Hancock Prospecting Pty Ltd & Ors v DFD Rhodes Pty Ltd & Ors; Rinehart & Anor v Rinehart & Ors [2021] HCATrans 41 (12 March 2021)

Last Updated: 15 March 2021

[2021] HCATrans 041

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Perth No P42 of 2020

B e t w e e n -

HANCOCK PROSPECTING PTY LTD ACN 008 676 417

First Applicant

HOPE DOWNS IRON ORE PTY LTD ACN 071 514 308

Second Applicant

HANCOCK MINERALS PTY LTD ACN 057 326 824

Third Applicant

TADEUSZ JOZEF WATROBA

Fourth Applicant

WESTRAINT RESOURCES PTY LTD ACN 009 083 783

Fifth Applicant

HMHT INVESTMENTS PTY LTD ACN 070 550 104

Sixth Applicant

ROY HILL IRON ORE PTY LTD ACN 123 722 038

Seventh Applicant

MULGA DOWNS IRON ORE PTY LTD ACN 080 659 150

Eighth Applicant

and

DFD RHODES PTY LTD ACN 008 672 731

First Respondent

MATTHEW JOHN KEADY AND DOROTHEA MARGARET CAMPBELL AS EXECUTORS OF THE ESTATE OF DONOVAN FRANCES DUNCAN RHODES

Second Respondent

WRIGHT PROSPECTING PTY LTD ACN 008 677 021

Third Respondent

BIANCA HOPE RINEHART

Fourth Respondent

JOHN LANGLEY HANCOCK

Fifth Respondent

HOPE RINEHART WELKER

Sixth Respondent

GINIA HOPE FRANCES RINEHART

Seventh Respondent

GEORGINA HOPE RINEHART

Eighth Respondent

THE HANCOCK FAMILY MEMORIAL FOUNDATION LTD ACN 008 499 312

Ninth Respondent

150 INVESTMENTS PTY LTD ACN 070 550 159

Tenth Respondent

MAX CHRISTOPHER DONNELLY AS TRUSTEE IN BANKRUPTCY OF LANGLEY GEORGE HANCOCK

Eleventh Respondent

MULGA DOWNS INVESTMENTS PTY LTD ACN 132 484 050

Twelfth Respondent

HAMERSLEY WA PTY LTD ACN 115 004 138

Thirteenth Respondent

Office of the Registry
Perth No P43 of 2020

B e t w e n -

GEORGINA HOPE RINEHART

First Applicant

150 INVESTMENTS PTY LTD ACN 070 550 159

Second Applicant

and

BIANCA HOPE RINEHART

First Respondent

JOHN LANGLEY HANCOCK

Second Respondent

HANCOCK PROSPECTING PTY LTD ACN 008 676 417

Third Respondent

HANCOCK MINERALS PTY LTD ACN 057 326 824

Fourth Respondent

THE HANCOCK FAMILY MEMORIAL FOUNDATION LTD ACN 008 499 312

Fifth Respondent

TADEUSZ JOZEF WATROBA

Sixth Respondent

WESTRAINT RESOURCES PTY LTD ACN 009 083 783

Seventh Respondent

HMHT INVESTMENTS PTY LTD ACN 070 550 104

Eighth Respondent

HOPE RINEHART WELKER

Ninth Respondent

GINIA HOPE FRANCES RINEHART

Tenth Respondent

MAX CHRISTOPHER DONNELLY AS TRUSTEE IN BANKRUPTCY OF LANGLEY GEORGE HANCOCK

Eleventh Respondent

HOPE DOWNS IRON ORE PTY LTD ACN 071 514 308

Twelfth Respondent

ROY HILL IRON ORE PTY LTD ACN 123 722 038

Thirteenth Respondent

MULGA DOWNS INVESTMENTS PTY LTD ACN 132 484 050

Fourteenth Respondent

MULGA DOWNS IRON ORE PTY LTD ACN 080 659 150

Fifteenth Respondent

WRIGHT PROSPECTING PTY LTD ACN 008 677 021

Sixteenth Respondent

DFD RHODES PTY LTD ACN 008 672 731

Seventeenth Respondent

MATTHEW JOHN KEADY AND DOROTHEA MARGARET CAMPBELL AS EXECUTOR OF THE ESTATE OF DONOVAN FRANCES DUNCAN RHODES

Eighteenth Respondent

HAMERSLEY WA PTY LTD ACN 115 004 138

Nineteenth Respondent

Applications for special leave to appeal

KIEFEL CJ
KEANE J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON FRIDAY, 12 MARCH 2021, AT 9.30 AM

Copyright in the High Court of Australia

____________________

MR N.C. HUTLEY, SC: May it please your Honours, I appear with my learned friend, MR J.D. HUTTON, for the applicants in P42 of 2020 and for the same-named respondents in the other matter. (instructed by Corrs Chambers Westgarth)

MR J. STOLJAR, SC: May it please the Court, I appear with my learned friend, MS L.E. HULMES, for the first and second respondents in P42 of 2020 and for the 17th and 18th respondents in P43 of 2020. (instructed by Taylor & Taylor Lawyers)

MS K.A. STERN, SC: May it please the Court, I appear with my learned friends, MR T.M. MEHIGAN, SC and MS L.A. COLEMAN for the third respondent in matter P42 of 2020 and for the 16th respondent in matter P43 of 2020, Wright Prospecting Pty Ltd. (instructed by Clayton Utz)

MR C.N. BOVA, SC: May it please the Court, I appear with MR T.E. O’BRIEN in P43 of 2020, for the applicants and for the same named respondents in the other matter. (instructed by Speed & Stracey Lawyers)

MR C.H. WITHERS, SC: May it please the Court, I appear with MR A.M. HOCHROTH for the fourth and the fifth respondents in matter P42 of 2020 and for the first and second respondents in matter P43 of 2020. (instructed by YPOL Lawyers)

KIEFEL CJ: There are submitting appearances and no appearance for the remaining respondents in each matter. Yes, Mr Hutley.

