Parbery v QNI Metals Pty Ltd
[2018] QSC 107
•25 May 2018
SUPREME COURT OF QUEENSLAND
CITATION:
Parbery & Ors v QNI Metals Pty Ltd & Ors [2018] QSC 107
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)
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)
STEFAN DOPKING
(second defendant added by counterclaim)
FILE NO/S:
SC No 6593 of 2017
DIVISION:
Trial Division
PROCEEDING:
Application
DELIVERED ON:
25 May 2018
DELIVERED AT:
Brisbane
HEARING DATE:
23 August 2017; 14 September 2017; 15 September 2017;
17 October 2017; 18 October 2017; 19 October 2017;
30 October 2107; 21 December 2017; 6 March 2018JUDGE:
Bond J
ORDER:
The orders of the Court are as follows:
1. Order as set out in annexure A to these reasons, amended as identified in paragraph [321] of these reasons.
2. The plaintiffs are directed to draw up a form of order embodying the order made by [1] above and to file that order in Court by 4:00pm on 28 May 2018.
CATCHWORDS:
PROCEDURE – STATE AND TERRITORY COURTS: JURISDICTION, POWERS AND GENERALLY – INHERENT AND GENERAL STATUTORY POWERS – TO PREVENT ABUSE OF PROCESS – GENERALLY – where company in liquidation – where liquidators commenced proceedings against former directors and certain companies within the corporate group – where liquidators brought an application for freezing orders and ancillary orders – where orders are sought pursuant to the Uniform Civil Procedure Rules 1999 (Qld) or pursuant to the Court’s inherent jurisdiction – whether a freezing order should be made against all or any of the defendants – whether, in the alternative, a form of notification order should be made against all or any of the defendants
PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – DETENTION, INSPECTION AND PRESERVATION – FREEZING ORDERS – where company in liquidation – where liquidators commenced proceedings against former directors and certain companies within the corporate group – where liquidators brought an application for freezing orders and ancillary orders – whether the plaintiffs have a good arguable case
PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – DETENTION, INSPECTION AND PRESERVATION – FREEZING ORDERS – where company in liquidation – where liquidators commenced proceedings against former directors and certain companies within the corporate group – where liquidators brought an application for freezing orders and ancillary orders – whether there is a risk to the integrity of the prospective Court processes of execution and enforcement
PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – DETENTION, INSPECTION AND PRESERVATION – FREEZING ORDERS – where company in liquidation – where liquidators commenced proceedings against former directors and certain companies within the corporate group – where liquidators brought an application for freezing orders and ancillary orders – whether the interests of justice favours the granting of the orders sought
Uniform Civil Procedure Rules 1999 (Qld) Ch 8 Pt 2 Div 2,
r 260, r 260A, r 260B, r 260C, r 260D, r 260EArchitecture HQ Pty Ltd v Propertylinc Pty Ltd [2015] FCA 686, applied
BGC Contracting Pty Ltd v WA Construction Hire Pty Ltd [2010] WASC 25, applied
Candy v Holyoake [2016] EWHC 970 (Ch), cited
Candy v Holyoake [2017] EWCA Civ 92, not applied
Cardile v LED Builders Pty Ltd (1999) 198 CLR 380, applied
Consolidated Constructions Pty Ltd v Bellenville Pty Ltd [2002] FCA 1513, cited
Curtis v NID Pty Limited [2010] FCA 1072, applied
Dotcom v Twentieth Century Fox Film Corporation [2014] NZCA 509, applied
Fletcher v Fortress Credit Corporation (Australia) II Pty Ltd (2011) 82 ACSR 352, cited
Frigo v Culhaci [1998] NSWCA 88, cited
Glenwood Management Group Pty Ltd v Mayo [1991] 2 VR 49, cited
Hayden v Teplitzky (1997) 154 ALR 497, cited
Hua Wang Bank Berhad v Deputy Commissioner of Taxation [2010] FCAFC 140, cited
Lakatamia Shipping Co Ltd v Su [2014] EWCA Civ 636, cited
LPH Developments Pty Ltd v Jameson Moore Pty Ltd [No 3] [2017] WASC 284, cited
Newcastle City Council v Caverstock Group Pty Ltd [2008] NSWCA 249, applied
Ninemia Maritime Corporation v Trave GmbH & Co KG (the Niedersachsen) [1984] 1 All ER 398, applied
Northcorp Limited v Allman Properties (Australia) Pty Ltd [1994] 2 Qd R 405, followed
Patterson v BTR Engineering (Aust) Ltd (1989) 18 NSWLR 319, applied
Perdaman Chemicals & Fertilisers Pty Ltd v Griffin Coal Mining Co Pty Ltd [2011] WASC 188, applied
PT Bayan Resources TBK v BCBC Singapore Pte Ltd (2015) 258 CLR 1, applied
RHG Mortgage Corporation Ltd v Morgan Kelly [2016] WASC 169, cited
Samimi v Seyedabadi [2013] NSWCA 279, applied
SDW2 Pty Ltd v JLF Corporation Pty Ltd [2017] QSC 1, applied
Severstal Export GmbH v Bhushan Steel Ltd [2013] NSWCA 102, cited
Skyworks NSW Pty Ltd v 32 Drummoyne Pty Ltd [2017] NSWSC 343, applied
Taylor v Diamand & Zikos Developments Pty Ltd (1997) 6 NTLR 164, applied
Third Chandris Shipping Corporation v Unimarine SA [1979] QB 645, cited
Victoria University of Technology v Wilson [2003] VSC 299, cited
COUNSEL:
S Doyle QC (23 August 2017, 14-15 September 2017), T Sullivan QC (17-19 October 2017, 30 October 2017, 21 December 2017, 6 March 2018), with M Hickey and A Rae, for the first and second plaintiffs
D O’Sullivan QC, with T March, for the first defendant, second defendant, seventh defendant and fifteenth defendant
The fourth defendant appeared on his own behalf
K Barlow QC, with K Byrne, for the eighth to fourteenth defendants
SOLICITORS:
King & Wood Mallesons for the first and second plaintiffs
Alexander Law for the first defendant, second defendant, seventh defendant and fifteenth defendant
The fourth defendant appeared on his own behalf
Robinson Neilsen for the eighth to fourteenth defendants
Contents
INTRODUCTION
THE COURSE OF THE APPLICATION
THE CONSIDERATIONS WHICH INFORM THE EXERCISE OF THE JURISDICTION
The inherent jurisdiction
The juridical basis for the making of freezing orders
The strength of the case
The risk to the integrity of the prospective Court processes of execution and enforcement
The interests of justice
Summary of the matters to be proved to justify an exercise of the inherent jurisdiction to make a freezing order
Jurisdiction under the UCPR
Freezing orders under the UCPR
Ancillary orders under the UCPR
THE PROPER APPROACH TO THE EVALUATION OF THE EVIDENCE
DO THE PLAINTIFFS HAVE A GOOD ARGUABLE CASE?
Introduction
The Joint Venture Agreement
QNI Metals, QNI Resources and Queensland Nickel become part of the Palmer business empire
Mr Palmer’s actual influence over Queensland Nickel
Mr Palmer as a director of Queensland Nickel even when not formally appointed
The significance of the green notebook
The implications of the way Queensland Nickel actually conducted its operations
Queensland Nickel makes payments to Mr Palmer and/or his entities and associates
Queensland Nickel encounters cash flow problems
Unpaid liabilities of Queensland Nickel
Alleged voidable transactions entered into when administration was imminent
The Waratah Coal transaction
The China First transaction
Queensland Nickel is placed into administration and then liquidation
Evaluation of the strength of the voidable transactions case
Mr Palmer acts under the alleged voidable transactions.
The good arguable case against Mr Palmer
Breach of duty
Insolvent trading.
The good arguable case against the corporate defendants
DOES THE RELEVANT RISK EXIST?
The question should be answered in the affirmative
Some further issues
DO THE INTERESTS OF JUSTICE FAVOUR THE MAKING OF THE ORDERS SOUGHT?
Prejudice caused by failing to make orders which should have been made
The significance of delay
Whether an undertaking to ensure the due expedition of the proceeding is offered
The availability of alternative proceedings or remedies.
Impact on the defendants and on innocent third parties
Conclusion
OVERALL EVALUATION
THE APPROPRIATE ORDERS
ANNEXURE A – FORM OF ORDERS SOUGHT BY PLAINTIFFS
ANNEXURE B – ALTERNATIVE FORM OF ORDERS SOUGHT BY PLAINTIFFS
ANNEXURE C – FORM OF UNDERTAKINGS
Introduction
Queensland Nickel Pty Ltd (Queensland Nickel) managed a nickel mining and refining joint venture on behalf of QNI Resources Pty Ltd (QNI Resources) and QNI Metals Pty Ltd (QNI Metals). The relationship between the three companies was regulated by two important instruments, namely a joint venture agreement and an administration agreement.
The joint venture formed (and still forms) part of the business empire of Mr Clive Palmer. He is the ultimate beneficial owner of Queensland Nickel, QNI Resources and QNI Metals. Indeed, he is the ultimate beneficial owner of all of the corporations who are defendants in the present proceeding and who were respondents to the plaintiffs’ application.[1] Mr Palmer is alleged to have been a director of Queensland Nickel at all material times, including the times when he was not formally appointed as such.[2]
[1] Mr Palmer’s ownership of the corporate defendants whether directly or indirectly is 100% with two exceptions. First, he owns a little over 99% of the shares in the fourteenth defendant, Closeridge Pty Ltd. Second, as Closeridge is one of the shareholders of Mineralogy, Mr Palmer’s direct and indirect ownership of Mineralogy is slightly diluted, but still over 99%.
[2] ASIC records reveal he was appointed as a director of Queensland Nickel during the period 2009 to 2012 and for discrete periods in 2013, 2014, and 2015.
Queensland Nickel was placed into voluntary administration on 18 January 2016. On 22 April 2016, it became subject to a creditors’ voluntary winding up and its administrators were appointed as its liquidators. It is convenient to refer to them as the general purpose liquidators.
On 18 May 2016, the Federal Court appointed three additional liquidators to Queensland Nickel as special purpose liquidators to pursue particular claims specified in the order. One special purpose liquidator has since resigned. On 27 February 2017, the creditors’ voluntary winding up was converted into a winding up in insolvency.[3]
[3] On 27 February 2017, I made an order pursuant to s 459A of the Corporations Act 2001 (Cth), which had this effect.
On 30 June 2017, the present proceeding was commenced. The two remaining special purpose liquidators are the first plaintiffs in this proceeding.[4] Queensland Nickel is the second plaintiff. Since this proceeding was commenced, a consolidation order has been made which consolidated this proceeding with certain other related proceedings, with the result that the consolidated proceeding now includes the general purpose liquidators as the third plaintiffs. However, the general purpose liquidators were not party to the application with which these reasons deal. Accordingly when, in these reasons, I refer to “the plaintiffs”, I refer only to the special purpose liquidators and Queensland Nickel.
[4] The source of the first plaintiffs’ authority as liquidators of Queensland Nickel lies in the Federal Court order, but also in my order of 27 February 2017, which as well as converting the creditors’ winding up of Queensland Nickel into a winding up in insolvency, also confirmed the continuation of the existing regime of general purpose liquidators and special purpose liquidators as the liquidators in the winding up in insolvency.
The defendants to this proceeding include:
(a)Mr Palmer.
