SUPREME COURT OF QUEENSLAND CITATION: Parbery & Ors v QNI Metals & Ors [2018] QSC 121 PARTIES: STEPHEN JAMES PARBERY AND MICHAEL ANDREW OWEN IN THEIR CAPACITIES AS LIQUIDATORS OF QUEENSLAND NICKEL PTY LTD (IN LIQ) ACN 009 842 068 (first plaintiffs) QUEENSLAND NICKEL PTY LTD (IN LIQ) ACN 009 842 068 (second plaintiff) JOHN RICHARD PARK, KELLY-ANNE LAVINA TRENFIELD & QUENTIN JAMES OLDE AS LIQUIDATORS OF QUEENSLAND NICKEL PTY LTD (IN LIQUIDATION) ACN 009 842 068 (third plaintiffs) v QNI METALS PTY LTD ACN 066 656 175 (first defendant) QNI RESOURCES PTY LTD ACN 054 117 921 (second defendant) QUEENSLAND NICKEL SALES PTY LTD ACN 009 872 566 (third defendant) CLIVE FREDERICK PALMER (fourth defendant) CLIVE THEODORE MENSINK (fifth defendant) IAN MAURICE FERGUSON (sixth defendant) MINERALOGY PTY LTD ACN 010 582 680 (seventh defendant) PALMER LEISURE AUSTRALIA PTY LTD ACN 152 386 617 (eighth defendant) PALMER LEISURE COOLUM PTY LTD ACN 146 828 122 (ninth defendant)
2 FAIRWAY COAL PTY LTD ACN 127 220 642 (tenth defendant) CART PROVIDER PTY LTD ACN 119 455 837 (eleventh defendant) COEUR DE LION INVESTMENTS PTY LTD ACN 006 334 872 (twelfth defendant) COEUR DE LION HOLDINGS PTY LTD ACN 003 209 934 (thirteenth defendant) CLOSERIDGE PTY LTD ACN 010 560 157 (fourteenth defendant) WARATAH COAL PTY LTD ACN 114 165 669 (fifteenth defendant) CHINA FIRST PTY LTD ACN 135 588 411 (sixteenth defendant) COLD MOUNTAIN STUD PTY LTD ACN 119 455 248 (seventeenth defendant) EVGENIA BEDNOVA (eighteenth defendant) ALEXANDER GUEORGUIEV SOKOLOV (nineteenth defendant) ZHENGHONG ZHANG (twentieth defendant) SCI LE COEUR DE L OCEAN (twenty-first defendant) DOMENIC MARTINO (twenty-second defendant) MARCUS WILLIAM AYRES (first defendant added by counterclaim) FILE NO/S: SC No 6593 of 2017 DIVISION: PROCEEDING: STEFAN DOPKING (second defendant added by counterclaim) Trial Division Application DELIVERED EX 22 May 2018
TEMPORE ON: DELIVERED AT: Brisbane HEARING DATE: 22 May 2018 JUDGE: ORDER: CATCHWORDS: Bond J 3 The application is dismissed. PROCEDURE STATE AND TERRITORY COURTS: JURISDICTION, POWERS AND GENERALLY INHERENT AND GENERAL STATUTORY POWERS TO PREVENT ABUSE OF PROCESS GENERALLY where plaintiff company is in liquidation where two defendant companies apply for ancillary orders in respect of a prospective freezing order as against the plaintiff liquidators where application is made pursuant to the court s inherent jurisdiction and pursuant to Uniform Civil Procedure Rules 1999 (Qld) r 260B, r 260D(5) and r 260E where the defendant companies contend they are entitled to invoke the court s jurisdiction without establishing the merits of their underlying case against the plaintiff liquidators whether the defendant companies must establish a good arguable case against the plaintiff liquidators PROCEDURE STATE AND TERRITORY COURTS: JURISDICTION, POWERS AND GENERALLY INHERENT AND GENERAL STATUTORY POWERS TO PREVENT ABUSE OF PROCESS GENERALLY where plaintiff company is in liquidation where two defendant companies apply for ancillary orders in respect of a prospective freezing order as against the plaintiff liquidators where application is made pursuant to the court s inherent jurisdiction and pursuant to Uniform Civil Procedure Rules 1999 (Qld) r 260B, r 260D(5) and r 260E whether there is sufficient prospect of a substantive freezing order being made at a subsequent stage to warrant the making of the ancillary orders sought PROCEDURE STATE AND TERRITORY COURTS: JURISDICTION, POWERS AND GENERALLY INHERENT AND GENERAL STATUTORY POWERS TO PREVENT ABUSE OF PROCESS GENERALLY where plaintiff company is in liquidation where two defendant companies apply for ancillary orders in respect of a prospective freezing order as against the plaintiff liquidators where application is made pursuant to the court s inherent jurisdiction and pursuant to Uniform Civil Procedure Rules 1999 (Qld) r 260B, r 260D(5) and r 260E whether the inadequacy of the undertakings offered by the defendant companies is a discretionary consideration weighing against the grant of any ancillary orders PROCEDURE CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS COMMENCING