MR HUTLEY: Thank you, your Honour. If your Honours would go to application book 187, your Honours will there see section 8 of the Commercial Arbitration Act and the central question is: what is the scope of the phrase “a court before which an action is brought in a matter”?

There is no dispute that there is an arbitral matter between my clients and Mr Hancock and Ms Rinehart in the sense of a body of disputes that have agreed to be determined in arbitration under the Hope Downs Deed. First, there is a dispute between my clients and those individuals as to their right to challenge the entitlement of HPPL Group to the Hope Downs interests. They have promised not to do so under clause 7(b), which your Honours will find at Court book 178 at paragraph 56.

The dispute as to whether Mr Hancock and Ms Rinehart are entitled to the Hope Downs interests has been referred by this Court in the earlier proceedings and by the Western Australia Court of Appeal in relation to the cross‑claim to arbitration. The issue is whether there was an obligation to refer the question as to whether Ms Rinehart and Mr Hancock could raise by way of defence into the claim with DFD Rhodes the issue of their entitlement to those assets, and we say that issue, when sought to be raised by way of defence, meant there was an action brought in a matter which is the subject of an arbitration agreement, that is the matter at that level being whether the court should – whether Ms Rinehart and Mr Hancock are entitled to bring that defence to the action.

The Court of Appeal’s decision has determined that issue. They have held that they are entitled by allowing them to pursue the defence. The court - if I can take your Honours to paragraph 273 in the reasons of the Chief Justice, he said:

Applying these principles to the present case, in my view, while the right of Mr Hancock and Ms Rinehart to dispute HDIO and its predecessor’s title to the Tenements may well give rise to a ‘matter’ between Mr Hancock and Ms Rinehart and other parties to the Hope Downs Deed . . . the defences themselves are not, and do not mean that the primary proceedings are ‘in’, ‘a matter, which is the subject of the arbitration agreement’.

That is the crisp question, and the court in effect held that to be an action in a matter there had to be a proceeding, a pleading, where, on one side was an arbitrable party and on the other side was another arbitrable party.

KEANE J: Mr Hutley, what do you say about paragraph 274 that follows the paragraph you have just taken us to, where the Chief Justice says:

There is no respect in which the defences ‘join issue’ with any party to the Hope Downs Deed or with a party to that deed within the extended meaning in the Commercial Arbitration Act. To use the Full Court’s expression from HPPL v Rinehart FFC, the ‘body of differences’ to which s 8 applies does not include the claims brought by WPPL and DFD Rhodes; nor does it include the defences to those claims.

MR HUTLEY: We had never thought a reference to arbitration of WPPL’s claim against Ms Rinehart and Mr Hancock – what we say, the body of differences is the body of differences constituted by the ability to raise the defence at all and, secondly, as the court elsewhere held, although there is no party joinder in a formal sense, were this to go on there is a potential of an estoppel between the parties, that is, the parties to the arbitration agreement, my client and Mr Withers’ clients such as we are bound by that determination.

KIEFEL CJ: Mr Hutley, your argument centres upon matter the subject of the arbitration, matter in section 8.

MR HUTLEY: Quite.

KIEFEL CJ: But Chief Justice Quinlan’s construction of section 8 is premised, is it not, on the question of the parties being those in the arbitration alone - that appears most clearly perhaps at paragraph 265. It is his Honour’s view that the underlying premise of section 8 is that it is referable only to the parties to the arbitration, and that is really the central question, is it not?

MR HUTLEY: Yes, your Honour, I accept that that is precisely the question. In our submission ‑ ‑ ‑

KEANE J: And “party” in this context is a defined term.

MR HUTLEY: Being party to the arbitration agreement, not party to the suit.

KEANE J: Yes.

MR HUTLEY: So, in our respectful submission, one asks this question in the way of testing this. Let it be assumed that the suit had been commenced against Mr Withers’ clients and they had come forward and said that it happened later. The High Court has determined that this question of section 7(b) is an arbitrable matter. We are, prima facie, obliged not to raise this defence. We want to raise the defence, but we cannot because there is a matter between ourselves and HPPL and this action is brought in that matter because it seeks to engage us to raise our defence which we have agreed our ability to do will be arbitrated.

According to the Full Court, the Court of Appeal, that could not be a response because they could not come forward and say, we have a matter between us – there is a matter, there is a body of differences about our ability to raise this very question and we want a stay of the action – so we want to be sent, in this suit, to arbitration. What effect that will then have on the ability of the suit to come forward would be a question on the relationship of the suit brought and the matter, but that is a matter of procedure.

It will not – what one is talking here is is that the difference here is the difference about the main defendant’s ability to raise the defence. That is the difference. It is pointed out, a fortiori, in this case, is to say that the action is not in that matter – is that it can give rise to estoppels, as the court contemplates, and can be so – Mr Withers’ clients say there should be estoppels about the central matters which have been the subject of the reference to arbitration both in the Federal Court, this Court, and also by the Western Australian Court in respect of the cross‑claim.

KIEFEL CJ: Mr Hutley, do you agree, though, that the question is whether or not the Court of Appeal was correct to hold that section 8(1) applies only to the parties to the arbitration?

MR HUTLEY: We have no difficulty with it only applies to the parties to the arbitration. They are the people who are referred to arbitration, but we do not seek the reference of WPPL to arbitration at all.

KIEFEL CJ: But that does not – the operation of section 8 inform the court in relation to the orders it makes under its own procedures with respect to the action.

MR HUTLEY: Quite. It is obliged under section 8 if there is an action in a matter to refer the parties, not the parties to the suit – because parties is the parties to the arbitration agreement to arbitration. Thus, for example, there are many cases where there were more parties to an action than parties to an arbitration agreement. For example, your Honours will have seen reference to them, there are many of them, and that has the consequence that the Court is obliged to refer the parties to the arbitration agreement to arbitration, and that may have implications to the conduct of the suit.