(b)One group of companies, of which Mr Palmer is both a director and the ultimate beneficial owner, namely:
(i) the first defendant, QNI Metals;
(ii) the second defendant, QNI Resources;
(iii) the third defendant, Queensland Nickel Sales Pty Ltd; and
(iv) the sixteenth defendant, China First Pty Ltd.
(c)A second group of companies, of which Mr Palmer is also both a director and the ultimate beneficial owner, namely:
(i) the seventh defendant, Mineralogy Pty Ltd;
(ii) the eighth defendant, Palmer Leisure Australia Pty Ltd;
(iii) the ninth defendant, Palmer Leisure Coolum Pty Ltd;
(iv) the tenth defendant, Fairway Coal Pty Ltd;
(v) the eleventh defendant, Cart Provider Pty Ltd;
(vi) the twelfth defendant, Coeur De Lion Investments Pty Ltd;
(vii) the thirteenth defendant, Coeur De Lion Holdings Pty Ltd;
(viii) the fourteenth defendant, Closeridge Pty Ltd; and
(ix) the fifteenth defendant, Waratah Coal Pty Ltd.
The plaintiffs and each of the two groups of companies have solicitors on the record and were separately represented before me by senior and junior counsel. Mr Palmer represented himself.
Although I will return to the detail of the allegations advanced in the plaintiffs’ statement of claim[5] later in this judgment, it suffices presently to note that, amongst other things, the proceeding will involve the resolution of:
(a)claims for indemnity for liabilities Queensland Nickel incurred in its capacity as trustee for or agent of the joint venturers while acting as the appointed general manager of the joint venture;
(b)debt claims and claims for moneys having received;
(c)insolvent trading claims and breach of duty claims against Queensland Nickel’s directors, including its alleged shadow director, Mr Palmer; and
(d)claims challenging the validity of certain security instruments entered into on the eve of the voluntary administration of Queensland Nickel.
[5] In accordance with my judgment in Re Queensland Nickel (in liq) [2017] QSC 258 the plaintiffs have delivered a consolidated statement of claim which encompasses allegations advanced in four separate proceedings, but for present purposes (and because it is consistent with the position which obtained when most of the argument was advanced in relation to the present application) it is sufficient to refer to the statement of claim which existed prior to the consolidated version was filed.
I have before me an application by the plaintiffs for freezing orders and ancillary orders against Mr Palmer and certain of the corporate defendants I have identified above. The plaintiffs contend that there is a risk (indeed a likelihood) that the defendants’ assets will be dealt with in such a way that a prospective judgment in the plaintiffs’ favour will be wholly or partially unsatisfied.
The orders ultimately sought by the plaintiffs fall into essentially two alternatives. First, the form of order which represents their primary case, namely an order which contains freezing orders and ancillary orders. That form of order is annexure A to these reasons.[6] Second, the form of order which represents their alternative case, which they would advance in the event that I was not persuaded to make freezing orders. That form of order would not freeze assets but would require parties subject to it to notify the plaintiffs before undertaking transactions of a particular character. That form of order is annexure B to these reasons.
[6] The form of order identifies amounts which are slightly less than the amounts which the evidence before me supports. That is because the amounts claimed in the consolidated statement of claim are less than the amounts which were sought when the application was argued. The reasons for the slight reductions were unexplained.
The course of the application
The application before me was advanced by hearings which took place as follows:
(a)23 August 2017: This was an application for an interim freezing order. It was resolved by my order of 23 August 2017. Upon –
(i) undertakings being given by some of the defendants; and
(ii) the usual undertaking as to damages being given by the special purpose liquidators and the Commonwealth of Australia,
the oral application was dismissed and a timetable was set for evidence and further submissions.
(b)14 and 15 September 2017: These were the first two days of hearing of the plaintiffs’ application for interlocutory freezing orders. After brief argument I rejected an application for an interim freezing order, and, upon similar undertakings as those given on 23 August 2017, the application was adjourned to 17 and 18 October 2017.
(c)17, 18 and 19 October 2017: These were the next three days of the hearing of the plaintiffs’ application for interlocutory freezing orders. On 17 October 2017, Mr Palmer advanced a recusal application in relation to my continued involvement in the application. He also advanced an application for adjournment. I refused both applications: see Parbery v QNI Metals Pty Ltd [2017] QSC 231. The hearing proceeded but was not finalized, and, on 19 October 2017, the application was adjourned until 30 October 2017.
(d)30 October 2017: This was the (then) final day of the hearing of the plaintiffs’ application for interlocutory freezing orders. Again, upon similar undertakings to those previously given, the plaintiffs’ application was adjourned to a date to be fixed for the delivery of judgment. The undertakings so given are set out in annexure C to these reasons.
The fact that the application took place over the range of dates identified in the previous paragraph was a function of the availability of the court and of the parties and the need to permit the parties to examine and respond to the extent of the material which had been filed.
The next steps were
(a)on 21 December 2017, by consent –
(i) I gave Mr Palmer, QNI Metals, QNI Resources and Mineralogy leave to re-open their case to adduce evidence of the successful outcome on 24 November 2017 of certain litigation in the Supreme Court of Western Australia and to adduce other evidence and permitted reliance on further submissions addressing that material; and
(ii) I permitted the plaintiffs to file and serve written submissions on the question whether a notification injunction order should be made in the alternative to the order which had been formulated thus far; set a timetable for further submissions addressing that question; and listed 6 March 2018 as the day for receiving submissions on that question.
(b)6 March 2018: This was the final day of the hearing of the plaintiffs’ application for interlocutory freezing orders. By that time, the form of undertaking offered by the Commonwealth had slightly changed as set out in a document filed on 2 March 2018. The undertakings offered are set out in annexure C to these reasons.
The material before me is voluminous. Indeed, even by the day of the application for an interim freezing order, I had received over 7,000 pages of evidentiary material. So extensive was the material that, at the outset, I advised the parties that if they wanted me to take particular evidence into account they would need to take me to it specifically during argument or have it specifically footnoted in their written submissions. The extent of the material did not improve after the first day. By 6 March 2018, I had received over 13,000 pages of evidentiary material from the parties. There was no index to that material.
The considerations which inform the exercise of the jurisdiction
I am invited to make the orders sought in exercise of the Court’s powers pursuant to Chapter 8, Part 2, Division 2 of the Uniform Civil Procedure Rules 1999 (Qld) (UCPR) or pursuant to the Court’s inherent jurisdiction. I will consider the latter first.
The inherent jurisdiction
The juridical basis for the making of freezing orders
The Supreme Court has an inherent power to make orders to protect the integrity of its processes once they have been set in motion.[7] The power is to be exercised when necessary for the protection of those processes.[8] Keane and Nettle JJ put it this way in PT Bayan Resources TBK v BCBC Singapore Pte Ltd:[9]
When it is demonstrated to a superior court that there is a likelihood that its processes will be abused or frustrated, it is within the court’s power to make orders considered to be appropriate to prevent that from occurring.
[7] Cardile v LED Builders Pty Ltd (1999) 198 CLR 380 per Gaudron, McHugh, Gummow and Callinan JJ at [25].
[8] cf CSR Ltd v Cigna Insurance Ltd (1997) 189 CLR 345 per Dawson, Toohey, Gaudron, McHugh, Gummow and Kirby JJ at 392.
[9] (2015) 258 CLR 1 at [64].
The Court may mould orders to protect the integrity of its processes according to the exigencies of the case and, because the schemes which a debtor subject to the Court’s processes might devise to frustrate their effective operation are legion, novelty of form is no objection to the validity of the order.[10]
[10] This is a slight modification (so as to elevate the generality) of the famous observation by Brennan J in Jackson v Sterling Industries Ltd (1987) 162 CLR 612 at 621 that “A judicial power to make an interlocutory order in the nature of a Mareva injunction may be exercised according to the exigencies of the case and, the schemes which a debtor may devise for divesting himself of assets being legion, novelty of form is no objection to the validity of such an order.”, cited with approval in Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia (1998) 195 CLR 1 per Brennan CJ, McHugh, Gummow, Kirby and Hayne JJ at [35] and Cardile v LED Builders Pty Ltd per Gaudron, McHugh, Gummow and Callinan JJ at [41] – [42].
The inherent power to protect the integrity of court processes is regarded as providing the juridical foundation for a particular type of order, the form of which is no longer novel,[11] namely a freezing order. Typically, such an order “has the effect, subject to exceptions, of freezing the assets of a defendant or proposed defendant to ensure that a judgment of the court that a plaintiff might obtain will not be frustrated”.[12] Such orders were previously known as Mareva orders or injunctions,[13] but, for the most part, I will use the current terminology. The inherent jurisdiction would undoubtedly also permit the making of ancillary orders, similar to those which are so defined under the UCPR.[14]
[11] Cardile v LED Builders Pty Ltd per Gaudron, McHugh, Gummow and Callinan JJ at [25], [40]; PT Bayan Resources TBK v BCBC Singapore Pte Ltd per French CJ, Kiefel, Bell, Gageler and Gordon JJ at [43] and per Keane and Nettle JJ at [64] – [65].
[12] Supabarn Supermarkets Pty Ltd v Cotrell Pty Ltd [2016] ACTSC 49 per Refshauge J at [12].
[13] after Mareva Compania Naviera SA v International Bulkcarriers SA [1980] 1 All ER 213. Note also that in Cardile v LED Builders Pty Ltd per Gaudron, McHugh, Gummow and Callinan JJ at [25], the High Court explained that the term “injunction” is an inappropriate identification of the area of legal discourse within which the Mareva order is to be placed and that the term “Mareva order” was more appropriate.
[14] As to this see [64]-[69] below.
Freezing orders are regarded as the paradigm example of orders formulated to protect the integrity of court process,[15] that protection being regarded as extending to preserving the efficacy of the execution which would lie against an actual or prospective judgment debtor.[16] In a real sense, the purpose of granting such relief is to facilitate (or more properly to protect) the prospective Court processes of execution and enforcement.[17]
[15] cf Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia per Brennan CJ, McHugh, Gummow, Kirby and Hayne JJ at [35], cited with approval in Cardile v LED Builders Pty Ltd per Gaudron, McHugh, Gummow and Callinan JJ at [41] – [42] and also in PT Bayan Resources TBK v BCBC Singapore Pte Ltd per French CJ, Kiefel, Bell, Gageler and Gordon JJ at [43].
[16] Cardile v LED Builders Pty Ltd per Gaudron, McHugh, Gummow and Callinan JJ at [25].
[17] PT Bayan Resources TBK v BCBC Singapore Pte Ltd per French CJ, Kiefel, Bell, Gageler and Gordon JJ at [46] and per Keane and Nettle JJ [66] – [67], restating the High Court’s approval of observations made by Lord Nicholls of Birkenhead in Mercedes Benz AG v Leiduck [1996] AC 284 at 306.
In PT Bayan Resources TBK v BCBC Singapore Pte Ltd[18] Keane and Nettle JJ observed,
The power to make a freezing order is one which is to be exercised judicially, having regard to the considerations which inform the exercise of the power.
[18] (2015) 258 CLR 1 per Keane and Nettle JJ at [77].
Three broad considerations inform the judicial exercise of the inherent jurisdiction to make an order protective of the prospective Court processes of execution and enforcement. I will address them under separate headings below.
The strength of the case
The first relevant consideration is whether the plaintiff’s underlying cause of action has the requisite strength.