4 PROCEEDINGS OTHER MATTERS where plaintiff company is in liquidation where court appointed liquidators of the company are also plaintiffs in the proceeding where two defendant companies apply for ancillary orders in respect of a prospective freezing order as against the plaintiff liquidators whether leave of the court is required to proceed against the plaintiff liquidators Uniform Civil Procedure Rules 1999 (Qld) r 260B, r 260D(5), r 260E Armitage v Gainsborough Properties Pty Ltd [2011] VSC 419, applied Fortress Credit Corporation (Australia)(II) Pty Ltd v Fletcher and Barnet [2015] NSWCA 85, cited JSC Mezhdunarodniy Promyshlenniy Bank & Anor v Pugachev [2015] EWCA Civ 139, cited Matrix Group Limited (in liquidation) (Trustee) v Oates [2018] FCA 22, cited Ninemia Maritime Corporation v Trave GmBH & Co KG (The Niedersachsen) [1984] 1 All ER 398, cited QNI Resources Pty Ltd v Park [2016] QSC 222, cited Re Queensland Nickel (in liquidation) [2017] QSC 258, cited COUNSEL: T Sullivan QC with M Hickey for the first plaintiffs/respondents K Byrne for the first and second defendants/applicants SOLICITORS: King & Wood Mallesons for the first plaintiffs/respondents Alexander Law for the first and second defendants/applicants HIS HONOUR: The present application is brought in relation to litigation managed by me on the commercial list. It has a complicated history which has been dealt with in previous judgments by me. Two of those judgments should be mentioned, because they set out much of the 5 factual background, most of which I will not repeat here: (a) First, QNI Resources Pty Ltd v Park [2016] QSC 222, in which the present applicants and another company failed to obtain leave to proceed in respect of the various claims asserted against Queensland Nickel identified in a statement of claim filed on 13 June 2016. 10 (b) Second, Re Queensland Nickel (in liquidation) [2017] QSC 258, in which I explained why I thought that certain proceedings should be consolidated. A consolidation order has now been made. There is presently a consolidated statement of claim and a consolidated defence and counter-claim. The present proceeding is the consolidated proceeding. The present applicants are the first two 15 defendants in the consolidated proceeding. They also advance a counter-claim as articulated in the consolidated defence and counter-claim. I will refer to them as the joint venturers.
In the consolidated statement of claim, Queensland Nickel (the second plaintiff in the consolidated proceeding) has asserted personal and proprietary rights against a number of parties. Against the joint venturers, such rights include rights along the lines of those to which are referred in QNI Resources Pty Ltd v Park at [130]-[132]. 5 I identified the implications of the existence of such rights in QNI Resources v Park at [133]-[134] as follows: [133] Either way, the implications would then include: (a) Queensland Nickel would be regarded as having a proprietary or beneficial interest in the Joint Venture Property to the extent of its right to be indemnified for Joint Venture 10 Expenses properly incurred; (b) 5 Queensland Nickel could not be compelled to surrender the Joint Venture Property to the Joint Venturers until its indemnity claim had been satisfied or provision made for its satisfaction; and (c) the entitlement of Joint Venturers to the Joint Venture Property would be confined to so 15 much of the Joint Venture Property as was available after the liabilities in question had been discharged or provision had been made for them. Until that occurred, it would be impossible to say what the Joint Venturers entitlement was. [134] If Queensland Nickel did acquire a beneficial interest in the Joint Venture Property in one of those ways described at [132] with the result referred to at [133], then it would follow that: 20 (a) the contractual and equitable claims against Queensland Nickel and the Administrators which rely on Queensland Nickel having an unconditioned obligation to return the Joint Venture Property would all fail because Queensland Nickel s rights would have justified retention of the property in the circumstances; (b) the failure to offer to do equity would be an insurmountable obstacle to equitable 25 remedies and to any legal remedy which turned on an exercise of discretion; I also observed at [136] of that judgment as follows: In my view the negation of the existence of Queensland Nickel s entitlement to an indemnity of such a nature as would also confer proprietary or beneficial rights in the Joint Venture Property is 30 an essential aspect of the applicants claims against Queensland Nickel. The applicants case as currently framed asserts conclusions which suit their case but does not establish a solid foundation for them. In a technical pleading sense, the pleading is flawed because of failure to plead the material facts which justify the pleaded conclusions. However, although that failure is significant, the point is more fundamental, especially in light of the evidence I have received. Absent a solid 35 foundation for the pleaded negations, there can be no solid foundation to (and no point in the Court embarking on a consideration of) the applicants claims for relief against Queensland Nickel In the counter-claim in the consolidated proceeding, the joint venturers advanced a damages claim against (amongst others) the first plaintiffs (who are the special purpose liquidators of Queensland Nickel) for the order of $1.8 billion. A critical 40 aspect of the counter-claim is to contend that the administrators (who subsequently became the general purpose liquidators) of Queensland Nickel wrongfully refused to transfer joint venture property to the joint venturers and their new manager. A similar proposition is advanced in relation to the special purpose liquidators in relation to their alleged failure to comply with the demand that they transfer the 45 property in March 2017. The theory is that the wrongful conduct caused the joint venture to cease operating, thereby causing the joint venturers loss in the form of diminution in the value of the assets of the joint venturers of $1.8 billion-odd, loss of value of other assets and lost opportunity to continue to trade at a profit. A critical aspect of the pleaded counter-claim, just as it was for the pleading in 50 respect of which I refused leave to proceed, is the negation of the existence of rights of the nature of those claimed by Queensland Nickel. In this regard, it is material to observe that in the application for freezing orders recently advanced by Queensland
6 Nickel (and on which I am presently reserved), the joint venturers conceded that Queensland Nickel established a good arguable case for the relief sought against the joint venturers. On 11 May 2018, the joint venturers brought an application for an interim freezing 5 order on an ex parte basis. That application failed for reasons set out in my unreported decision of that date. Today, the joint venturers do not press an application for a freezing order. Instead, they advance an application for an ancillary order in respect of a prospective freezing order. They seek an order which would require the first plaintiffs to provide 10 extensive information about their assets and the alleged transaction which they referred to in the earlier application for an interim freezing order. Thus, the joint venturers seek orders that, upon certain undertakings which they offer, the special purpose liquidators must: (a) on or before 29 May 2018: 15 (i) to the best of his ability inform the applicant in writing of all the respondent s assets world wide, giving their value, location and details (including any mortgages, charges or other encumbrances to which they are subject and the capacity in which they are held) and the extent of the respondent s interest in the assets, including the respondent s interest in the business PPB Advisory, the entities PPB Pty Ltd ABN 20 85 130 343 252; PPB Corporate Finance Pty Ltd (formerly PPB Advisory Pty Ltd) ABN 13 130 176 911 and PPB unit Trust ABN 67 972 164 718 and their related entities; (ii) inform the applicant in writing of particulars regarding the respondent s employment or association with the business PPB Advisory, as at the date of this 25 order, including remuneration and provide copies of trust deeds or partnership agreements or similar; (iii) to the best of his ability inform the applicant in writing of, assuming completion of the proposed sale has occurred according to its terms, the expected impact of the proposed sale on the respondent s financial position, including the respondent s 30 interest in PricewaterhouseCoopers, the respondent s employment or association with PricewaterhouseCoopers and benefits or consideration from the proposed sale which would have been received by the respondent (whether income, capital, cash, equity or other consideration) at completion or in the future; (iv) inform the applicants of the following concerning the proposed sale: 35 (i) particulars of the initial approach (including by whom and when); (ii) (iii) the rationale and impetus for the proposed sale; the settlement date; (v) provide to the applicants a copy of the contract of sale and purchase and any associated instruments regarding the proposed sale, including any minutes of 40 meeting of PPB Pty Ltd or related entities considering or approving the proposed sale; b. within 10 working days of this order, swear and serve on the applicant an affidavit setting out the above information. The joint venturers rely on the inherent jurisdiction and on UCPR rr 260B, 260D(5) 45 and 260E. Relevantly, they submit (footnotes omitted): [18] A freestanding ancillary information order may be made. That is, one not in conjunction with a freezing order. [19] The Court must be satisfied that an ancillary order is appropriate. It is not necessary for the Court to determine that the elements of a freezing order, namely (a) good arguable case (b) 50 danger that the Court s processes will be frustrated (c) interests of justice favour the grant of the order, are established.
