers present at the meetings had some over-arching responsibility to ensure that the meetings were conducted properly and at arms-length. I do not accept that assumption. BDW, and even less so Ms O’Halloran, plainly had no such responsibility. They did not owe any duty to protect HRL’s interests at the meetings. Accordingly, the foundation for the submission does not exist.
- The plaintiffs submit that the Arbitral Tribunal may be required to make findings about what occurred at the meetings on 9 September 1994 and for that purpose it may need to interpret Ms O’Halloran’s file notes of the meetings. But even accepting that that is the case, it is difficult to see why there would be a real risk that Mr Martin would not be able to undertake that task impartially. There was no suggestion that there was a real risk that he would discuss the contents of the notes with Ms O’Halloran.
- The plaintiffs also submit that there is a potential that Gina and HPPL will rely on the involvement of BDW in defence of the claim in the arbitration, with the result that the focus will then be on what BDW (including Ms O’Halloran) knew at various times. But again, that is not the relevant question. It is not suggested that currently HPPL and Gina seek to defend the claim on the basis that what they did was justified because it was supported by legal advice. No such defence has been pleaded. Consequently, there is no basis for thinking that the issue will arise in the arbitration.
- The last issue raised by the plaintiffs is that there is a real risk that Mr Martin will not be able to consider impartially any submission that the Tribunal should draw adverse inferences from the fact that neither Gina nor HPPL will call Ms O’Halloran in accordance with the principles stated in Jones v Dunkel. The plaintiffs identify the following topics on which the Tribunal may be asked to draw an adverse inference against one or more of the defendants arising from the failure to call Ms O’Halloran:
- Whether and if so when HPPL asserted rights to the Balance Tenements and if there was a viable claim in respect of those tenements why it was not included in the counterclaim;
- How a viable claim could have existed over EL47/597 (one of the Balance Tenements) in light of the fact that it had been applied for after Lang’s death;
- Whether Ms O’Halloran was aware at the time of the 9 September 1994 meeting of the existence of the plan to remove the mining assets from HRL and then use the debt between HRL and HPPL, guaranteed by HFMF, to eliminate HFMF’s shareholding in HPPL;
- Whether and if so why Ms O’Halloran considered that HRL and HFMF were adequately and independently represented at the 9 September meeting when they were represented by two senior HPPL executives;
- Whether the offer made by HRL on 9 September 1994 concerned only the tenements the subject of the counterclaim or included all tenements;
- Why Ms O’Halloran included Recital C in the 1995 Deed;
- Whether Gina was involved in HRL’s decision to execute the 1995 Deed;
- Whether Gina was involved in giving instructions to BDW in relation to the advice relied on by Coopers & Lybrand.
- These paragraphs identify topics on which Ms O’Halloran, if called, may have been able to give some evidence, although given the passage of time there must be a real question whether she would have any recollection of those matters. The paragraphs do not identify inferences sought to be drawn from the failure to call Ms O’Halloran. Without knowing what those inferences are, it is difficult to understand how it could be said that there is a real risk that Mr Martin would not be able to evaluate a Jones v Dunkel submission impartially. However, three general points can be made. First, it is important to bear in mind that the only inference that could be drawn from the failure to call Ms O’Halloran is that she could not give evidence from her own independent recollection of the relevant events. It could not be inferred from the failure to call her that her evidence would be adverse to Gina’s or HPPL’s case: see Australian Securities and Investments Commission v Hellicar (2012) 247 CLR 345;  HCA 17 at . Why there is a risk that Mr Martin would not be able to evaluate that submission impartially is unclear. As I have said, it is not suggested that there is a real risk that Mr Martin will discuss the matter with Ms O’Halloran.
- Second, a number of issues identified by the plaintiffs are not issues in the arbitration. In particular, as I have sought to explain, Ms O’Halloran’s conduct is not an issue in the arbitration. Consequently, whether she was aware of a particular matter or what she considered at the time is irrelevant. The plaintiffs could not properly ask the Tribunal to draw any inferences on those matters.
- Third, the plaintiffs do not explain why there is a real risk that Mr Martin would not be able to consider impartially any submission to the effect that the Tribunal should infer from the failure to call Ms O’Halloran that her evidence would not have assisted Gina’s or HPPL’s case. If any inference is to be drawn, it is to be drawn against the party who might be expected to call the witness, not the witness.