McMurdo J observed in Fletcher v Fortress Credit Corporation (Australia) II Pty Ltd (2011) 82 ACSR 352, the requisite strength of the cause of action relied upon for a freezing order has been described variously in the authorities as either –
(a)the need for a “prima facie case”; or
(b)the need for a “good arguable case”.
His Honour also observed that although the latter phrase is also used in UCPR r 260D, its use in the Mareva injunction authorities pre-dates the rule. For example, in Ninemia Maritime Corporation v Trave GmbH & Co KG (the Niedersachsen) [1984] 1 All ER 398 where Mustill J said (at 404, emphasis added):
In these circumstances, I consider that the right course is to adopt the test of a 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.
In Samimi v Seyedabadi [2013] NSWCA 279, McColl JA observed at [68] that “established principles developed in relation to Mareva injunctions require that the applicant for such an order, at least at first instance, demonstrate a good arguable case on a justiciable cause of action”. Her Honour also referred with approval[19] to the observation by Mustill J in Ninemia that “the court should not be drawn into a premature trial of the action, rather than a preliminary appraisal of the plaintiff’s case”.[20]
[19] Samimi v Seyedabadi at [69].
[20] [1984] 1 All ER 398 at 404.
The Ninemia test is the test which should be applied. It has been said that the threshold set by the Ninemia is a “very low one”: see Curtis v NID Pty Limited [2010] FCA 1072 per Edmonds J at [6].[21]
[21] His Honour’s description has been referred to with approval multiple times: see SBA Music Pty Ltd v Hall [2014] FCA 1038 per Wigney J at [14]; Brentwood Village Ltd (in liq) v Terrigal Grosvenor Lodge Pty Ltd [2014] FCA 1203 per Gleeson J at [24]; Platinum Mortgage Securities (Vic) Limited [2015] FCA 633 per Flick J at [7]; Brentwood Village Ltd (in liq) v Terrigal Grosvenor Lodge Pty Ltd (No 2) [2015] FCA 944 per Gleeson J at [56]; Australian Competition and Consumer Commission v Unique International College Pty Ltd (No 4) [2016] FCA 628 per Flick J at [14]; Australian Competition and Consumer Commission v Get Qualified Australia Pty Ltd (2016) 244 FCR 538 per Beach J at [33]; RRG Nominees Pty Ltd v Visible Temporary Fencing Australia Pty Ltd [2017] FCA 1352 per White J at [6].
The risk to the integrity of the prospective Court processes of execution and enforcement
The second relevant consideration is whether the relevant risk to the integrity of the Court’s processes exists.
The particular type of risk to the integrity of the Court’s processes with which freezing orders are concerned is the risk posed to the prospective Court processes of execution and enforcement in respect of any judgment in the plaintiff’s favour.
Accordingly, what is generally at issue is whether there is a danger that steps might be taken with the result that the Court’s execution and enforcement process would be frustrated, in the sense that any judgment of the court will be wholly or partly unsatisfied. In Patterson v BTR Engineering (Aust) Ltd (1989) 18 NSWLR 319, Gleeson CJ (with whom Meagher JA and Rogers A-JA broadly agreed) said as follows (at 321–322, emphasis added):
[A] plaintiff will need to establish … a danger that, by reason of the defendant’s absconding, or of assets being removed from the jurisdiction or disposed of within the jurisdiction or otherwise dealt with in some fashion, the plaintiff, if he succeeds, will not be able to have his judgment satisfied.
The latter observation (namely “or otherwise dealt with in some fashion”) is significant. The exercise of the jurisdiction is not limited to the simplistic case in which evidence suggests there is a risk of a defendant absconding or taking assets offshore.
It is not necessary for a plaintiff to establish on the balance of probabilities that the risk will actually come to pass. In Patterson v BRT Engineering, Gleeson CJ observed (at 325) that “[i]t is not difficult to imagine situations in which justice and equity would require the granting of an injunction to prevent dissipation of assets pending the hearing of an action even though the risk of such dissipation may be assessed as being somewhat less probable than not”. In the same case, Meagher JA observed (at 327, emphasis added):
What degree of proof is, then, required? Different judges have decided it in different ways. Without wishing to drown in a sea of semantics, I should have thought that the plaintiff is required to prove, on a balance of probabilities, that there is a real risk of the dissipation of assets.
The defendants submitted that “real risk of dissipation” was an insufficient description of the required degree of proof. They invited me to follow Candy v Holyoake [2017] EWCA Civ 92 per Gloster LJ (with whom Jackson LJ agreed) at [34], to conclude that, in every case (emphasis added):
There must be a real risk, judged objectively, that a future judgment would not be met because of an unjustifiable dissipation of assets. But it is not every risk of a judgment being satisfied which can justify freezing order relief. Solid evidence will be required to support a conclusion that relief is justified...
I decline to take that course.
Expressing the matter in a way which required the plaintiff to establish a risk of an “unjustifiable” dealing with assets would invite an enquiry into the defendant’s purpose or motivation in embarking on an actual or apprehended dealing with assets, with a view to establishing a purpose that can be impugned as “unjustifiable”. The weight of authority in Australia (including authority binding on me[22]) supports the view that a plaintiff seeking a freezing order does not have to show that the purpose of the defendant’s conduct, occurring or apprehended, is to prevent recovery of the amount of any judgment which might be obtained in the plaintiff’s action. Rather, it will suffice if the plaintiff can demonstrate that that would be the effect of the conduct: see Glenwood Management Group Pty Ltd v Mayo [1991] 2 VR 49 per Young CJ at 53; Northcorp Limited v Allman Properties (Australia) Pty Ltd [1994] 2 Qd R 405 per Pincus JA, Ambrose and White JJ at 407; Hayden v Teplitzky (1997) 154 ALR 497 per Lindgren J at 505-507; Consolidated Constructions Pty Ltd v Bellenville Pty Ltd [2002] FCA 1513 per Carr J at [17]-[26]; Victoria University of Technology v Wilson [2003] VSC 299 per Redlich J at [24]; BGC Contracting Pty Ltd v WA Construction Hire Pty Ltd [2010] WASC 25 per Le Miere J at [11]-[14]; Perdaman Chemicals & Fertilisers Pty Ltd v Griffin Coal Mining Co Pty Ltd [2011] WASC 188 per Beech J at [135].
[22] See Northcorp Limited v Allman Properties (Australia) Pty Ltd [1994] 2 Qd R 405. The binding status of Northcorp was recognized in Fletcher v Fortress Credit Corporation (Australia) II Pty Limited per McMurdo J at [28].
It is appropriate to make some (non-exhaustive) observations as to the way in which a plaintiff may go about demonstrating the existence of the relevant risk.
First, although it is not essential to prove that a defendant’s purpose or intention is to frustrate any potential judgment against the defendant, that is not to say that the question of purpose or intention is irrelevant. If a plaintiff adduced evidence which shed light on the likely actual intentions of a defendant, that evidence might well prove to be extremely relevant. In his text Freezing and Search Orders,[23] Biscoe observes (at [6.19]):
However, if there is evidence of a positive intention to frustrate a judgment, that should almost certainly lead the court to exercise its discretion to grant a freezing order. Thus the respondent’s own boasts were held sufficient evidence of the necessary danger in A/S D/S Svendborg v Wansa [1997] 2 Lloyd’s Rep 183 at 188-9; and in Ausbro Forex Pty Ltd v Mare (1986) 4 NSWLR 419 evidence of a threat by the defendant to close up his companies and take his money and himself overseas led Young J to grant a Mareva order.
[23] Peter Biscoe, Freezing and Search Orders (LexisNexis Butterworths, 2nd Ed, 2008).
Second, mere assertion of the existence of the risk is not sufficient: Frigo v Culhaci [1998] NSWCA 88 per Mason P, Sheller JA and Sheppard AJA at 8 and Severstal Export GmbH v Bhushan Steel Ltd [2013] NSWCA 102 per Bathurst CJ (with whom Beazley P and Barrett JA agreed) at [57]. There must be solid evidence which justifies the conclusion: see Ninemia per Mustill J at 406, and LPH Developments Pty Ltd v Jameson Moore Pty Ltd [No 3] [2017] WASC 284 per Banks-Smith J at [30].
Third, the evidence which establishes the underlying strength of the plaintiff’s case may have a bearing on the assessment of the risk which exists to the integrity of the Court processes. Where the underlying case involves allegations of serious dishonesty, they may be relied on in considering the second element: cf Patterson v BRT Engineering per Gleeson CJ at 325. However there is no reason in principle to confine this proposition to cases of serious dishonesty: see RHG Mortgage Corporation Ltd v Morgan Kelly [2016] WASC 169 per Pritchard J at [38].
Finally, the conclusion that there is a real risk of steps being taken which would have the effect of frustrating the prospective Court processes of execution and enforcement in respect of any judgment in the plaintiff’s favour is often, perhaps even usually,[24] a matter of inference rather than direct proof. If so, there must be facts from which a prudent, sensible commercial person could properly infer the existence of the relevant risk of frustration: see Third Chandris Shipping Corporation v Unimarine SA [1979] QB 645 per Lawton LJ at 671, referred to with approval in Hua Wang Bank Berhad v Deputy Commissioner of Taxation [2010] FCAFC 140 per Lander, Middleton and Nicholas JJ at [21]-[23] and in Severstal Export GmbH v Bhushan Steel Ltd [2013] NSWCA 102 per Bathurst CJ (with whom Beazley P and Barrett JA agreed) at [59].
[24] Supabarn Supermarkets Pty Ltd v Cotrell Pty Ltd per Refshauge J at [58].
The interests of justice
The final relevant consideration is whether it is in the interests of justice that the power be exercised.
The first matter which must be emphasised in any discussion of the interests of justice in this area of discourse is that the onus of proof is on the party seeking the order and, importantly, high authority establishes that the jurisdiction to make freezing orders is one which must be exercised with a high degree of caution and with proper consideration for the nature of the impact on the persons affected. The leading authority in this regard is the High Court decision of Cardile v LED Builders Pty Ltd, in which the judgment of the plurality stated (emphasis added):[25]
… It has been truly said that a Mareva order does not deprive the party subject to its restraint either of title to or possession of the assets to which the order extends. Nor does the order improve the position of claimants in an insolvency of the judgment debtor. It operates in personam and not as an attachment. Nevertheless, those statements should not obscure the reality that the granting of a Mareva order is bound to have a significant impact on the property of the person against whom it is made: in a practical sense it operates as a very tight “negative pledge” species of security over property, to which the contempt sanction is attached. It requires a high degree of caution on the part of a court invited to make an order of that kind. An order lightly or wrongly granted may have a capacity to impair or restrict commerce just as much as one appropriately granted may facilitate and ensure its due conduct.
We agree with the tenor of what was said with particular respect to Mareva relief before judgment by the Court of Appeal of New South Wales (Mason P, Sheller JA, Sheppard A-JA) in Frigo v Culhaci:
“[A Mareva order] is a drastic remedy which should not be granted lightly....
A [Mareva order] is an interlocutory order which, if granted, imposes a severe restriction upon a defendant’s right to deal with his or her assets. It is granted at the suit of a plaintiff whose status as a creditor is in dispute and who need not be a secured creditor. Its purpose is to preserve the status quo, not to change it in favour of the plaintiff. The function of the order is not to ‘provide a plaintiff with security in advance for a judgment that he hopes to obtain and that he fears might not be satisfied; nor is it to improve the position of the plaintiff in the event of the defendant's insolvency’ ... Many authorities attest to the care with which courts are required to scrutinise applications for [Mareva orders]…”
[25] (1999) 198 CLR 380 per Gaudron, McHugh, Gummow and Callinan JJ at [50]-[51], citations omitted.