But, as the cases say, that is neither here nor there because the statute has mandated that if there is an action which has the characteristic of being in a matter in the way of section 8, which I take, is brought in a matter which is the subject of an arbitration agreement, once that relationship of being in a matter exists there is a mandatory obligation to refer.

KEANE J: The way you are now putting this argument – shifting attention away from the way in which is it is framed in your written application, it seems that you are not so much arguing about the proper construction of section 8, but you are arguing about a question which may be a matter of fact and degree and impression about whether or not it is in a matter or not.

MR HUTLEY: No, with respect. The Court of Appeal’s decision means – and they make it perfectly clear at 273 and 274 – for an action that is brought to be in a matter there must be, as it were, on opposite sides of the record parties to an arbitration agreement. That is what they say in terms at 273 and 274. That is what they are saying. This has the result that there can only be an action in a matter if there is a circumstance where, on one side whether it be a pleading or cross‑claim, an arbitrating party, and on the other side an arbitrating party. That is what they found here.

They referred, of course, to the cross‑claim because they said that Mr Withers’ clients were on one side and my clients were on the other side; refer it away. They do not refer this even though they say the dispute as to whether Mr Withers’ clients can raise the defence is a matter. That is what they say at the beginning of 273 and that must be correct. Courts determine this in other cases that that is a matter. But they say it is not an action brought in a matter and they say it is not brought in that matter because in fact there are not on both sides of the record – you can say on one – on both sides of the record there is a party to the arbitration agreement. That is in essence – we say that is what the court has said. They have given the words “actions in the matter” an extremely limited operation.

KIEFEL CJ: Mr Hutley, I am still struggling with why you are focusing only on one aspect of section 8 when the Court of Appeal at more than one passage, particularly say at paragraph 135 described section 8 as containing a composite phrase which requires consideration not only of the matter, but the parties to the dispute, and it is the parties to the dispute and the underlying premise of section 8 being referable only to the parties to the arbitration that controls the ability of the court to order a stay only with respect to parties to the arbitration. That is what their Honours held. They did not just decide the question on their view of a matter.

MR HUTLEY: I am not suggesting they did decide it only on their view of the matter, your Honour. They did it on the basis that they say on the true construction of the agreement what your Honour says is completely right. For the operation of section 8 you have to have a litigation where there are parties to an arbitration agreement on opposite sides of the record in a pleading.

KIEFEL CJ: Section 8 operates only with respect to those parties to the arbitration.

MR HUTLEY: I accept that, and that is all we seek, is an order that they be referred to arbitration about the ability ‑ ‑ ‑

KIEFEL CJ: But you cannot stay – their Honours held that you cannot stay the proceedings involving other parties. You cannot stay the proceedings in relation to parties who are not parties to the arbitration.

MR HUTLEY: As a mandatory consequence of section 8, no. But there are many cases where there is litigation - where there are litigations involving more parties than the parties to an arbitration agreement. Justice Hammerschlag’s judgment was one, which is referred to in John Holland at paragraph 167 at page 199. They are a multi‑party suit, but there was in that a dispute between parties to an arbitration agreement.

KIEFEL CJ: Well, that is only to say that as a matter of discretion the court might stay.

MR HUTLEY: No, the court said they had to refer the parties to the arbitration agreement to arbitration.

KIEFEL CJ: Yes.

MR HUTLEY: The stay is the tool by which the courts secure that consequence.

KIEFEL CJ: Quite, yes.

MR HUTLEY: Now, that sometimes ‑ ‑ ‑

KIEFEL CJ: They cannot extend the order for stay to non‑parties to the arbitration except perhaps as a matter of discretion where it was considered appropriate to do so.

MR HUTLEY: Quite. We never suggested anything else. We do not suggest that there is a mandatory section 8 stay on the suit brought by WPPL or DFD Rhodes. Because you have to stay the pursuit of the defence because that is a matter between us, that may have consequences for the balance of the suit. That was exactly the same in the decision before Justice Hammerschlag.

KEANE J: But there is something very awkward and very odd about speaking about staying a defence.

MR HUTLEY: Your Honour, in one sense ‑ ‑ ‑

KEANE J: It is just sort of apiece with the, with respect, quite tortured articulation of this point that you are regaling us with.

MR HUTLEY: If your Honours ‑ in our respectful submission, a stay is just a tool, it is the tool by which the Court controls procedures and the use of the word “stay” ‑ ‑ ‑

KEANE J: But it is determinative of people’s rights.

MR HUTLEY: With respect, no. The stay would not be a final say, it would await the outcome of the arbitration, because even the arbitration – if we were successful and they were prevented – that is Mr Withers’ clients – from ever raising this defence, that would remove any capacity for this issue to be debated by Mr Withers’ client.

That is all the stay would do, that is the parties – they had agreed not to raise these defences, they have agreed that if they – any dispute about them raising it will be dealt with by arbitration and all we seek is the determination of that dispute, pursuant to section 8, in arbitration.

It does not determine the rights of WPPL or DFD Rhodes at all, because Mr Withers’ clients may be successful, they may prove that they are entitled to raise the defence, in which case it will come back to Court and that case will be fought out.

In our respectful submission, it is a complete – with all due respect to the Full Court, a confusion ‑ the Court of Appeal. We are not saying there will be determined as between WPPL and DFD Rhodes, and Mr Withers’ clients any issue. What there will be determined is between Mr Withers’ clients and my clients – the issue which they promised will be determined in arbitration, whether they are entitled to raise these allegations against WPPL and DFD Rhodes.

The result of the Court of Appeal’s judgment is that that issue – that entitlement – has been finally determined by the court on a procedural step, on the basis of the fact that they are saying there is not an action in a matter because there is no joining of issue between my clients on the pleading of the defence by Mr Withers’ clients to WPPL.

