Hancock v Rinehart [2014] NSWSC 637

Supreme Court New South Wales

Medium Neutral Citation: Hancock v Rinehart [2014] NSWSC 637 Hearing dates: 9 May 2014 Decision date: 22 May 2014 Jurisdiction: Equity Division Before: Brereton J Decision: Order for additional discovery made Catchwords: PROCEDURE - Discovery - Notices to produce Cases Cited: Hancock v Rinehart [2013] NSWSC 1998 Category: Interlocutory applications Parties: John Langley Hancock (first plaintiff) Bianca Hope Rinehart (second plaintiff) Gina Hope Rinehart (first defendant) Ginia Hope Frances Rinehart (second defendant) Hope Rinehart Welker (third defendant) Hancock Prospecting Pty Ltd (fourth defendant) Hope Downs Iron Ore Pty Ltd (fifth defendant) Representation: C H Withers w N Zerial (plaintiffs) C N Bova (first defendant) R G McHugh SC w P W Flynn (second defendant) C J Birch SC (third defendant) D B Studdy SC w C Colquhoun (fourth & fifth defendants) Solicitors: Yeldham Price O'Brien Lusk (plaintiffs) Corrs Chambers Westgarth (first, fourth, fifth defendants) Gadens Lawyers (second defendant) Deutsch Miller (third defendant) File Number(s): 2011/285907