There are other reasons for caution. First, there may be difficulties associated with the quantification and recovery of damages pursuant to the usual undertaking as to damages if it should turn out that the order should not have been granted.[26] Second, difficulties arise in relation to the identification of the events which will trigger the dissolution of the order or the entitlement to damages.[27]
[26] Cardile v LED Builders Pty Ltd per Gaudron, McHugh, Gummow and Callinan JJ at [52].
[27] Cardile v LED Builders Pty Ltd per Gaudron, McHugh, Gummow and Callinan JJ at [52].
Discretionary considerations must be carefully weighed before an order is made.[28] Such considerations may include:
(a)the degree of expedition with which the plaintiffs have proceeded;
(b)whether an undertaking to ensure the due expedition of the proceeding is offered;
(c)the availability of alternative proceedings or remedies;
(d)the potential damaging effect which the order might have on the defendant’s reputation or business; and
(e)the effect of the proposed orders on innocent third parties.
[28] Cardile v LED Builders Pty Ltd per Gaudron, McHugh, Gummow and Callinan JJ at [53].
It may also be noted that, whilst the strength of a plaintiff’s underlying case may ultimately be fully litigated at a trial, the question of whether there ever actually was a danger to the Court’s processes as contended may only ever get explored in the context of the interlocutory application, with all of the disadvantages which that entails.[29]
Summary of the matters to be proved to justify an exercise of the inherent jurisdiction to make a freezing order
[29] see further my discussion as to the way in which I will approach the question of the evaluation of evidence for the purpose of this application at [71]-[75] below.
There are three broad considerations which inform the exercise of the inherent jurisdiction to make a freezing order. The same considerations would necessarily inform the exercise of the inherent jurisdiction to make an ancillary order.
First, whether the plaintiff has a 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 Court believes to have a better than 50% chance of success.
Second, whether there is a real risk of steps being taken which would have the effect of frustrating the prospective Court processes of execution and enforcement in respect of any judgment in the plaintiff’s favour.
Third, whether it is in the interests of justice that the power be exercised, in particular bearing in mind that the jurisdiction must be exercised with a high degree of caution and with proper consideration for the nature of the impact on the persons affected.
It should be emphasised that the judicial exercise of the inherent jurisdiction to make freezing or ancillary orders does not involve merely a mechanical exercise of sequentially inquiring whether the plaintiffs have established each of the three matters which I have identified. The strength of the plaintiffs’ case, the danger of frustration of a prospective judgment, the interests of justice and any other relevant discretionary factors are all considered together in the exercise of the discretion: see Perdaman Chemicals & Fertilisers Pty Ltd v Griffin Coal Mining Co Pty Ltd [2011] WASC 188 per Beech J at [142] (citing Perth Mint v Mickelberg (No 2) [1985] WAR 117 per Burt CJ at 119; Glenwood Management Group Pty Ltd v Mayo [1991] 2 VR 49 per Young CJ at 54-55) and see also RHG Mortgage Corporation Ltd v Morgan Kelly [2016] WASC 169 per Pritchard J at [24].
Jurisdiction under the UCPR
In 2004, the Council of Chief Justices of Australia and New Zealand appointed a committee of judges representing the Federal Court of Australia, all State Supreme Courts and the Family Court of Australia to investigate and, if thought fit, make recommendations for the harmonization of court rules, practice notes and precedents relating to Mareva orders and Anton Piller orders.
The fruits of the committee’s work included harmonized rules, harmonized practice directions and model orders which were adopted in almost identical form in the various States and Territories and in New Zealand. In Queensland, the provisions of Chapter 8 Part 2 Division 2 of the UCPR were inserted in 2007.[30]
[30] Uniform Civil Procedure Amendment Rule (No 1) 2007 (Qld) s 9.
Notably, the continued undiminished existence of the Court’s inherent jurisdiction to make freezing or ancillary orders is acknowledged by r 260E.
The relevant[31] provisions of the Uniform Civil Procedure Rules are these:
[31] I have omitted from the quote of r 260D the provisions which deal with judgment debtors.
260 Definitions for div 2
In this division—
ancillary order has the meaning given by rule 260B.
another court means a court outside Australia or a court in Australia other than the court.
applicant means a person who applies for a freezing order or an ancillary order.
freezing order has the meaning given by rule 260A.
judgment includes an order.
respondent means a person against whom a freezing order or an ancillary order is sought or made.
260A Freezing order
(1) The court may make an order (a freezing order) for the purpose of preventing the frustration or inhibition of the court’s process by seeking to meet a danger that a judgment or prospective judgment of the court will be wholly or partly unsatisfied.
(2) A freezing order may be an order restraining a respondent from removing any assets located in or outside Australia or from disposing of, dealing with, or diminishing the value of, those assets.
260B Ancillary order
(1) The court may make any order (an ancillary order) ancillary to a freezing order or prospective freezing order it considers appropriate.
(2) Without limiting subrule (1), an ancillary order may be made for either or both of the following purposes—
(a)obtaining information about assets relevant to the freezing order or prospective freezing order;
(b) deciding whether the freezing order should be made.
260C Respondent need not be party to proceeding
A freezing order or an ancillary order may be granted whether or not the respondent is a party to an existing proceeding.
260D Order against … or prospective judgment debtor or third party
(1) ….
(2) This rule also applies if an applicant has a good arguable case on an accrued or prospective cause of action that is justiciable in—
(a) the court; or
(b) …
(i)…; and
(ii) ….
(3) The court may make a freezing order or an ancillary order or both against a … prospective judgment debtor if the court is satisfied, having regard to all the circumstances, that there is a danger that a … prospective judgment will be wholly or partly unsatisfied because—
(a) the … prospective judgment debtor or another person might abscond; or
(b) the assets of the … prospective judgment debtor or another person might be—
(i) removed from Australia or from a place inside or outside Australia; or
(ii) disposed of, dealt with or diminished in value.
(4) The court may make a freezing order or an ancillary order or both against … a third party if the court is satisfied, having regard to all the circumstances, that—
(a) there is a danger that a … prospective judgment will be wholly or partly unsatisfied because—
(i) the third party holds or is using, or has exercised or is exercising, a power of disposition over assets (including claims and expectancies) of the … prospective judgment debtor; or
(ii) the third party is in possession of, or in a position of control or influence concerning, assets (including claims and expectancies) of the … prospective judgment debtor; or
(b) a process in the court is or may ultimately be available to the applicant as a result of a judgment or prospective judgment, under which process the third party may be obliged to disgorge assets or contribute toward satisfying the judgment or prospective judgment.
(5) This rule does not affect the power of the court to make a freezing order or ancillary order if the court considers it is in the interests of justice to do so.
260E Jurisdiction
This division does not diminish the inherent, implied or statutory jurisdiction of the court to make a freezing order or ancillary order.
Freezing orders under the UCPR
Rule 260A confers on the Court a wide jurisdiction to make freezing orders. A freezing order is an order made for the purpose of preventing the frustration or inhibition of the court’s process by seeking to meet a danger that a judgment or prospective judgment of the court will be wholly or partly unsatisfied.
The type of order which can be made pursuant to r 260A is not specified. The order is called a freezing order, but the definition of that term is circular. Obviously orders of the nature of those which have been made in the exercise of the inherent jurisdiction may be made and such orders appear in the pro-forma freezing order which is an appendix to Practice Direction 1 of 2007. But the wording of the rule admits of no particular limit other than the order be an appropriate response to the specified purpose. I could see no reason, for example, why it would not admit of making an order in “notification injunction” form, for example:
(a)the injunction considered in Candy v Holyoake [2017] EWCA Civ 92 in which the restraint was “from disposing, dealing or otherwise engaging in transactions with their assets in the sum of or to the value of more than £1m without first giving the Claimants’ solicitors 7 days advance notice in writing”;[32] or
(b)the more specific orders considered in Lakatamia Shipping Co Ltd v Su [2014] EWCA Civ 636 in which the restraint was that a particular nominated asset “may not be disposed of, charged or otherwise dealt with by [the respondent] without 14 days’ notice being given to the solicitors for the claimant”.
[32] Candy v Holyoake [2016] EWHC 970 (Ch) at [1].
Rule 260A does not specify any particular matters of which the Court must be satisfied before exercising the jurisdiction. However, it is implicit in the text of r 260A that the Court would have to be satisfied that it was appropriate that the order be made for the purpose specified in r 260A(1). And it is implicit in the nature of the jurisdiction itself that the power be exercised only if the Court considers it is in the interests of justice to do so.
Some judges have expressed the view that the considerations identified in r 260D are the considerations of which the Court must be satisfied before exercising the jurisdiction conferred on rr 260A and 260B.[33] The issue may not have any practical operation in most cases, however for these three reasons, I do not think that it is appropriate to construe the link with r 260D as anything more than illustrative:
(a)The terms of r 260A, r 260B and r 260D do not set out that link. To the contrary, each reads as a separate grant of power.
(b)The terms of r 260D(5) are antithetical to the notion that r 260D would, by force of its terms, constrain (or even define) the power granted by rr 260A or 260B.
(c)The jurisdiction to make ancillary orders granted by r 260B includes the standalone jurisdiction of making an order ancillary to a prospective freezing order and, quite apart from the terms of r 260D(5), it would not make sense to require an applicant for such an order to prove the same things as would need to be established for an actual freezing order. I will return to the question of this particular jurisdiction.
[33] See, for example, Deputy Commissioner of Taxation v Gashi (2010) 27 VR 127 per Bell J at [61]; Creswick v Creswick [2012] QSC 174 per Martin J at [7].
What then are the matters of which, on the proper construction of r 260A, a Court must be satisfied before exercising the jurisdiction conferred by r 260A?
I think two points can be made.
First, a narrow or technical approach to r 260A is not appropriate. In Newcastle City Council v Caverstock Group Pty Ltd [2008] NSWCA 249 per Spigelman CJ (with whom Bell JA and Handley AJA agreed) at [43], in a passage also cited with approval by McColl JA in Samimi v Seyedabadi at [61]:
The [NSW rule which was the equivalent of r 260A] is a formulation of the Mareva injunction jurisprudence, which is a comparatively recent development of the common law, based upon the power of a court to prevent the frustration of its process and to ensure that its judgments are not without value. I accept that a narrow or technical approach to such a power is not appropriate.
Second, it would be wrong to regard the jurisdiction to be completely unfettered. The language of the rule suggests at least the two considerations mentioned at [56] above, namely the Court would have to be satisfied that (1) it was appropriate that the order be made for the purpose specified in r 260A(1); and (2) it was in the interests of justice to make the order. Further, since the Mareva jurisprudence is the context within which r 260A (and the other provisions in the Chapter 8, Part 2, Division 2 of the UCPR) was formulated, then it must be appropriate to have regard to that jurisprudence. The language of the rule certainly permits of that approach. Accordingly, notwithstanding the fact that r 260A does not specify any particular matters of which the Court must be satisfied before exercising the jurisdiction, it is appropriate to conclude that the Court ought to have regard to the three considerations which are relevant to the exercise of the inherent jurisdiction to make such orders.[34]
[34] see [16]-[49] above.