In other words, it has gone off on a pleading point. Our point is the – what has been agreed here is an agreement to arbitrate that very issue as to whether they can raise this defence. The consequences of having it determined may be that that holds up the WPPL DFD Rhodes proceedings, but the court has said on numerous occasions that can often be the consequence of an order to arbitrate. It happens all the time. It happened in the John Holland Cases and other cases referred to in the judgment. There is nothing peculiar about that.

KIEFEL CJ: I see the light, Mr Hutley.

MR HUTLEY: If your Honours please.

KIEFEL CJ: Are we hearing from Mr Bova before we hear from the respondent? I am sorry, is that the orange light. I am colour blind today, was that the orange light? Mr Hutley, I do apologise. I have caught you short.

MR HUTLEY: Your Honour, I think I have said what I have come to say your Honour.

KIEFEL CJ: How very kind of you, thank you.

MR HUTLEY: No problem.

KIEFEL CJ: Yes, Mr Bova.

MR BOVA: May it please the Court. We say that, as a matter of statutory construction, we adopt Mr Hutley’s submissions but we wish to add the further points. On a plain reading of section 8 of the Act, in effect what the Court of Appeal has done is to import the provisions of section 7(2) of the International Arbitration Act, which your Honours will find at AB 188. If your Honours look at paragraph 110 of the Chief Justice’s judgment, your Honours will see plainly the distinction between section 7(2) of the International Act and section 8 of the uniform legislation. If your Honours turn to subparagraph (a), your Honours see that the Act only applies in circumstances where there are:

proceedings instituted by a party to an arbitration agreement . . . against another party –

That language has influenced the Court of Appeal in Western Australia insofar as they have imported the notion of the need for a party on both sides of ‑ ‑ ‑

KIEFEL CJ: Can you point to where in the judgment that Chief Justice Quinlan draws upon section 7(2) of the International Arbitration Act in terms of his construction of the Commercial Arbitration Act?

MR BOVA: Yes. What his Honour does is, he goes through the authorities relating to subsection (2) and he concludes, with respect – if your Honours turn to application book 211, at paragraphs 223 to 225 – that, by reason of the earlier jurisprudence in relation to section 7(2), and by reason of what we say is a misapprehension as to the way in which both the HPPL parties and the Rinehart parties put the matter before his Honour and your Honours see at 223:

there is . . . no practical distinction between the notion of ‘staying the defences’ of Mr Hancock and Ms Rinehart –

and, we say, that is pursuant to section 8 and staying the claims brought by WPPL and DFD Rhodes against Mr Hancock and Ms Rinehart, pursuant to section 7 because the effect would be the same.

What his Honour has done there by adopting the position that, ultimately, we say, the proceeding must be stayed as a matter of case management – or, potentially stayed as a matter of case management – his Honour, to use his Honour’s language at paragraph 224, has viewed the application through the provision, or through the prism, of seeking a section 8 stay of the entirety of the proceeding and then imported into that notion the requirement that there be an arbitral party on both sides. If I could take your Honours back to paragraphs 137 and 139 of the judgment – it is at 139, where he relies on the authorities to ‑ ‑ ‑

KIEFEL CJ: Was his Honour dealing with an argument in relation to section 7(2)?

MR BOVA: No, your Honour. This, with respect, was a matter that his Honour took on without the assistance of the parties in relation to the same, and a distinction was drawn between the two for the purposes of section 8, but his Honour then relied upon section 7, and we say has constrained the language beyond their ordinary and natural meaning, such that it is now the law in this country that, in order to invoke section 8, a plaintiff must be an arbitral party, or an applicant must be an arbitral party.

KIEFEL CJ: His Honour goes on to deal with it in terms of the language of section 8 itself, though, does he not?

MR BOVA: In our respectful submission, not clearly.

KIEFEL CJ: Paragraph 248?

MR BOVA: In our respectful submission, his Honour strains the language to – and does not focus on an action in a matter which is deliberately broader than section 7(2).

KIEFEL CJ: But his Honour is saying that is not the only question – and the question of the parties to the arbitration is – it is probably true to say his Honour elevates that as the more important constructional question.

MR BOVA: Yes. Perhaps, I can answer it this way, your Honour ‑ ‑ ‑

KEANE J: If the question is, as one apprehends it is, that only a party to the arbitration agreement can invoke a section 8 procedure, how do you say that the Chief Justice was not correct to reach the conclusion he did, given that section 8 contemplates that it can be actioned only by a party, “a party” being a defined term as being a party to the arbitration agreement? How is it that it can be said that his Honour is wrong in that view?

MR BOVA: Because his Honour has focused on the wrong question, with respect. My client is a party to the arbitration agreement. It brings an application under section 8 to have the dispute or the matter referred to arbitration. It is not to focus on the non‑parties to the suit being the plaintiffs in the WPPL or the Rhodes proceedings. Can I make that proposition good by taking your Honour to the pleading that is referred to. If your Honours would turn to page 182 of the application book, and your Honours there see at paragraph 81 and 82 what is set out. And this is critical, in our respectful submission, for understanding how it is that one stays a defence. If your Honour looks at paragraph 3A.3, which is set out there, it was pleaded that:

[The Children] are entitled in equity to an interest in the tenements in respect of which WPPL claims in these proceedings to be entitled in equity to an interest, for the reasons set out in their statement of claim in the Federal Court of Australia proceedings . . . and for the reasons set out in their counterclaim –

So as part of the defence, they have positively asserted that the matters that have otherwise been referred to arbitration, being the counterclaim in this proceeding, as well as the statement of claim in the Federal Court proceeding that your Honours have referred to arbitration, is incorporated into the defence. And all we sought, and all we said was a matter, within the meaning of section 8, were those allegations that incorporated the body of disputes between Ms Hancock and Mr Rinehart on the one hand, and HPPL and Mrs Rinehart on the other.

