Palmer v CITIC Ltd [No 13]

The respondents, being Palmer, Fortescue Metals Group Limited, and Mineralogy, brought proceedings against the appellants, CITIC Ltd and CITIC Resources Holdings Limited, in the Supreme Court of New South Wales. The dispute concerns alleged breaches of an indemnification agreement and related contractual obligations. The respondents sought to strike out various paragraphs from the appellants' defences, which the appellants resisted. The court had to determine whether the respondents' strike-out applications were valid and whether the appellants' defences should be expunged.

The court addressed the legal issues by considering the principles applicable to strike-out applications. It assessed whether the paragraphs in question involved disputed questions of construction or were otherwise ambiguous. The court also examined the appropriate test for determining the validity of the strike-out applications. It considered whether the respondents' challenge to the appellants' plea concerning the onus under clause 9.1(e) of the Fortescue Coordination Deed was valid and whether the plea answered the causation allegations in the statement of claim. Additionally, the court examined the challenge to the appellants' plea regarding the requirement for the respondents to take all reasonable steps to minimise or avoid the claimed loss.

The court found that the respondents' challenge to the appellants' plea concerning the onus under clause 9.1(e) was valid as it involved disputed questions of construction. The court determined that the plea did not properly answer the causation allegations in the statement of claim. However, it held that the plea regarding the requirement for the respondents to take all reasonable steps was not ambiguous and properly pleaded the counterfactual. Consequently, the court dismissed the respondents' applications to strike out paragraphs 17 and 18 of the defences. The court also dismissed the respondents' application to strike out paragraphs 20 and 21 on the basis that they were not ambiguous.

The final orders included dismissing the respondents' applications to strike out certain paragraphs of the defences and affirming the validity of the appellants' pleas concerning the onus under clause 9.1(e) and the requirement for the respondents to take all reasonable steps.