The result is that I think that there is one overall question governing the exercise of power under r 260A, namely is a freezing order necessary for the purpose of preventing frustration or inhibition of the Court’s process by seeking to meet a danger that a judgment or prospective judgment of the Court will be wholly or partly unsatisfied. In seeking to answer that question the Court should address the three considerations which have been identified as relevant to the grant of freezing orders in the exercise of the inherent jurisdiction. I should also remark that r 260A is not worded in a way which would suggest any departure from the inherent jurisdiction’s focus on the effect rather than the purpose of the defendant's conduct, occurring or apprehended.
What then of r 260D? I make the following observations:
(a)Rule 260D confers on the Court a power to make freezing orders and ancillary orders which is specifically constrained.
(b)Putting to one side orders sought in aid of judgments from other courts, or against third parties, the constraints are (1) the applicant has the good arguable case referred to in
r 260D(2), and (2) the court is satisfied, having regard to all the circumstances, of the matters referred to in r 260D(3). Those matters cover the same ground as the first two considerations which are relevant in the exercise of the inherent jurisdiction. No mention is made of the third (interests of justice) consideration, but it could hardly be thought that the discretion conferred by the rule was intended to be exercised without having regard to that subject matter.(c)It is notable that r 260D(3)(b) is also not worded in a way which would suggest any departure from the inherent jurisdiction’s focus on the effect rather than the purpose of the defendant's conduct, occurring or apprehended.
Ancillary orders under the UCPR
Rule 260B confers on the Court a wide jurisdiction to make ancillary orders.
It is appropriate to consider what is meant by “ancillary” in the context of the phrase “order ancillary to a freezing order or prospective freezing order”. I make the following observations:
(a)The word is used in an adjectival sense.
(b)The Macquarie Dictionary definition defines the word, relevantly as “accessory; auxiliary”, with “auxiliary” being defined as “giving support; helping; aiding; assisting”.
(c)The Oxford English Dictionary defines the word, relevantly, as “subservient, subordinate, ministering (to).”
(d)I think the Macquarie Dictionary definition is more apposite. The result is that an order which is ancillary to a freezing order or a prospective freezing order is an order which gives support, helps, aids or assists a freezing order or a prospective freezing order.
The jurisdiction to make an order which is ancillary to a freezing order is easy to understand. The cases are replete with examples of orders which would be so regarded. Biscoe cites the following:[35]
[35] Peter Biscoe, Freezing and Search Orders (LexisNexis Butterworths, 2nd Ed, 2008) at 78.
(a)a disclosure of assets order;
(b)an order for the cross-examination of a respondent about asset disclosure;
(c)an order requiring the delivery up of specified assets;
(d)an order that a respondent direct its bank to disclose information;
(e)an order that a respondent pay money into court or a designated account;
(f)an order restraining a respondent from leaving the jurisdiction;
(g)an order appointing a receiver to the respondent’s assets;
(h)an order for the transfer of assets from one foreign jurisdiction to another;
(i)a freestanding disclosure order along the lines of that mentioned in Norwich Pharmacal Co v Customs & Excise Commissioners [1974] AC 133;
(j)a search order.
The jurisdiction to make an order ancillary to a “prospective” freezing order does not appear to have a clear analogue within the cases in which orders have been made in exercise of the inherent jurisdiction.
It is appropriate to consider what is meant by a “prospective” freezing order. I make the following observations:
(a)The word is used in an adjectival sense.
(b)The Macquarie Dictionary defines the term, relevantly as “1. of or in the future. 2. potential; likely; expected”.
(c)The Oxford English Dictionary defines:
(i) the term “prospective” as, relevantly –
“5. Expected or expecting to be (the object or thing specified) in the future; that is in prospect; proposed, likely, potential. (Now the usual sense.)”.
(ii) something as being “in prospect”, when it is “within the bounds of expectation; expected, or to be expected; within view”.
(d)Having regard to these definitions, I think the reference to prospective freezing order, should be taken to be a reference to a freezing order which is “in prospect”, in the sense that it is within the bounds of expectation that it will be made in the future. In other words the jurisdiction to make an “order ancillary to a … prospective freezing order” will exist when it is within the bounds of reasonable expectation[36] that a freezing order will be made in the future. This suggests the need for at least some examination of the prospects of a freezing order being made in the future.
[36] I have said “reasonable expectation” because it could hardly have been intended that it be within the bounds of unreasonable expectation.
I note that r 260B does not specify any particular matters of which the Court must be satisfied before exercising the power to make orders ancillary to a prospective freezing order. However, it is implicit in the text of r 260B that the Court would have to be satisfied that it was “appropriate” that the order be made. Obviously enough, an applicant would not have to prove that a freezing order would inevitably be granted on the future occasion, but the language suggests a broad discretion to be exercised judicially and to which many considerations might be relevant, including those which are regarded to be relevant in relation to the exercise of the inherent jurisdiction, namely the existence of a good arguable case, evidence of the relevant risk, and the interests of justice.
There is not a great deal of authority touching upon applications for orders on the basis that they are ancillary to a prospective freezing order. However, such authority as there is supports the view which I have expressed that there must be some examination at the time the ancillary order is sought of the sufficiency of the prospects that a freezing order will be made in the future. Thus:
(a)In Perdaman Chemicals and Fertilisers Pty Ltd v the Griffin Coal Mining Company Pty Ltd [2011] WASC 188, Beech J wrote (emphasis added):
[151] The order sought by Perdaman might be characterised as an ancillary order to preserve the position to enable Perdaman to apply for a freezing order, if so advised, following receipt of notice from Griffin pursuant to the injunction. Insofar as it is characterised in this way, it will be relevant to assess, in this application, the prospects of Perdaman obtaining a freezing order at that later time, to take into account whether those prospects are sufficient to warrant the imposition of the notice requirement on Griffin. I will return to this point.
…
[210] I have found that, apart from under cl 2.3 of the Negative Pledge Deed, the evidence does not establish a real threat or danger of execution by Griffin of an ICICI Charge. The only threat or danger of execution of an ICICI Charge is under cl 2.3.
[211] I have identified the likely prejudice to Griffin by the grant of an injunction restraining the execution of an ICICI Charge under cl 2.3 without notice to Perdaman.
[212] The injunction sought restrains execution of a charge (of a particular kind) without notice. The purpose of requiring notice before execution is to enable Perdaman to apply for a substantive freezing order in the form of an injunction restraining the execution of an ICICI Charge. The question arises whether, on the evidence before me, there is sufficient prospect of a substantive freezing order being made at the second stage (after notice to Perdaman pursuant to the injunction sought in this application), restraining execution by Griffin of an ICICI Charge pursuant to cl 2.3, to justify the imposition of the notice requirement on Griffin.
[213] Perdaman submits that the question of whether such an injunction might be granted at the second stage should be left to be assessed at the time of any application, on the basis of all the facts and circumstances then revealed. There is some force in this argument. However, on balance, I am not persuaded by it. In my view, there must be a sufficient foundation for the prospect of a substantive freezing order at the second stage to justify the imposition of the injunction to restrain execution without notice. In the circumstances of this case, unless there is some reasonable prospect of a substantive freezing order being made at the second stage, I think it would be inappropriate to require notice before execution of a relevant charge. What is a sufficient foundation, and what is a reasonable prospect, must take into account the limited extent of the prejudice to Griffin that I have found in the preceding section of these reasons. All the circumstances are to be weighed in the exercise of the discretion.
[214] For the reasons that follow, subject to one qualification, I am unable to identify circumstances in which there is any sufficient or reasonable prospect that I would, at the second stage, restrain execution, pursuant to cl 2.3, of an ICICI Charge.
(b)In BGC Australia Pty Ltd v Minspec Pty Ltd [2015] WASC 134, Mitchell J observed:
[11] As a freezing order is not contemplated at this stage, I do not need to determine whether the criteria for making a freezing order are satisfied. It is sufficient that there is a proper basis for apprehending that there might be grounds for making such an application in the future.
(c)In JSC Mezhdunarodniy Promyshlenniy Bank v Pugachev [2015] EWCA Civ 139 at [50]-[52], Lewison LJ approved a suggestion in an earlier case that what was requisite was that the applicant establish at least that there were “credible grounds for making [the prospective freezing order application] if so advised”.
The proper approach to the evaluation of the evidence
My task is to have regard to all the evidence before me and to form a view on whether the plaintiffs have sufficiently discharged their burden on the matters requisite to the making of orders sought – bearing in mind the degree of caution that I must exercise – as to justify the making of the orders.
The application before me is an application for alternative forms of interlocutory orders.[37] Its determination will not finally dispose of the rights of the parties. I am not making findings of fact at a trial or other hearing in which final relief is sought. In Skyworks NSW Pty Ltd v 32 Drummoyne Pty Ltd [2017] NSWSC 343, McDougall J described the task as involving a “qualitative evaluation” of the evidence. He wrote (at [24], emphasis added):
The Court is to undertake a qualitative evaluation of all the evidence that is available, to see if there is a sufficiently serious risk of frustration to justify the making of a freezing order. Further, the two considerations [namely, (1) whether there is a good arguable case and (2) whether there is a real risk of judgment frustration] should be analysed together (as each may impact on the other), and with an appreciation of both the underlying purpose of the rule and the relative risks of granting or withholding relief – the customary discretionary calculus.
[37] See Cardile v LED Builders Pty Ltd per Gaudron, McHugh, Gummow and Callinan JJ at [51], in which, amongst other things, the High Court agreed with remarks remade by the Court of Appeal of New South Wales (Mason P, Sheller JA, Sheppard A-JA) in Frigo v Culhaci in which a Mareva order was described at an interlocutory order.
It follows that an application for a freezing order is not, in general, an occasion to determine contested questions of fact and conflicts in affidavit evidence. Rather, the approach which should be taken to the process of the qualitative evaluation of the evidence is analogous to the approach to be taken in applications for interlocutory injunctions. As to that, see SDW2 Pty Ltd v JLF Corporation Pty Ltd [2017] QSC 1 in which I observed (at [56], emphasis added):
[W]hen evaluating whether the applicant has demonstrated a prima face case, it is a trite proposition that an application for an interlocutory injunction is not the trial of the cause of action. Such an application is not, generally speaking, the occasion to resolve disputed questions of fact. Especially is that so where, as is the case with most applications for interlocutory injunctions, and as was the case here, the application is argued on affidavit material with no cross-examination of any deponents. I agree with the following observations by Chaney J in Mineralogy Pty Ltd v Sino Iron Pty Ltd (No 12) [2016] WASC 335 at [15]:
While the court takes into account the apparent strength of the plaintiff's case, the court does not undertake a preliminary trial or attempt a forecast of the ultimate result. Moreover, an application for interlocutory injunction is not an occasion to determine contested questions of fact and conflicts in affidavit evidence. In a passage recently cited with approval by the Full Federal Court in Warner-Lambert Company LLC v Apotex Pty Ltd [2014] FCAFC 59 [72], Mahoney JA (with whom Glass & Samuels JJA agreed) made observations in Shercliff v Engadine Acceptance Corporation Pty Ltd [1978] 1 NSWLR 729 about the use to which the defendant's evidence can be put in determining an application for an interlocutory injunction:
But there are limitations upon the extent to which a judge is to take into account such evidence as the defendant may tender upon an interlocutory application. It is not his function to conduct a preliminary trial of the action, nor is it, in general, to resolve the conflict between the parties’ evidence, and grant or refuse the application upon the basis of such findings. Where there is conflict of evidence, the use which may be made of the defendant’s evidence in determining whether the plaintiff has made out a prima facie case is a limited one. For example, the plaintiff’s evidence, considered alone, may be such a prima facie case as would be acceptable if submitted to a jury in a trial. But, when considered in the light of the defendant’s evidence, it may be explained away so as no longer to be such. Or the defendant’s evidence, when juxtaposed to that of the plaintiff may show that there is in reality no such case, no real question between the parties, appropriate to warrant preserving the status quo until the hearing (734).