7 [20] The threshold test for asking questions is not the same as the threshold test for freezing assets. [21] It is submitted that it is sufficient for an applicant to establish that it has properly invoked the jurisdiction of the Court and on the evidence then available, a rational conclusion can be 5 drawn that a question exists as to whether the court s processes might be frustrated or inhibited, and the provision of information is justified to answer that question. The threshold requires credible evidence, and a reasonable possibility, of a risk of dissipation. Importantly, however, they resolutely contend that they are entitled to invoke the jurisdiction without establishing anything at all about the merits of their underlying 10 case against the first plaintiffs. They acknowledge that if they continue to pursue the freezing order application at some stage in the future, they would have to establish a good arguable case, in the sense, articulated in Ninemia Maritime Corporation v Trave GmBH & Co KG (The Niedersachsen) [1984] 1 All ER 398 per Mustill J at 404: 15 In these circumstances, I consider that the right course is to adopt the case of the good arguable case in the sense of a case which is more than barely capable of serious argument, and yet not necessarily one which the judge believes to have a better than 50% chance of success. But the time for establishing a good arguable case is not now, say the joint venturers. I reject that contention. 20 The occasion of any application for an ancillary order in respect of a prospective freezing order does require there to be a sufficient prospect of a substantive order subsequently being made in the future so as to justify the exercise of power by the Court. I do not think that this case is an occasion to make any detailed pronouncement of the considerations which apply to all applications for orders of 25 this nature or that it is appropriate to examine the limits of the test for the sufficient prospect of the freezing order subsequently being made. It suffices to say that, in the present case, I would not be prepared to entertain making an order on the bases sought without first being persuaded that there was a good arguable case against the first plaintiffs for the remedy sought. 30 First, that is so because the first plaintiffs are court appointed liquidators in a company being wound up in insolvency, and the joint venturers have not sought leave to bring either the counter-claim against them or the present application. The respondents have identified that there is a well-established principle that a court appointed liquidator cannot be served without the leave of the Court. It suffices to 35 quote from Armitage v Gainsborough Properties Pty Ltd [2011] VSC 419 per Almond J at [36]- [38] (footnotes omitted, original emphasis): [36] In Sydlow Pty Ltd (in liq) v T G Kotselas Pty Ltd & Ors, Tamberlin J characterised the principles as follows: The court, when administering the Law, is concerned to ensure that the winding-up is 40 implemented in a timely and efficient manner, so as to produce optimum results for all persons interested in the winding-up. In order to achieve this result, the court must protect the integrity of the winding-up under its supervision and control, by taking appropriate steps to prevent any proceedings or conduct which will wrongfully impede that process. One way in which this can be carried out is to require the grant of leave by 45 the court in respect of an action against an official liquidator, so that the court can satisfy itself that there is no wrongful interference with the process. Such interference may arise where, for example, proceedings are initiated or continued without any legal basis or prospect of success or for an improper or collateral purpose. This appears to be the principle which underlies the established requirement that leave is necessary in order to 50 sanction proceedings against an official liquidator.
8 [37] In Re Biposo Pty Ltd; Condon v Rodgers, Young J (as he then was) stated that the court will not enable proceedings to be commenced against a liquidator personally unless it is satisfied that there is a prima facie case: The court will be very jealous of its delegate exercising the powers that it is given. The 5 court will take every precaution to make sure that those powers are used impartially and for a proper purpose. The corollary of this is that the court will not permit its officers to be sued by a creditor or have an inquiry made under s 536 unless it is satisfied that there is a prima facie case. [38] In Sydlow, Tamberlin J suggested that there was no specific threshold appropriate in all 10 cases: The discretionary power of the court to grant leave must be exercised having regard to all the circumstances of the particular cases and bearing in mind the need to protect the integrity of its process. It does not necessarily follow that, in order to obtain leave, a prima facie case must be demonstrated. There is no specific threshold appropriate in all 15 cases, however there must be more than mere assertion. The court s discretion may be exercised on many grounds including, but not limited to, the sufficiency of the evidence adduced as to the prospect of success of the action on the application for leave. The jurisdiction also find support in the New South Wales Court of Appeal decision of Fortress Credit Corporation (Australia)(II) Pty Ltd v Fletcher and Barnet [2015] 20 NSWCA 85 per Bathurst CJ at [95]. It is notable also that in Matrix Group Limited (in liquidation) (Trustee) v Oates [2018] FCA 22, Gleeson J suggested that the requirement for leave to which I have just referred is similar to the requirement for leave to proceed against the company in liquidation: see at [64]-[65]. 