Supreme Court New South Wales Medium Neutral Citation: Hancock v Rinehart [2014] NSWSC 844 Hearing dates: Tuesday 24 June 2014 Decision date: 24 June 2014 Jurisdiction: Equity Division Before: Brereton J Decision: The tender is admissible Catchwords: EVIDENCE - relevance - tendency Legislation Cited: Evidence Act 1995 s 97 Category: Procedural and other rulings 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: Counsel: C Withers w N Zerial & Mr A Hochroth (plaintiffs) NC Hutley SC w BR McClintock SC & CN Bova (first defendant) RG McHugh SC w PW Flynn (second defendant) M Deutsch (sol) (third defendant) DB 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 (ex tempore) 1HIS HONOUR: The plaintiffs seek to tender documents relating to events that took place in and about September 2011 for the purpose of proving, as was originally alleged in the proceedings, that the first defendant acted in breach of her obligations as trustee of the trust and, in the course of doing so, prevailed upon a firm of accountants to take a particular course of action. The defendants object to the tender on the basis that, the first defendant having offered to retire as trustee last October when the proceedings first came on for hearing, there is no longer any relevance in the issue whether or not she committed breaches of trust. 2On 25 October 2013, in a letter from the plaintiffs' solicitors to the defendants' solicitors, the plaintiffs' solicitors observed that their position that the views of the first, fourth, and fifth defendants as to the identity of any replacement trustee should be given no weight, was based on the first defendant's conduct as defaulting trustee, the fourth defendant's involvement in and knowledge of that conduct, and the first defendant's control of the fourth and fifth defendants. In a letter dated 14 February 2014 [receipt of which was in the course of argument admitted by those acting for the second defendant but disputed by those acting for the first, fourth and fifth defendants, but has since been established], the plaintiffs' solicitors purported to put the defendants on notice that, at the hearing, they intended to make a submission that the first defendant, had she not resigned, would have been removed as a trustee as a result of her conduct and therefore should be regarded as a defaulting trustee, and identified the documents that they proposed to tender in support of that submission which, so far as I can tell, includes the documents presently under tender. In their objections to the second defendant's trustee proposal dated 27 May 2014, the plaintiffs, in paragraphs 7 and following, raised objections that the structure proposed by the defendants was susceptible to interference by, or the influence of, the first defendant who had previously defaulted in her duties as trustee; and, in paragraph 10, that the proposed corporate managing trustees did not appear to be sufficiently independent from the outgoing defaulting trustee. 3The documents, the subject of the present tender, were said to be relevant on a number of bases, but I think it suffices to distil them to two. The first is that they are said to be relevant to proving the "fortitude of Bianca" in the light of submissions that she may not have the resilience or determination to remain as trustee, and also to prove that she will have the fortitude to withstand such pressures as might in the future be exerted by the first defendant. In parallel with that, a second basis on which it is said that the material is relevant is that it tends to show, in conjunction with other material, the extent or lengths to which the first defendant may go in seeking to exert her own will in respect of the trust. 4As to the first of those bases, I am not convinced that merely proving that Bianca has taken proceedings in respect of actual or alleged breaches of trust, which she perceives to be in the interests of the beneficiaries, itself demonstrates that she has the fortitude of the type described, or more relevantly that it would make any difference in that respect whether it was established that the first defendant had in fact committed breaches of trust or not. But it does seem to me that one issue in these proceedings must be whether Bianca could be impartial as a trustee if appointed, and it is an obvious argument against her impartiality that she is embroiled in litigation, which she instituted, in which two of her siblings are on the other side of the record. An explanation as to why she has brought the proceedings, and the circumstances that provoked them, seems to me to be relevant to any criticism that might be made of her impartiality, and a justification of her conduct by proving what triggered it has relevance in that way. Some of Bianca's evidence in cross-examination touched on those matters [see T37.44-38.05; T40.37-40; T41.30-32; T45.45-47]. 5As to the second basis, it was accepted in the defendants submissions, at least by the first defendant and by the fourth and fifth defendants - indeed they submitted - that it would be not inappropriate for the plaintiffs to test the proposed managing trustees in cross-examination as to their ability to withstand pressure or influence from the first defendant. If it is permissible to test them in that way - that is to say, if that goes to a matter that is relevant and not merely as to credit (and, it seems to me, that it does go to a matter that is relevant) then it must also be relevant to prove the extent, nature and degree of the risk that those trustees will be put under that pressure. It will be very easy, it seems to me, for professional trustees to deny, almost as of rote, that they would succumb to any pressure from any source; but, as I understand the plaintiffs' case, what they want to establish is that, from the approaches made by the first defendant to PricewaterhouseCoopers in and about September 2011, from the role of the first defendant in sourcing at least some of the proposed managing trustees, and from the evidence in PX36 that, despite the disavowal on her behalf of any legal interest or desire to make any submission about the identity of the replacement trustee, seems to demonstrate that, as late as 22 June, she may still be endeavouring to exert pressure on the second plaintiff to succumb to the defendants' proposed replacement trustee, I should therefore conclude that there is a high likelihood that a managing trustee will be exposed to a type and extent of pressure that they may never have previously encountered. I say nothing as to the merits of that submission at this stage but, as I understand it, that is a submission that the plaintiffs propose to make, and it cannot be said not to be open on the material of which the Court is so far aware, or not to be relevant. The material presently under tender would potentially advance that argument. It may be that, in that way, it is tendency evidence; but it seems to me that it is at least plainly arguable that independence of a new trustee from influence by an outgoing trustee is a relevant consideration, and that the significance of that factor as a consideration might be affected by alleged misconduct of the outgoing trustee, in which case the relevance is not merely as to tendency but goes directly to a fact in issue. In any event, as it is otherwise relevant, compliance with s 97 is not required to enable it to be used also as tendency evidence; moreover, the earlier correspondence and notices to which I have referred gave ample practical notice of the intention to use the material in this way. 6That the conduct of the first defendant is relevant in that way does not necessarily mean that the Court will have to pronounce on whether or not the first defendant actually committed breaches of trust. 7In principle, and subject to any particular objection to any individual document concerned, the class of documents under objection is therefore admissible and I will admit them. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 25 June 2014