Although the parties to the present application did have the benefit of cross-examination of some witnesses, it nevertheless remained the fact that they did not have the benefit of the full cross-examination, or the capacity to deploy all other relevant evidence, that they would have had at a trial. Neither the fact that there was some cross-examination, nor the comparative abundance of material before me, alters the applicability to my present task of the observations made in Shercliff; Warner-Lambert; Mineralogy; SDW2 and Skyworks NSW. The approach which I will take to evaluating the evidence (and, in particular, the way in which I should take into account evidence tendered on behalf of the defendants) is that which I have identified.
Also, it would not follow that, on an application such as the present, I should accept the truth of a statement in an affidavit before me, simply because it was not the subject of cross-examination. The defendants in particular invited me to take that course. So far as the defendants’ evidence is concerned, the first answer to that submission is the point I have just made concerning the use to be made of defendants’ evidence on an application such as this. But there is another point to be made – equally applicable to the plaintiffs’ evidence as to that of the defendants – namely that made in a different context by Lord Diplock[38] in Eng Mee Yong v Letchumanan [1980] AC 331 at 341 – that in performing my task, I am not “bound to accept uncritically … every statement on an affidavit however equivocal, lacking in precision, inconsistent with undisputed contemporary documents or other statements by the same deponent, or inherently improbable in itself it may be”. In Taylor v Diamand & Zikos Developments Pty Ltd (1997) 6 NTLR 164, Martin CJ, Angel and Priestley JJ put it this way (at 170, emphasis added):
Although the court’s function is not to make findings of fact, nevertheless it is to take into account the apparent strength or weakness of the respective cases in order to decide whether a plaintiff’s principal claim for monetary relief is sufficiently strong on the merits. So too, when considering whether a plaintiff is sufficiently at risk to warrant relief by way of Mareva injunction. The task includes assessing the apparent plausibility of statements in affidavits and, if necessary and warranted, drawing adverse inferences. The court is entitled to look at the credibility of affidavit evidence just as on an application for summary judgment: see Eng Mee Yong v Letchumanan [1980] AC 331 at 341; National Westminster Bank v Daniel [1995] 1 WLR 1453. The function of the judge hearing an application for Mareva relief upon affidavits is to make a realistic assessment of the merits.
Do the plaintiffs have a good arguable case?
[38] Lord Diplock delivered the judgment of the Judicial Committee of the Privy Council which was also comprised of Lord Morris of Borth-y-Gest, Lord Hailsham of St. Marylebone, Lord Edmund-Davies and Lord Fraser of Tullybelton.
Introduction
Mr Palmer submitted that the plaintiffs had not established a good arguable case against him. I reject Mr Palmer’s submission. My evaluation of the evidence before me leads me to conclude that the plaintiffs do have a good arguable case for such relief against Mr Palmer as would justify the amounts sought to be made the subject of freezing orders against him. Indeed, some parts of that case are matters in respect of which I am prepared to say the plaintiffs’ case is a strong arguable case. I explain my reasons for reaching the various evaluations below.
The corporate defendants – all of whom were represented by senior counsel – did not dispute the proposition that the plaintiffs had established a good arguable case against the corporations against whom freezing orders were sought, for remedies which would justify the amounts sought to be made the subject of freezing orders. Nevertheless, and so as to understand the concession made, after I have dealt with the case against Mr Palmer, I will identify briefly under appropriate headings the nature of the case which has been advanced against each of the corporate defendants and on which the plaintiffs rely so as to justify the amounts sought to be made the subject of freezing orders.
As will appear, the evidence which establishes the underlying strength of the plaintiffs’ case is also relied upon by the plaintiffs as having a bearing on the assessment of the risk which exists to the integrity of the Court processes.
The Joint Venture Agreement
In about 1971, a nickel mining and refining project was established in North Queensland pursuant to the Queensland Nickel Agreement Act 1970 (Qld) and an agreement executed by the State of Queensland and others.
By 17 September 1992, the project had become owned and operated by two joint venturing companies, whose relationship inter se was governed by the terms of a deed bearing that date (the Joint Venture Agreement). That agreement also recorded the appointment of Queensland Nickel as the “General Manager” of the Joint Venture and expressed the parties’ agreement on a number of matters concerning the role of the General Manager and its relationship with the Joint Venturers. The role of General Manager was Queensland Nickel’s sole concern because it was obliged not to carry on or be interested in any other business or activity or other operation, whether directly or indirectly: cl 5.5(b).
Interests in the Joint Venture changed hands from time to time, but as from 31 January 1995 the interests in the project had become held in the manner they now are, namely by QNI Resources and QNI Metals as the two Joint Venturers, holding as to 80% and 20% respectively. The Joint Venture Agreement continued to govern the relationship inter se of QNI Resources and QNI Metals as the Joint Venturers and also the role of Queensland Nickel as General Manager and its relationship with the Joint Venturers. Each of the Joint Venturers and Queensland Nickel was a party to the Joint Venture Agreement.
There was also an Administration Agreement bearing the same date as the Joint Venture Agreement, the function of which was to govern the way in which Queensland Nickel as the General Manager provided Management Services to the Joint Venturers.
Amongst other things, the Administration Agreement obliged Queensland Nickel to provide Management Services, a term defined to include its obligations set out in the Administration Agreement –
(a)to manage the debtors of the Joint Venturers deriving from the sale of nickel products, including by collecting payment of those debts and crediting payment to such bank account of the Joint Venturer as the Joint Venturer might direct; and
(b)the preparation of annual consolidated profit and loss statements and cash flow budgets for each Joint Venturer, including estimates of –
(i) the costs and expenses payable by the Joint Venturer to Queensland Nickel for acting as General Manager and for providing management services;
(ii) the capital expenditure and other joint venture expenses payable by the Joint Venturer; and
(iii) the proceeds of sale of the Joint Venturer’s products.
The Administration Agreement also provided that all costs, liabilities and expenses properly incurred by Queensland Nickel in the performance of its obligations under the agreement would be paid or reimbursed by each Joint Venturer in proportion with its interest in the Joint Venture and that all such costs, liabilities and expenses would be deemed to be Joint Venture Expenses and would accordingly be subject to the funding call process provided for by cl 6.4 of the Joint Venture Agreement: cl 6.
The salient features of the Joint Venture Agreement included those set out in the following paragraphs.
The Joint Venturers agreed to continue the Joint Venture which had been formed for the purposes of mining, developing and exploiting the nickel mine and related mining, processing, research and marketing activities: cl 2.1. The Joint Venture would be limited to those purposes unless both Joint Venturers otherwise agreed in writing: cl 2.3. Those purposes would affect Queensland Nickel as General Manager because it was obliged to act subject to and consistently with the Joint Venture Agreement (cl. 5.2(a)) and it was obliged not to use Joint Venture Property for any other purpose than the purpose of the Joint Venture (cl. 3.1).
Queensland Nickel as General Manager was in charge of and responsible for (amongst other things, emphasis added):
(a)the overall management, operation and administration of the Joint Venture: cl 5.2(a)(i);
(b)managing the funds of the Joint Venture: cl 5.2(a)(ii);
(c)maintaining the accounting records of the Joint Venture: cl 5.2(a)(iii);
(d)preparing and maintaining complete books and accounting records describing each Joint Venturer’s financial involvement in the Joint Venture: cll 5.2(a)(iii) and 5.2(b)(xvii);
(e)the management and control of the Joint Venture Property (a term which was defined, to which I will shortly turn) and all operations under the Joint Venture Agreement as agent for and for the account of the Joint Venturers: cl 5.2(a)(vii);
(f)the performance of “Management Services” as described in the Administration Agreement: cl 5.2(a); and
(g)the doing of all other acts and things as may be necessary or advisable for efficient and economic operation of the Joint Venture: cl 5.2(b)(xxiv).
As to the Joint Venture Property (the management and control of which was the responsibility of Queensland Nickel as just recorded):
(a)Clause 3.1 of the Joint Venture Agreement recorded the agreement of the Joint Venturers (and Queensland Nickel) that (emphasis added) –
All the Joint Venture Property shall at all times be made available for the purpose and duration of the Joint Venture and during such duration shall not be used for any other purpose. …
(b)The expression “Joint Venture Property” is comprehensively defined in cl 1.1 of the Joint Venture Agreement to include relevant real property and mining titles, relevant technology and know-how and “all other rights, titles, interests, claims and benefits held or acquired from time to time, directly or indirectly, for the purposes of the Joint Venture”. However, products produced at the nickel refinery did not fall within the definition of Joint Venture Property: cll 3.1 and 3.3 and the definition of “Products” in cl 1.1.
(c)All the “Joint Venture Property” and, subject to cl 3.3, all Products, were beneficially owned by the two Joint Venturers as tenants in common in proportion to their participating interest in the Joint Venture and all liabilities of the Joint Venture were to be severally borne by the two Joint Venturers in that proportion: cl 3.1. By cl 3.3 “Each of the Joint Venturers shall have the right to, and shall, receive in kind its Subject Products on production thereof at the Treatment Facilities and separately dispose of or market such share.”
(d)Notwithstanding the statement concerning beneficial ownership of Joint Venture Property, the Joint Venture Agreement expressly contemplated that (with the exception of real property and mining titles) legal title to any Joint Venture Property could, for purposes of convenience and at the request of the Joint Venturers, be held solely in the name of Queensland Nickel: cl 3.2. If that occurred, the Joint Venture Property would be held “for the use and benefit of the Joint Venturers in proportion to their Participating Interests”. Thus the possibility that Queensland Nickel might hold Joint Venture Property on trust was obviously contemplated.
(e)The Joint Venture Agreement imposed restrictions on the ability of the Joint Venturers and a Joint Venture Owners Committee (“the JVOC”, as to which see [89] below) to create “Encumbrances” over Joint Venture Property, but in terms which contemplated that “Permitted Encumbrances” might be created. Thus:
(i) “Encumbrance” was defined in cl 1.1 to mean mortgage, hypothecation, pledge lien or charge or anything analogous to any of those things;
(ii) “Permitted Encumbrance” was defined in cl 1.1 to include various liens arising in the ordinary course of business, including –
Aany mechanics’ workmen’s or other like lien arising in the ordinary course of business securing obligations which are not yet overdue or which are being contested or litigated in good faith; and
Bany Encumbrance in respect of deposits of money or property by way of security for the performance of any contractual or statutory obligations arising in the ordinary course of business other than obligations for borrowed moneys or the deferred purchase price of goods or services;
(iii) other than a Permitted Encumbrance, the creation of any Encumbrance over all or any part of the Joint Venture Property was regarded as a decision required to be made by the approval of each Joint Venturer: cl 4.10; and
(iv) without the prior consent of the other Joint Venturer, no Joint Venturer could create or suffer to subsist any Encumbrance of its interest except a Permitted Encumbrance.
(f)Queensland Nickel was constrained (except for liens arising in the normal and ordinary course of business) against creating any mortgage, pledge, charge, encumbrance, lien over, or trust in respect of Joint Venture Property or any of it: cl 5.5(i).