Now, the primary judge – one can see that again in paragraph 4.4, where there is an incorporation of those aspects. We say the court had a duty to refer off to arbitration that part of the defence, which was already the subject of an arbitration, and then consider as a matter of discretion what it does with the rest of the proceedings. Does it permit, for example, the WPPL and the Rhodes proceedings to proceed as against HPPL on some limited question, on all questions, in the same way that it was constituted before the children were joined to the proceedings? There is a ‑ ‑ ‑

KIEFEL CJ: We are not concerned with the question of discretion here, which would only be a matter of practice of procedure, of course.

MR BOVA: Correct, and there is no appeal in relation to that. But what the Chief Justice has done, in our respectful submission, is elided the distinction between the two. He has focused effectively on the end result as to what the practical effect, which was paragraph 234, would be of granting a section 8 stay in respect of this dispute, and the question of a section 8 stay and the question of a discretionary stay. And, with respect, the primary judge understood this point, and if your Honours turn back to page 63 of the application book, paragraph 140, the primary judge, following the reasoning of the Full Federal Court, because at this time the High Court had not heard the application, says:

I find that the claims made by Ms Rinehart and Mr Hancock in their counterclaims and defences –

And we underline the words defences:

in which they dispute the right and title of HDIO and its predecessors in title to the Hope Downs tenements is a matter which is the subject of the arbitration agreement in cl 20 of the Hope Downs deed.

As soon as that finding is made, in our respectful submission, a finding not challenged on appeal, not dealt with in any meaningful way by the Court of Appeal, then there is a positive obligation under section 8 to refer the defences to arbitration, the parties to arbitration. And that, in our respectful submission, is fundamental.

Now, the real issue here ‑ and when one looks at – to answer your Honours’ questions in relation to how could it be that there is effectively a joinder or an issue between co‑defendants in the proceedings ‑ the issue arises starkly, in our respectful submission, if your Honours turn to paragraphs 505 to 508 of the judgment on application book page 277 where Justices Beech and Vaughan set out, effectively the overlap in issues between – they set out where a potential issue estoppel could arise in relation to co‑defendants. So, as between HPPL, Ms Rinehart and Mr Hancock. And your Honours see at the end of 505:

Nevertheless, in our view, there are ways in which an issue estoppel between the defendants to the primary proceedings would appear to arise

And they identify two areas which are matters which are the subject of the arbitration:

First, in order for a plaintiff to succeed in its claim, it must establish that when the Tenements were acquired by HML/HRL, they were held on trust for HPPL. That is an issue on which the defendants’ interests are, or would appear to be, in conflict in the relevant sense.

And they go on to assert how they are in conflict. Secondly, in 507:

the plaintiffs’ claims might fail on the ground of failing on that issue – that the Tenements were not acquired for the benefit of HPPL, but rather were acquired for the benefit of the Children.

Again, interrelated, but issues that would potentially give rise to an issue estoppel in the curial proceedings. And your Honours see at paragraph 508:

For these reasons, if the two primary proceedings are decided first, and the plaintiffs’ claims succeed, or are rejected on the ground of the basis on which the Hope Downs Tenements were acquired, then, prima facie at least, an estoppel between the HPPL parties, on the one hand, and Mr Hancock and Ms Rinehart on the other, would appear to arise ‑

So, what we have here is the Court of Appeal accepting, effectively, we say, that there is a matter as between the arbitral parties, because there is a real risk that there will be issue estoppel that arises from a determination of the curial proceedings, when at the same time these matters are being dealt with in arbitration. And, in those circumstances, we respectfully say, and in light of paragraphs such as paragraph 140 of the primary judge’s reasons, there was an obligation to refer those parts of the defence to arbitration in relation to which there was a matter. And clearly, in those circumstances, section 8 has been satisfied, and clearly in those circumstances it has ‑ ‑ ‑ ‑

KIEFEL CJ: That part of section 8 has been satisfied, what about that aspect relating to the parties?

MR BOVA: There is clearly a dispute because there is an issue estoppel, but nothing in the language of section 8, with respect, your Honour, speaks of a party needing to be an applicant in the proceedings. The matter here is characterised as a dispute between Ms Rinehart and Mr Hancock on the one hand, HPPL and Ms Rinehart on the other hand. And it clearly, in our respectful submission, fits plainly within the plain reading of the language, and there was a deliberate choice, in our respectful submission, which is articulated in the written submissions in more detail, to move away from the international Act to a more broader statutory vehicle pursuant to which parties are able to have their matters dealt with in arbitration.

I am reminded by my learned junior that at paragraph 253 of the judgment – I will take your Honours back to that – that that is effectively how the Chief Justice comes to the conclusion that there has to be a party to an arbitration agreement on both sides of the record because his Honour focuses on the language “arbitration agreement” as defined in section 8, being:

confined to such ‘disputes’ –

As Mr Hutley made plain and with respect – it is most apparent when your Honours go back to 223 ‑ ‑ ‑

KIEFEL CJ: I do not know why you say that the International Arbitration Act, which is the only thing that has influenced his Honour in relation to that aspect of construction – at paragraph 250 at the top of the page you have just referred us to, his Honour refers to:

The emphasis in the Act is upon the voluntary submission by parties of their disputes to arbitration.

I mean, that is the approach to construction that his Honour is taking.

MR BOVA: Correct, but there will be determination of those disputes as between the parties to the arbitration agreement by reason of the issue estoppel and also, as Mr Hutley pointed out, by reason of effectively a summary determination of HPPL and my clients’ rights under clause 7(b) of the Hope Downs deed.

The children are doing the very thing that they have covenanted not to do in this proceeding and it is being permitted because the court has not referred off or stayed pursuant to section 8 that aspect of the claim, which in parallel is being determined in the arbitration by former Chief Justice Martin and the other arbitrators.