25 Counsel for the joint venturers suggested that the principle ought not be regarded as applying in this case because the claim should be regarded as a defensive proceeding, relying on cases in which that potential exception applied to the requirement to obtain leave to proceed under s 471B of the Corporations Act 2001 (Cth). I do not think that argument has merit. It may have merit in relation to the claim 30 advanced against the joint venturers by Queensland Nickel. I express no concluded view on that question, but I do note that the defence and counter-claim pleads the counter-claim as a defence by way of set-off of the claims advanced against the joint venturers by Queensland Nickel. No such contention is made as to the use to which the claims against the special purpose liquidators can be put. 35 Second, the case against the special purpose liquidators does rest on mere assertion in the counter-claim. It is relevant to note: (a) (as I have already mentioned) in the freezing order application brought by the first and second plaintiffs in the present proceeding, the joint venturers have conceded the existence of a good arguable case against them; 40 (b) the negation of the existence of Queensland Nickel s rights is pleaded with the same generality and lack of articulation of material facts as that which I criticised in QNI Resources Pty Ltd v Park; and (c) no other evidence, regardless of the state of the pleading, is adverted to before me today (understandably, given the joint venturers resolute rejection of the 45 need to consider whether there is a good arguable case). Third, there is no reason in the present circumstances to think that the question of whether there was a good arguable case could not be established now, if it ever could be.
9 Absent demonstration of good arguable case, I would not consider it appropriate to make an order against the special purpose liquidators, even if other matters did support the order. But there are problems as to the latter proposition. 5 Quite apart from whether there is a good arguable case, I am not persuaded on the evidence before me that there is a sufficient prospect of a substantive freezing order ever being made at a subsequent stage to warrant the making of the ancillary order sought at this stage. In particular, I reject the notion that there are presently credible grounds on which an application for a freezing order might be based (as to credible 10 grounds, see JSC Mezhdunarodniy Promyshlenniy Bank & Anor v Pugachev [2015] EWCA Civ 139 at [49]-[52]). I note that the joint venturers point to statements made in the newspaper articles I referred to in my unreported reasons for rejecting their ex parte application for a freezing order, but the newspaper articles are not evidence of anything and, if they 15 were, I would not attribute weight to them. The whole point of the evidence is the possibility that I would infer from the manner of responsive correspondence sent by the first plaintiffs solicitors that there may either have been or will be in the future a sale by PPB Advisory Pty Ltd of its business to PricewaterhouseCoopers. But there is presently no credible case that if there is a sale, that proposition could properly 20 lead to an inference that the plaintiffs might be or might be intending to embark upon a process of dealing with their assets in such a way as would tend to frustrate the prospective Court processes of execution or enforcement in relation to any judgment which the joint venturers might obtain on their counter-claim. The joint venturers submitted to me that the evidence which did establish that risk 25 was (1) the indication that the sale might be at an undervalue and (2) the timing of the sale in relation to the timing of the commencement of the counter-claim. As to the former, there is no evidence of that the sale might be at an undervalue. There are statements in media reports, but I have indicated the approach I take to the media reports. As to the proposition about the timing of the sale, it is evident even from the 30 media reports on which reliance is placed that the notion of a sale to PricewaterhouseCoopers had been under discussion for months prior to 1 May 2018, which would mean months prior to the issue of the counter-claim. So even if I should rely on media reports which I have said I should not the media reports would not help this aspect of the joint venturers case. Absent any reference to the 35 media reports, I do not think that there is any basis upon which I can infer a proposition about timing of any sale and, even if I could, the notion of drawing the inference that the joint venturers seek to draw is, in my view, entirely speculative. A submission was made by the special purpose liquidators that a discretionary consideration against the grant of any order, if I were otherwise minded to do, was 40 the inadequacy of the undertakings offered. The only undertakings offered were those recorded in paragraphs 4, 5 and 6 of Schedule A to the amended application and paragraph 4 of the body of the amended application. There was no usual undertaking as to damages offered. There was a proposed undertaking as to confidentiality. 45 Usually, the failure to offer the usual undertaking as to damages would be fatal to an application for a freezing order. I think its absence in the present circumstances probably does, on balance, favour refusal, but I do not attribute a great deal of weight to it. I take that view because the main mechanism by which damages might be caused would be consequent upon breach of the confidentiality undertaking, and if
10 there was a breach of the confidentiality undertaking, the liquidators would have their remedy. The application should be dismissed.