In performing its role, Queensland Nickel was subject to the directions of the JVOC: cl 5.2(a) and (b). The JVOC had the responsibility and authority for the conduct of the Joint Venture: cl 4.1. It was to be set up to consider and determine general policy and strategic matters for the Joint Venture so as to achieve the aims and objectives of the Joint Venture: cl 4.1. Amongst other things, the JVOC was to provide Queensland Nickel with directions in respect of its duties and responsibilities and to monitor the performance of those duties and responsibilities in accordance with directions given: cl 4.1(a).
The Joint Venture Agreement contemplated that Queensland Nickel could incur personal liabilities to third parties consequent upon performing the various Joint Venture activities, which Queensland Nickel would pay by disbursing funds provided to it by the Joint Venturers to carry out the operation of the Joint Venture: cl 5.2(b). But it also contemplated that Queensland Nickel might itself pay Joint Venture liabilities which might be directly payable by the Joint Venturers: cl 5.2(b)(xiv) and (xvi).
The Joint Venture Agreement contemplated that the Joint Venturers would share in the benefits and assume the obligations arising out of the actions taken by Queensland Nickel in the performance of its duties and responsibilities in the proportions in which they held their respective Participating Interests: cl 5.5(s).
The Joint Venture Agreement contained provisions which set out mechanisms for Queensland Nickel to prepare budgets and financial plans in relation to the Joint Venture: cll 6.1 and 6.2. Related provisions enabled Queensland Nickel to make “calls” on the Joint Venturers to meet “Joint Venture Expenses”, namely “all costs, liabilities and expenses of the Joint Venture properly incurred”, and obliged each of the Joint Venturers to contribute its share of the required funds once the call was made: cl 6.4.
Annexure A – Form of orders sought by plaintiffs
UPON THE UNDERTAKINGS OF THE COMMONWEALTH AND THE FIRST PLAINTIFFS GIVEN TO THE COURT, THE ORDER OF THE COURT IS THAT:
INTRODUCTION
In this order:
(a)a corporation ordered to do something must do it personally or through its directors, officers, employees or agents;
(b)a person or corporation ordered not to do something must not do it personally or through its directors, officers, partners, employees, agents or in any other way;
(c)the term “Defendant” or “Defendants” refers to the Defendant or Defendants as the case may be identified in paragraphs 2 to 11 below.
FREEZING ORDER
The First Defendant, QNI Metals Pty Ltd, must not remove from Australia or in any way dispose of, deal with or diminish the value of any of its assets in Australia up to the unencumbered value of AUD$49,993,120.74, until judgment or further order.
The Second Defendant, QNI Resources Pty Ltd, must not remove from Australia or in any way dispose of, deal with or diminish the value of any of its assets in Australia up to the unencumbered value of AUD$199,972.482.97, until judgment or further order.
The Fourth Defendant, Clive Frederick Palmer, must not remove from Australia or in any way dispose of, deal with or diminish the value of any of his assets in Australia up to the unencumbered value of AUD$204,943,664.39
AUD$219,050,604.30, until judgment or further order.The:
(a) Ninth Defendant, Palmer Leisure Coolum Pty Ltd;
(b) Twelfth Defendant, Coeur de Lion Investments Pty Ltd; and
(c) Thirteenth Defendant, Coeur de Lion Holdings Pty Ltd,
must not remove from Australia or in any way dispose of, deal with or diminish the value of any of their assets in Australia up to an aggregate unencumbered value of AUD$67,039,694.27
AUD $67,145,594.27, until judgment or further order.The Seventh Defendant, Mineralogy Pty Ltd, must not remove from Australia or in any way dispose of, deal with or diminish the value of any of its assets in Australia up to the unencumbered value of AUD$14,458,217.94
AUD$16,425,535.54, until judgment or further order.The Eighth Defendant, Palmer Leisure Australia Pty Ltd, must not remove from Australia or in any way dispose of, deal with or diminish the value of any of its assets in Australia up to the unencumbered value of AUD$375,000.00, until judgment or further order.
The Tenth Defendant, Fairway Coal Pty Ltd, must not remove from Australia or in any way dispose of, deal with or diminish the value of any of its assets in Australia up to the unencumbered value of AUD$9,163,066.73, until judgment or further order.
The Eleventh Defendant, Cart Provider Pty Ltd, must not remove from Australia or in any way dispose of, deal with or diminish the value of any of its assets in Australia up to the unencumbered value of AUD$324,999.68, until judgment or further order.
The Fourteenth Defendant, Closeridge Pty Ltd, must not remove from Australia or in any way dispose of, deal with or diminish the value of any of its Australian Assets up to the unencumbered value of AUD$77,800.00, until judgment or further order.
The Fifteenth Defendant, Waratah Coal Pty Ltd, must not remove from Australia or in any way dispose of, deal with or diminish the value of any of its assets in Australia up to the unencumbered value of AUD$2,000,000.00, until judgment or further order.
In each case in paragraphs 2 to 11:
(a)the assets of the Defendant in Australia are referred to herein in relation to that defendant, as his or its (as the case may be) Australian Assets;
(b)the amount which a Defendant may not remove from Australia, dispose of, deal with or diminish the value of, is referred to herein in relation to that Defendant, as the Relevant Amount.
If the unencumbered value of the Australian Assets of any of the Defendants exceeds the Relevant Amount in respect of that Defendant, then that Defendant may remove any of those assets from Australia or dispose of or deal with them or diminish their value, so long as the total unencumbered value of that Defendant’s Australian Assets still exceeds the Relevant Amount.
If the unencumbered value of the Australian Assets of any Defendant is less than the Relevant Amount in respect of that Defendant, and if that Defendant has assets outside Australia (Ex-Australian Assets):
(a)that Defendant must not dispose of, deal with or diminish the value of any of that Defendant’s Australian Assets and Ex-Australian Assets up to the unencumbered value of that Defendant’s Australian and Ex-Australian assets of the Relevant Amount; and
(b)that Defendant may dispose of, deal with or diminish the value of any of that Defendant’s Ex-Australian assets, so long as the unencumbered value of that Defendant’s Australian Assets and Ex-Australian Assets still exceeds the Relevant Amount.
For the purposes of this order, each Defendant’s assets include:
(a)all its assets, whether or not they are in its name and whether they are solely owned or co-owned;
(b)any asset which it has the power, directly or indirectly, to dispose of or deal with as if the asset were its own (a Defendant is to be regarded as having such power if a third party holds or controls the asset in accordance with the Defendant’s direct or indirect instructions); and
(c)in particular the assets listed against the name of that Defendant in Schedule A to this application.
PROVISION OF INFORMATION
Subject to order 17, each of the Defendants must:
(a)within 7 clear business days of the date of these orders (the Provision Date), to the best of their ability inform the Plaintiffs in writing of all their assets, giving their value, location and details (including any mortgages, charges or other encumbrances to which they are subject) and the extent of their interest in the assets; and
(b)by 4.00 pm on 7 clear business days following the Provision Date, swear an affidavit setting out the above information and serve it on the Plaintiffs’ solicitors.
This paragraph applies if:
(i)any of the Defendants is not a corporation and they wish to object that compliance with order 16 may tend to incriminate them or make them liable to a civil penalty; or
(ii)any of the Defendants is a corporation and all of the persons who are able to comply with order 16 on its behalf and with whom it has been able to communicate, wish to object that compliance may tend to incriminate them respectively or make them respectively liable to a civil penalty.
(a)The Defendants must, on or before the Provision Date (or within such further time as the Court may allow), notify the Plaintiffs in writing that they wish to take such objection and identify the extent of the objection.
(b)If such notice is given, the Defendants need only comply with order 16 to the extent, if any, that it is possible to do so without disclosure of the material in respect of which the objection is taken.
(c)If such notice is given, the Plaintiff may seek directions as to the filing and service of affidavits setting out such matters as the Defendants wish to place before the Court in support of the objection.
EXCEPTIONS
This order does not prohibit the Fourth Defendant, Mr Palmer, from paying a reasonable amount to be determined by the Court on account of living expenses.
This order does not prohibit any of the Defendants from:
(a)paying a reasonable amount to be determined by the Court on account of reasonable legal expenses;
(b)providing financial support to any of the Defendants by way of loans which are repayable on not more than 1 months’ notice;
(c)dealing with or disposing of any of that Defendant’s assets in the ordinary and proper course of its business, including paying business expenses bona fide and properly incurred; and
(d)in relation to matters not falling within (a), (b) or (c), dealing with or disposing of any of its assets in discharging obligations bona fide and properly incurred under a contract entered into before this order was made, provided that before doing so the Defendant gives the Plaintiffs at least 2 working days’ written notice of the particulars of the obligation.
The parties may agree in writing that the exceptions in the preceding paragraph are to be varied. In that case, the parties must as soon as practicable file with the Court and serve on the other a minute of a proposed consent order recording the variation signed by or on behalf of the each of them, and the Court may order that the exceptions are varied accordingly.
This order does not prevent any Defendant from disposing of an asset the subject of the order with:
(a) the Plaintiffs’ prior written consent; or
(b)an order from the Court releasing that asset from this order, provided that the Plaintiffs have been given at least 7 days’ notice of any application to the Court for such an order to be made.
This order will cease to have effect in relation to a Defendant if that Defendant:
(a) pays the Relevant Amount into Court; or
(b)pays that sum into a joint bank account in the name of the Defendant, (or Defendant’s solicitor) and the solicitor for the Plaintiffs, as agreed in writing between them; or
(c)provides security in that sum by a method agreed in writing with the Plaintiffs to be held subject to the order of the Court.
Any such payment and any such security will not provide the Plaintiffs with any priority over the Defendant’s other creditors in the event of the Defendant’s insolvency.
If this order ceases to have effect pursuant to sub-paragraph 22(a), the individual Defendant must, as soon as practicable, file with the Court and serve on the Plaintiffs notice of that fact.
PERSONS OTHER THAN THE PLAINTIFFS AND DEFENDANTS
This order does not prevent any bank from exercising any right of set off it has in respect of any facility which it gave a Defendant before it was notified of this order.
No bank need inquire as to the application or proposed application of any money withdrawn by a Defendant if the withdrawal appears to be permitted by this order.
Except as provided in paragraph 28 below, the terms of this order do not affect or concern anyone outside Australia.
The terms of this order will affect the following persons outside Australia:
(a)a Defendant, its directors, commissioners, officers, employees and agents (except banks and financial institutions);
(b) any person (including a bank or financial institution) who:
(i) is subject to the jurisdiction of this Court; and
(ii)has been given written notice of this order, or has actual knowledge of the substance of the order and of its requirements; and
(iii)is able to prevent or impede acts or omissions outside Australia which constitute or assist in a disobedience of the terms of this order; and
(c)any other person (including a bank or financial institution), only to the extent that this order is declared enforceable by or is enforced by a court in a country or state that has jurisdiction over that person or over any of that person’s assets.
Nothing in this order shall, in respect of assets located outside Australia, prevent any third party from complying or acting in conformity with what it reasonably believes to be its bona fide and properly incurred legal obligations, whether contractual or pursuant to a court order or otherwise, under the law of the country or state in which those assets are situated or under the proper law of any contract between a third party and any of the Defendants, provided that in the case of any future order of a court of that country or state made on the one of the Defendant’s or the third party’s application, reasonable written notice of the making of the application is given to the Plaintiffs.