We say, with respect, that because his Honour was effectively looking at this through the prism of what might happen to the entire proceedings, he has effectively characterised an application brought by the respective applicants as an application pursuant to section 8 against non‑parties. His Honour has then focused on the question of whether or not a party needs to be an applicant to the proceedings – sorry, he is focused on the question of whether or not an applicant needs to be an arbitral party as opposed to a non‑arbitral party and, in our respectful submission, has erred.

That is no clearer, in our respectful submission, by the way his Honour deals with the application of the facts to the law at paragraphs 223 to 225 and his focus on the effect being the same. His Honour says that the effect of the HPPL party’s submissions that there will be a section 8 stay more than likely followed by a discretionary stay means that we can effectively look at the whole dispute as if it were primarily a section 8 stay because his Honour says at 225:

This is important because:

(a) it focuses attention on the fact that, on HPPL and Mrs Rinehart’s case, the ‘matter’ to which s 8 applies is, or includes, the disputes as they involve WPPL and DFD Rhodes ‑

That is simply not the case. It was never submitted that the matter referred to in section 8 had any involvement in the case that was advanced by WPPL and DFD Rhodes, as is clear from the pleading I took your Honours to, where there is the express incorporation of the counterclaim.

And what, in our respectful submission, the court has done is – and I may be repeating myself – they have only done half of the task that they were mandated to do by section 8 of the Act. They have referred the counterclaim, which is clearly a matter between arbitral parties within the meaning of section 8, but they then have not referred those parts of the defence which are similarly part of that same matter.

When they do that and give effect, in our respectful submission, to the plain language of section 8, there is then a subsidiary matter, which your Honours are not here to deal with, as to whether or not as a matter of case management principles or discretion the rest of the proceeding can continue as between non‑arbitral parties and arbitral parties. I will leave that point.

Could I briefly articulate for your Honours, having gone through those matters, why we say this is clearly an appropriate vehicle in order to determine the proper construction of section 8 of the Act. We say that there
is no dispute between the parties as to any of the key matter which crystallise these important issues of statutory construction concerning both section 5 and section 8. We say John and Bianca’s claims against HPPL and my clients concerning the Hope Downs tenements as made in the counterclaim in the Federal Court proceedings raise matters the subject of section 8 for the reasons I have identified, and there has been a stay of both of – both the counterclaim and Federal Court proceedings.

We say that this is the perfect vehicle because the defence itself demonstrates that they have adopted the whole of those claims in their defence to WPPL and Rhodes’s claims. I have taken your Honours to paragraph 140 in which the primary judge found that the matters raised in the defence were arbitrable. His Honour the primary judge found at paragraph 138 of the judgment at appeal book page 63 that there was a prima facie case that in so doing John and Bianca had breached clause 7 of the Hope Downs deed so that, in our respectful submission, is not in dispute. So much was accepted by the Court of Appeal.

There is an undisputed – and we emphasise the word “undisputed” – risk of issue estoppels arising from a curial determination in this matter between the arbitral parties about the arbitrable dispute in respect of which they have been referred by this Court to arbitration. We say these matters enable this Court to give an authoritative ruling as to whether section 5 is limited to the Court intervening into the arbitrable process only or whether section 8 is limited to claims made by arbitrable parties. This, as Mr Hutley has pointed out, is a pure question of law, not one involving disputed questions of fact, discretion or an approach to the evidence. In our respectful submission, it is worthy of a grant of special leave. May it please the Court.

KIEFEL CJ: Yes, Mr Stoljar.

MR STOLJAR: May it please the Court. The gravamen of the reasoning of the court below was that a matter for the purposes of section 8 is the difference or controversy between the parties to the arbitration agreement. The corollary of that is that it is erroneous to focus as the applicants, in our respectful submission, do on the subject matter of the dispute without giving adequate or any regard to the identification of the parties between whom the dispute arises.

The approach taken by the court below in arriving at that analysis of the term “matter” for the purposes of section 8 was entirely consistent with, and indeed drawn from, the unanimous decision of the Full Federal Court in Hancock Prospecting v Rhinehart [2017] FCAFC 170; 257 FCR 442. We say that the fundamental problem with the applicant’s position, both in this application and the court below is that the position taken seeks to identify a “matter” for the purposes of section 8 by reference solely to underlying facts and without any or sufficient regard to the parties to the controversy. Indeed, the way it was put this morning was that what attracted the application of section 8 was the proposition that the defendants were entitled to bring a defence. In our submission, that entitlement of itself is not a matter.

What is a matter, if there is one, is the difference or controversy between the parties to the arbitration agreement. In our respectful submission, the applicants have not identified with any precision in the proposed grounds of appeal or their submissions generally precisely what they contend is the error in the reasoning of the court below to the extent that articulates a proposition of a kind I have just identified and nor, for that matter of course, an error in the reasoning of the Full Court of the Federal Court in Hancock Prospecting.

There has been some discussion between your Honours and the counsel for the applicants concerning the importance of the word “party” as it is deployed in section 8. May I say something about that, but beginning by pointing out that Ms Rinehart and Mr Hancock are “parties” in at least two different senses, and the two need to be, as it were, picked apart. In the first place, they are parties to the arbitration agreement, and they are thereby, plainly, parties for the purposes and within the meaning of section 8.

As parties to the arbitration agreement, there has arisen a difference or controversy between them, that is to say, Ms Rinehart and Mr Hancock, and other parties to the arbitration agreement, and that is encapsulated, in effect, in their counterclaim against HPPL. To that extent, there is a matter, for the purposes of section 8 that, separately and independently, each of Ms Rinehart and Mr Hancock is also a party, simply to the litigation. Each has been joined by Rhodes and WPPL, because the joinder was necessary for the resolution of the litigious controversy.

As litigants, their dispute also involves the difference or controversy, but this time it is between them and parties to the litigation, and that dispute is captured in their defences to each of the Rhodes and the WPPL claims. To the extent that Ms Rinehart and Mr Hancock are parties in the first sense, they must be referred to arbitration pursuant to section 8 because it is a mandatory referral. To the extent that they are parties in the second sense, they are outside the ambit of section 8, they are merely parties to the litigation.