- The plaintiffs submit that Mr Martin may more readily accept the proposition that Ms O’Halloran was not called because she now has no recollection of relevant events than the proposition that she was not called because she was not in a position to support Gina’s innocent explanation of the events. But that submission involves the error identified by the High Court in Australian Securities and Investments Commission v Hellicar (2012) 247 CLR 345;  HCA 17 at  and . There may be a number of reasons why a witness is not called to give evidence. At most, all that can be inferred from the failure to call Ms O’Halloran is that her evidence would not assist Gina’s or HPPL’s case. The Tribunal would not be entitled to infer from the failure to call Ms O’Halloran that she was unable to give an innocent explanation of the events in which she was involved. Consequently, the risk identified by the plaintiffs does not arise.
- It follows that the summons must be dismissed with costs.
- On 20 April 2022, I made an interim suppression order under s 10 of the Court Suppression and Non-publication Orders Act 2010 (NSW) (the Suppression Act) in the following terms:
8. Pursuant to section 10 of the Court Suppression and Non-publication Orders Act 2010 (NSW) (Suppression Act) and until further order of the Court, information as to:
8.1 any relief claimed in these proceedings;
8.2 the content of the Statement of Issues filed 12 April 2022; and
8.3 any pleadings, documents, evidence or arguments filed, read or given in these proceedings,
is not to be disclosed, by publication or otherwise, to any person other than:
8.4 to the parties and their legal representatives;
8.5 to the Honourable Wayne Martin AC QC, Dr Michael Hwang SC and the Honourable Dr Kevin Lindgren AM QC; or
8.6 in the arbitral proceedings constituted before the Honourable Wayne Martin AC QC, Dr Michael Hwang SC and the Honourable Dr Kevin Lindgren AM QC,
(Interim Suppression Order).
9. Pursuant to section 9(4) of the Suppression Act, the Interim Suppression Order does not prohibit disclosure of orders made in these proceedings.
10. Pursuant to section 11 of the Suppression Act, the Interim Suppression Order applies throughout the Commonwealth of Australia.
- On 4 May 2022 that order was extended until further order.
- Section 7 of the Suppression Act permits the Court to make a final suppression order on the grounds permitted by the Act. Section 8 relevantly provides:
(1) A court may make a suppression order or non-publication order on one or more of the following grounds—
(a) the order is necessary to prevent prejudice to the proper administration of justice,
(e) it is otherwise necessary in the public interest for the order to be made and that public interest significantly outweighs the public interest in open justice.
- During the course of the hearing, I indicated that I was prepared to make a final order under s 7 of the Suppression Act in respect of the material before the Court. The CA Act contains extensive provisions directed at maintaining the confidentiality of arbitrations conducted pursuant to it. Accordingly, I accepted that such an order was necessary to prevent prejudice to the proper administration of justice and otherwise necessary in the public interest and that that public interest significantly outweighed the public interest in open justice. I invited the parties to bring in short minutes of order to give effect to the indication I had given.
- On the other hand, I indicated that I was not prepared to make a suppression order in respect of these reasons for judgment. In my opinion, the public interest in open justice requires that the public should know the grounds on which a challenge to an arbitrator succeeds or fails. The proper administration of justice did not require information concerning these proceedings as opposed to the arbitration to be suppressed and any public interest in maintaining the confidentiality of some aspects of the arbitration did not outweigh the public interest in open justice. However, I indicated that I would make an interim suppression order for a week to allow one or more of the parties an opportunity to seek a suppression order in respect of parts of this judgment. The orders I propose to make take account of these matters.
- HPPL and a number of other defendants, rely on the confidentiality provisions of the CA Act, also filed a cross-claim seeking orders restraining the plaintiffs from disclosing documents relied on by the plaintiffs in these proceedings save for the purposes of conducting these proceedings. Since it became unnecessary to deal with the cross-claim, there should be no order for costs in relation to it.
- The orders of the Court are:
- Summons dismissed;
- Order that the plaintiffs pay the defendants’ costs of the proceedings (other than the cross-summons);
- Order that each party bear its own costs of the cross-summons;
- Direct that within seven days of the date of this judgment the parties bring in short minutes of order recording the terms of a suppression order to be made by the Court under s 7 of the Court Suppression and Non-publication Orders Act 2010 (NSW) (the Act) in respect of material placed before the Court, and any transcript produced, in connection with these proceedings;
- Order pursuant to s 10 of the Act that until 4.00 pm on 10 June 2022 or further order this judgment and its contents are not to be disclosed, by publication or otherwise, to any person other than:
- to the parties and their legal representatives;
- to the Honourable Wayne Martin AC QC, Dr Michael Hwang SC and the Honourable Dr Kevin Lindgren AM QC.
- Liberty to apply on 24 hours’ notice in relation to orders (4) and (5).