Judgment 1The remaining substantive issue in these proceedings, set down for hearing for a week commencing on 24 June 2014, is the appointment of a replacement trustee of the Hope Margaret Hancock Trust, consequent upon the retirement of the first defendant Mrs Rinehart. There are two competing proposals: the plaintiffs propose the second plaintiff Ms Bianca Rinehart; and the defendants propose a corporate custodian trustee and a professional managing trustee. 2On 3 December 2013, on applications made by the plaintiffs and by the second defendant, I made orders for discovery in respect of a number of classes of documents [Hancock v Rinehart [2013] NSWSC 1998]. Those classes were proposed by the relevant applicants, and where contentious determined by the Court, on the basis of what at that stage appeared to be the live issues, and in particular (1) the weight to be afforded to the wishes expressed by the second and third defendants; (2) the independence and impartiality of the professional trustees proposed by the defendants; (3) the impartiality of Bianca; and (4) the independence of two proposed advisory trustees. Although the evidence was not complete, no objection was then taken that disclosure was premature - no doubt the circumstance that the proceedings were, in a sense, part-heard as a result of the trial of some of the issues in October 2013 and the belated attempts of the parties to nominate replacement trustees influenced that approach. Such orders were made on the application. 3On 21 February 2014, I made pre-trial directions, including relevantly that (1) any party seeking orders by way of further and better discovery or enforcement of discovery arising out of and not inconsistent with the order made by the Court on 3 December 2013 may file and serve a motion to that effect; (2) the balance of the proceedings be provisionally listed for hearing for 4 days commencing on 24 June 2014; (3) the plaintiffs, and the second third and fourth defendants, file and serve any further evidence by 20 May 2014; (4) the parties file and serve any responsive affidavit evidence by 10 June 2014; and (9) by 27 May any party objecting to any proposed replacement trustee file and serve a notice specifying in summary form the grounds of objection to be relied upon. 4On 1 March 2014, Corrs Chambers Westgarth (Corrs) - the solicitors for the fourth defendant HPPL, a corporation controlled by Mrs Rinehart - sent a letter to Yeldham Price O'Brien Lusk (YPOL), the solicitors for the plaintiffs, containing allegations to the effect that Bianca had, while a director of HPPL, committed breaches of confidence and of her statutory and fiduciary duties. These allegations were repeated, and others made, in a further letter on 4 April 2014, expressly in the context of matters said to render Bianca unsuitable for appointment as trustee, coupled with an invitation to the plaintiffs to withdraw Bianca's nomination. In addition, by letter of 17 April 2014 from Gadens - the solicitors for the second defendant Ms Ginia Rinehart - to YPOL, notice was given to the plaintiffs that the second defendant intended to object to Bianca's nomination on grounds arising from the alleged unlawful use of confidential documents, and referred to emails said to suggest that while a director of HPPL she had "leaked" confidential documents. 5On 24 April 2014, the plaintiffs served notices to produce pursuant to UCPR r 34.1, on HPPL and on Ginia. The notice addressed to HPPL required production to the Court on 8 May 2014 of all documents relied upon in support of the allegations made in the 1 March and 4 April letters and, without limiting the generality thereof, specific documents referred to in them. The notice address to Ginia required production of all documents relied upon in support of the allegations in the 17 April letter, and without limiting that requirement, a copy of the emails referred to in it. 6By motion filed by leave on 9 May 2014, HPPL seeks to have the notice to produce addressed to it set aside. Informally, it also seeks to have the notice addressed to Ginia set aside. 7In essence, HPPL contends that the notices are premature, on the grounds that (1) the issues are not yet defined, as time for service of the notice of grounds on which Bianca's nomination is opposed has not yet arrived, and it may be that HPPL will decide not to raise or rely on the matters referred to in the 1 March and 4 April letters; and (2) the time for service of evidence has not yet arrived, so that the notice effectively seeks discovery in circumstances where it would not be ordered under Practice Note SC Eq 11, the effect of which is that, other than in exceptional circumstances, discovery will not be ordered until the evidence is complete. 8Counsel for Ginia has indicated that, but for the motion brought by the fourth defendant, she would produce the emails referred to in the notice, but no other documents, as she had not yet determined what if any material she would rely on in connection with the allegations. 9The plaintiffs further submitted that while the notice will, if not set aside, elicit documents supportive of the allegations, in due course they would desire production of all documents relevant to - that is those that may tend to rebut, as well as those that tend to support - the allegations; which effectively foreshadows an application for discovery of an additional class of documents. 10The discovery orders of 3 December 2013 were sought and made on the basis of the issues as they were then perceived. The breach of confidence issue - which if sustained could be relevant to Bianca's fitness - had not then been raised. Unless and until the allegations are withdrawn, documents which relate to them are plainly relevant to an issue in the proceedings. 11HPPL's argument that disclosure in respect of that issue would be premature, particularly having regard to Practice Note SC Eq 11 and the possibility that the issue may not ultimately be pressed in the notice of grounds of opposition, is devoid of merit in the circumstances that orders for discovery have already been made on the basis of the then perceived issues, the hearing is imminent, and these allegations have been advanced for the first time recently and presumably seriously on the basis that they will be relied on at the hearing. In that context, it ill behoves HPPL to protest that it ought not be required to disclose the documents relevant to the allegation. 12Both the imminence of the hearing, and the second defendant's candid disclosure that her production under the notice would be limited because she had not yet decided what if any documents she would rely on in support of the allegation, indicate that the interests of justice will best be served by an order for additional discovery, rather than by merely permitting the notices to produce to stand. Given the relationship between the defendants, there is no good reason why all the defendants, other than the third defendant, should not be ordered to give such discovery. 13Accordingly, the Court orders that: (1)Pursuant to UCPR r 21.2, by 29 May 2014 the first, second, fourth and fifth defendants give discovery to the plaintiffs and each other of all documents that are or have been in their respective possession custody or power that are relevant to the allegations contained in the letters from Corrs Chambers Westgarth to Yeldham Price O'Brien Lusk dated 1 March and 4 April 2014 and from Gadens to Yeldham Price O'Brien Lusk dated 17 April 2014; (2)Paragraph 1 of the fourth defendant's motion filed 9 May 2014 be dismissed. 14As the fourth defendant's motion also seeks other relief, it would be inappropriate otherwise to dismiss it at this point. However, in principle the plaintiffs' costs associated with the claim in paragraph 1 of that motion should be paid by the fourth defendant.