Now that, your Honours, emerges from a passage of the application books, or a passage of the judgment below, if I could take your Honours to page 218 of the application book, at about line 12 your Honours will observe in paragraph 255 that the Chief Justice refers in particular to the words in section 8:

the parties to arbitration –

Then, in 256, articulates two reasons why the deployment of that term is significant in the present context. And his Honour says, at about line 3 of 256:

First, it is obvious, both from the definition and from the statutory context, that this can only mean that the ‘parties’ as defined by the Act must be referred to arbitration –

the matter to which your Honour Justice Keane made reference during debate earlier on this morning, so that is the first point. And the second point emerges at paragraph 266 on page 220 of the application book at about line 40, and your Honours will see that the Chief Justice goes on say that:

A stay of proceedings between parties who or which cannot be referred to arbitration under s 8(1), in my view, would go beyond what is necessary to effect the referral of the parties whose dispute can (and must) be referred to arbitration under s 8(1). Indeed, the effect of such a stay may be such as to produce a result in which there is no forum in which a particular dispute can be resolved (i.e. court proceedings having been stayed and there being no relevant arbitration agreement binding those parties).

And that anomalous consequence is supportive of the construction that his Honour gave both to the word “parties” in section 8 and the way that section 8 works in terms of the mandatory referral.

Developing that anomalous consequence briefly, if our friends are correct in the way that they approach section 8, it would have the consequence that a person who has never entered into an arbitral agreement, and who has regularly invoked the jurisdiction of a court, could have their claim stayed, potentially for years, while the arbitration makes its way through its processes and then there may be curial disputes in relation to the outcome of the arbitration in due course. And, in our respectful submission, a consequence of that kind would have required the clearest possible statutory language.

Our friends have said something about issue estoppel this morning. Can I respond to that. Mr Bova took your Honours to the passage in the first judgment of the Court of Appeal below at page 277 of the application book, where the majority in the first decision below at paragraph 505, so about line 30, identified ways in which an issue estoppel between the defenders at the primary proceedings would appear to arise and Mr Bova drew attention to those words in particular.

However, events have marched on, and in the second Court of Appeal judgment, your Honours will find that at page 337 of the application book, at about line 35, in paragraph 171, after discussing the question of issue estoppel in some detail, their Honours say:

the prospect of any issue estoppel arising is both highly contingent and, even if the necessary contingencies occur, attended by a considerable uncertainty.

And, in any event, in the exercise of their Honours’ discretion and the debate, in our respectful submission, our friend’s arguments seem to move between statutory construction and sometimes enter into the train of discretion. But what their Honours have done in the exercise of their Honours’ discretion is allow the proceedings to continue to a point where the issues will be crystallised in greater detail, and at that point questions of whether there are or not issue estoppels can be given further consideration, but those are all issues about the exercise of the court’s inherent jurisdiction to a grant a stay. They are not issues about section 8, in our respectful submission.

Our friends have relied upon other legislation, in particular section 7(2) of the International Arbitration Act. When I say rely on it, our friends have said that the construction taken by the Court of Appeal has been informed or influenced by the language of that section. In our respectful submission, that is not an accurate analysis of the reasoning process of the Court of Appeal. The Court of Appeal has given effect to the language of section 8.

The question of what previous iterations of the arbitration legislation may or may not say is peripheral, in our respectful submission, at best. What matters is the language of section 8; if the outcome of section 8 has an outcome that is or for that matter is not consistent with what might have occurred on the application of earlier iterations of the arbitration legislation, that is, as it were, by the by, all that the court below needed to do was to give effect to section 8 and, in our respectful submission, they did so. They did so in a way that was consistent with earlier authority to achieve an outcome that achieves justice as between the parties on the exercise of the discretion and, indeed, there is no appeal brought from the discretionary aspect of the judgment.

In our respectful submission the applications for special leave should be refused. Unless there are any questions, those are my submissions, may it please the Court.

KIEFEL CJ: Yes, thank you, Mr Stoljar. At this point we will hear the applicants in reply, Mr Hutley.

MR HUTLEY: There is no anomaly in the approach we take. That can be seen from paragraph 170, at application book 201, where the Court of Appeal referred to the statement of then Chief Justice Martin about the mere fact that the consequence of section 8 may be that proceedings are held up. That happens every day when there are other parts. And it happens when, in effect, there may be more than one matter in – the matter may be a subset of a part of the suit that may be an essential part – the whole suit does not get referred, it has to stay to await that.

So, the timing issue, in our respectful submission, is a diversion. It points away from concentration on the central issue. The central issue, in our respectful submission, is simply this. Is, as the Court of Appeal has held, it essential for the purposes of a section 8 stay that there be on both sides of a record – whether it is a pleading or a cross‑claim – arbitral parties? If that is correct, then they are correct. If that is not correct, then they have asked and answered the wrong question.

KEANE J: Do you accept that when section 8 provides for referring the parties to arbitration, it is using the defined term?

MR HUTLEY: Certainly, your Honour. It is using the parties to the arbitration – the arbitration agreement. They are sent to arbitrate their matter. They are sent to arbitration. The stay is merely the procedural consequences for the suit – and it may be a perpetual stay, it may be a temporary stay, depending upon the outcome of the arbitrated question. That is why we say, in this case, there really is a simple, simple answer. Were the children – that is, Mr Withers’ clients – able to raise this defence? Yes, or no? They promised they would not. That is the subject of an arbitration agreement.

This action by DFD Rhodes and WPPL entered that matter. It is an action in a matter – that matter – because the position of Mr Withers’ clients is that they wish to, contrary to their agreement, advance that defence. All we seek is the arbitrated determination of whether they are entitled to it. We say, section 8 says there is an action in that matter. If the Court concludes that there can only be a matter if there were parties to an arbitration on separate sides of a suit, that would give rise to extraordinary conclusions.

For example, let me assume, in current days, there is an arbitration agreement between A and B who are defendants to a suit, but those matters are, for example, ones which can be the subject of proportionate liability defences. They may not be able to cross‑claim against each other. But the court would say there is no action in that matter because they are not contrary on a suit. As to whether estoppels can arise or not, the mere possibility – and the court did not discount the possibility, in fact they said at 139, at page 329, that there is a real possibility of estoppel.

KIEFEL CJ: That is managed, though, is it not by the way in which the court allows the matter to proceed only to a particular point and then to consider the position of the parties – to see where the arbitration is at that point. The impetus, of course, being on the arbitration getting on with it.

MR HUTLEY: But, your Honour, this is a section 8 question ‑ ‑ ‑

KIEFEL CJ: Yes.

MR HUTLEY: ‑ ‑ ‑ and that possibility ‑ ‑ ‑

KIEFEL CJ: Does not affect the question of construction.

MR HUTLEY: ‑ ‑ ‑ does not affect the question of construction.

KIEFEL CJ: I suppose that it is a difficult thing to use potential contingent issue estoppels to determine the question of the matter though.

MR HUTLEY: Your Honour, can I say that is why your Honour will have seen our focus is on the fact that there is a, as it were, clear breach of clause 7(b), the clearest breach of a promise. That is an arbitral matter – the court has found it on four occasions – whether you can raise these issues. All we say is, section 8 says that this action, that is by.....has entered that matter. It is in that matter. That is what we seek the stay for. That is what we wish to say by way of reply, your Honour.

KIEFEL CJ: Mr Bova?

MR BOVA: Your Honour, very briefly, two points. As Mr Hutley has articulated, in our respectful submission, it is a plain question of statutory construction as to whether a non‑party needs to be an arbitral party – sorry, whether a section 8 stay can proceed in circumstances where a non‑party is an applicant or moving party. If the answer to that question is yes, all parties to the proceeding need to be parties to the arbitration agreement, or an applicant at least needs to be a party to the arbitration agreement, then the Court of Appeal’s construction is correct.

But if it is not, in our respectful submission, then taking the example of the pleading that I took your Honours to, at application book page 182, paragraph 3A.3, that is a matter that needed to be referred to arbitration, and the Court of Appeal has, in our respectful submission, failed to properly apply section 8.

When one looks at section 8 of the Act – and as Mr Hutley took your Honours to, it is at paragraph 106 of the judgment – there is nothing in that section which, in our respectful submission, gave cause for the Chief Justice to read into it that requirement. The reference to party and parties to the arbitration is obviously a reference to a party to the arbitration agreement.

My client, for example, is a party to the arbitration agreement, but is not a party to the claim brought by DFD Rhodes and WPPL. It is invoking its contractual and statutory rights in order to seek a section 8 stay of the dispute as between the arbitral parties only. It is not seeking any relief at all in respect of the non‑arbitral parties.

KEANE J: You keep saying a section 8 stay. There is not a section 8 stay. Questions of stay arise as a matter of discretion in case management after section 8 has done its work. Section 8 is about referring.

MR BOVA: Correct, and the courts, in our respectful submission, including this Court in the Rinehart decision, said that ordinarily the means by which one affects the referral is a stay.

KEANE J: But it is not a section 8 stay.

MR BOVA: It is a referral pursuant to section 8, your Honour is perfectly correct. It can be done in any number of ways and perhaps that is where the confusion lies in the Court of Appeal’s analysis, in confusing the distinction between the referral under section 8 and a discretionary stay of the remainder of the proceedings in the event that that was warranted as a matter of general case management.

But the construction the Court of Appeal has adopted, in our respectful submission, means that there can never be a dispute between arbitrable parties in circumstances where an applicant or a plaintiff is not an arbitrable party, yet there is a real risk of an issue estoppel between those arbitrable parties in the proceedings.

KIEFEL CJ: That is a matter for case management, is it not?

MR BOVA: It is not, in our respectful submission. It shows clearly that within the meaning of section 8 there is a matter being a body of disputes.

KIEFEL CJ: I had not understood that that was how you put it.

MR BOVA: Yes.

KIEFEL CJ: I understood Mr Hutley to put that, but I had not understood you to.

MR BOVA: We did, and as a matter of case management, in our respectful submission, the question of an issue estoppel is going to arise in the arbitration, not in the proceedings.

KIEFEL CJ: The question of an issue estoppel is relevant to the stay which is within the general discretion of the Court, and the Court takes into account how its processes can deal with the point at which any issue estoppel might arise.

MR BOVA: But, in our respectful submission, it shows clearly that there is an action brought in a matter within the meaning of section 8.

KIEFEL CJ: I understand the argument.

MR BOVA: It must be, in our respectful submission, even in our submission the prospect of the same, and the question ‑ ‑ ‑

KIEFEL CJ: It might be a matter, but you are still left with the question whether it is a matter the subject of an arbitration – between arbitral parties.

MR BOVA: But it must be, if your Honour is – going back to paragraphs 505 to 508, those matters which the Court of Appeal identifies as being possible or likely issue estoppels in the proceedings are the very same matters that are being determined in court – in arbitration, as well as the clause 7(b) matter, and there is a complete, in our respectful submission, overlap between the two in those circumstances. We say, and I am at the risk of repeating myself, having only referred part of the dispute to arbitration because of its failure to properly construe section 8 of the Act, that the Court of Appeal has not, with respect, referred as it was obliged to do under the relevant section. May it please the Court.

KIEFEL CJ: We will not require to hear from the other parties.

We are of the view that in each of these matters there are insufficient prospects of success to warrant the grant of special leave. Special leave is refused with costs.

AT 10.33 AM THE MATTERS WERE CONCLUDED