OTHER ORDERS
The parties have leave to apply.
The Defendants pay the Applicants’ costs of the application.
Signed:
SCHEDULE A
PARTICULAR ASSETS
This table identifies particular assets owned by various Respondents to this application, as referred to in paragraph 15(c).
| First Defendant QNI Metals Pty Ltd | Yabulu Refinery and associated assets |
| Second Defendant QNI Resources Pty Ltd | Yabulu Refinery and associated assets |
| Fourth Defendant Clive Frederick Palmer |
|
| Seventh Defendant Mineralogy Pty Ltd | Mining tenements held in Western Australia
|
| Eighth Defendant Palmer Leisure Australia Pty Ltd | Palmer Gold Coast Golf Course Palmer Colonial Golf Course Palmer Sea Reef Golf Club (pleaded as ‘Sea Temple Golf and Country Club’) Residential lots at Palmer Sea Reef Golf Course |
| Ninth Defendant Palmer Leisure Coolum Pty Ltd | Security interest in Palmer Coolum Resort 98% shareholding in Coeur de Lion Holdings Pty Ltd |
| Tenth Defendant Fairway Coal Pty Ltd | Exploration Permit for Coal, EPC No 1029 1% interest in Mineral Development Licence MDL 468 |
| Eleventh Defendant Cart Provider Pty Ltd | 65 G29-E 8V Yamaha Golf Carts |
| Twelfth Defendant Coeur de Lion Investments Pty Ltd | Real property and improvements and Palmer Coolum Resort |
| Thirteenth Defendant Coeur de Lion Holdings Pty Ltd | 100% shareholding in Coeur de Lion Investments Pty Ltd |
| Fourteenth Defendant Closeridge Pty Ltd | 2% shareholding in Coeur de Lion Holdings Pty Ltd
|
| Fifteenth Defendant Waratah Coal Pty Ltd | Shares in:
|
Annexure B – Alternative form of orders sought by plaintiffs
INTRODUCTION
In this order:
(a)a corporation ordered to do something must do it personally or through its directors, officers, employees or agents;
(b)a person or corporation ordered not to do something must not do it personally or through its directors, officers, partners, employees, agents or in any other way;
(c)the term “Defendant” or “Defendants” refers to the first, second, fourth, seventh, eighth, ninth, tenth, eleventh, twelfth, thirteenth, fourteenth and fifteenth defendants as the case may be.
NOTIFICATION REQUIREMENT
For the purposes of the paragraphs 3 to 12:
(a) “transaction” means:
(i) any disposal of the defendant’s assets to any person; or
(ii)any dealing or transaction which otherwise diminishes the value of the defendant’s assets; and
(b)notice is to be given in writing to the Plaintiffs’ Australian solicitors, King & Wood Mallesons, by email to [email protected].
QNI Metals Pty Ltd
Until judgment or earlier order, QNI Metals Pty Ltd must provide the Plaintiffs with at least 7 business days’ prior notice before carrying out any transaction which has the effect of diminishing or further diminishing the unencumbered value of its assets below $49,993,120.74.
QNI Resources Pty Ltd
Until judgment or earlier order, QNI Resources Pty Ltd must provide the Plaintiffs with at least 7 business days’ prior notice before carrying out any transaction which has the effect of diminishing or further diminishing the unencumbered value of its assets below $199,972.482.97.
Clive Frederick Palmer (Mr Palmer)
Until judgment or earlier order, Mr Palmer must provide the Plaintiffs with at least 7 business days’ prior notice before carrying out any transaction which has the effect of diminishing or further diminishing the unencumbered value of his assets below $204,943,664.39.
Mineralogy Pty Ltd
Until judgment or earlier order, Mineralogy Pty Ltd must provide the Plaintiffs with at least 7 business days’ prior notice before carrying out any transaction which has the effect of diminishing or further diminishing the unencumbered value of its assets below $14,458,217.94.
Palmer Leisure Australia Pty Ltd
Until judgment or earlier order, Palmer Leisure Australia Pty Ltd must provide the Plaintiffs with at least 7 business days’ prior notice before carrying out any transaction which has the effect of diminishing or further diminishing the unencumbered value of its assets below $375,000.
Palmer Leisure Coolum Pty Ltd, Coeur de Lion Investments Pty Ltd and Coeur de Lion Holdings Pty Ltd (Coolum Entities)
Until judgment or earlier order, each of the Coolum Entities must provide the Plaintiffs with at least 7 business days’ prior notice before any of them carry out any transaction which has the effect of diminishing or further diminishing the aggregate unencumbered value of their assets below $67,039,694.27.
Fairway Coal Pty Ltd
Until judgment or earlier order, Fairway Coal Pty Ltd must provide the Plaintiffs with at least 7 business days’ prior notice before carrying out any transaction which has the effect of diminishing or further diminishing the unencumbered value of its assets below $9,163,066.73.
Cart Provider Pty Ltd
Until judgment or earlier order, Cart Provider Pty Ltd must provide the Plaintiffs with at least 7 business days’ prior notice before carrying out any transaction which has the effect of diminishing or further diminishing the unencumbered value of its assets below $324,999.68.
Closeridge Pty Ltd
Until judgment or earlier order, Closeridge Pty Ltd must provide the Plaintiffs with at least 7 business days’ prior notice before carrying out any transaction which has the effect of diminishing or further diminishing the unencumbered value of its assets below $77,800.
Waratah Coal Pty Ltd
Until judgment or earlier order, Waratah Coal Pty Ltd must provide the Plaintiffs with at least 7 business days’ prior notice before carrying out any transaction which has the effect of diminishing or further diminishing the unencumbered value of its assets below $2,000,000.
PROVISION OF INFORMATION
Subject to the exceptions in paragraph 4 and 5 below, each of the Defendants must:
(a)within 7 clear business days of the date of these orders (the Provision Date), to the best of their ability, inform the Plaintiffs, in writing, of all their assets, providing their value, location and details (including any mortgages, charges or other encumbrances to which they are subject) and the extent of their interest in the assets; and
(b)by 4.00 pm on 7 clear business days following the Provision Date, swear and serve on the Plaintiff’s solicitors an affidavit setting out the information required by the preceding subparagraph.
EXCEPTIONS
This paragraph applies if:
(a)any of the Defendants is not a corporation and that Defendant wishes to object to complying with paragraph 3 above because doing so may tend to incriminate them or make them liable to a civil penalty; or
(b)any of the Defendants is a corporation and all of those persons who are able to comply with paragraph 3 on its behalf, and with whom the Defendant has been able to communicate, wish to object to complying with paragraph 3 above because doing so may tend to incriminate them respectively or make them respectively liable to a civil penalty.
The Defendants must, on or before the Provision Date (or within such further time as the Court may allow), notify the Plaintiffs in writing that they wish to take such objection and identify the extent of the objection.
If such notice is given:
(a)the Defendants need only comply with paragraph 3 to the extent, if any, that it is possible to do so without disclosure of the material in respect of which the objection is taken.
(b)the Plaintiff may seek directions for the filing and service of affidavits that set out such matters as the Defendants wish to place before the Court in support of the objection.
This order does not require notification by:
(a) the fourth defendant, Mr Palmer, of his living expenses;
(b) any of the Defendants, when paying their own reasonable legal expenses; and / or
(c)any of the Defendants, in dealing with or disposing of any of that Defendant’s assets in the ordinary and proper course of its business, including by paying business expenses bona fide and properly incurred.
ASSETS
For the purposes of this order, each Defendant’s assets include:
(a)all its assets, whether or not they are in its name and whether they are solely owned or co-owned;
(b)any asset which it has the power, whether directly or indirectly, to dispose of or deal with as if the asset were its own (a Defendant is to be regarded as having such power if a third party holds or controls the asset in accordance with the Defendant’s direct or indirect instructions); and
(c)in particular, the assets listed beside the name of that Defendant in Schedule A to this order.
OTHER ORDERS
The parties have leave to apply.
The Defendants pay the Applicants’ costs of the application.
Signed:
SCHEDULE A
PARTICULAR ASSETS
This table identifies particular assets owned by various Respondents to this application, as referred to in paragraph 6(a).
| First Defendant QNI Metals Pty Ltd | Yabulu Refinery and associated assets |
| Second Defendant QNI Resources Pty Ltd | Yabulu Refinery and associated assets |
| Fourth Defendant Clive Frederick Palmer | Cessna Citation aircraft 750-0021 registration VP-CFP
|
| Seventh Defendant Mineralogy Pty Ltd | Mining tenements held in Western Australia
|
| Eighth Defendant Palmer Leisure Australia Pty Ltd | Palmer Gold Coast Golf Course Palmer Colonial Golf Course Palmer Sea Reef Golf Club (pleaded as ‘Sea Temple Golf and Country Club’) Residential lots at Palmer Sea Reef Golf Course |
| Ninth Defendant Palmer Leisure Coolum Pty Ltd | Security interest in Palmer Coolum Resort 98% shareholding in Coeur de Lion Holdings Pty Ltd |
| Tenth Defendant Fairway Coal Pty Ltd | Exploration Permit for Coal, EPC No 1029 1% interest in Mineral Development Licence MDL 468 |
| Eleventh Defendant Cart Provider Pty Ltd | 65 G29-E 8V Yamaha Golf Carts |
| Twelfth Defendant Coeur de Lion Investments Pty Ltd | Real property and improvements and Palmer Coolum Resort |
| Thirteenth Defendant Coeur de Lion Holdings Pty Ltd | 100% shareholding in Coeur de Lion Investments Pty Ltd |
| Fourteenth Defendant Closeridge Pty Ltd | 2% shareholding in Coeur de Lion Holdings Pty Ltd
|
| Fifteenth Defendant Waratah Coal Pty Ltd | Shares in:
|
Annexure C – form of undertakings
Form of undertaking given on 30 October 2017
Undertaking by QNI Metals Pty Ltd (QM) and QNI Resources Pty Ltd (QR)
On the giving by the Commonwealth of the Australia (sic) of the undertaking recorded in paragraph 3 below, and on the giving of the undertakings by Stephen James Parbery for and on behalf of the First Plaintiffs in paragraph 4 below, QM and QR undertake, until 4pm on the date of delivery of judgment in this application:
(a)not to remove from Australia, or in any way dispose of, deal with or diminish the value of the Yabulu Refinery and their other assets in Australia (Assets) up to the unencumbered value of AUD$220,000,000 (Unencumbered Value) (save that for the avoidance of doubt QM and QR may undertake negotiations in connection with any possible sale of the Refinery but no contract of sale for the Refinery may be entered into without three business days’ notice in writing to the plaintiffs, including providing to them the terms of the proposed contract);
(b)to make the Assets up to the Unencumbered Value available to meet any final orders made by this Honourable Court requiring any of the respondents to the Application to pay any debts, damages or other compensation to the Plaintiffs in Proceeding BS6593/17 which have not been met by any Respondent within the time period set by this Honourable Court for such award to be met;
(c)if the unencumbered value of the Assets exceeds $220,000,000, QM or QR may remove any of those assets from Australia, or dispose of or deal with them or diminish their value, so long as the total unencumbered value of their Assets still exceeds $220,000,000,
(the undertaking at 1(a) to (c) above being the QR/QM Undertaking).
Undertaking by Waratah Coal Pty Ltd and China First Pty Ltd
On the giving by the Commonwealth of the Australia (sic) of the undertaking recorded in paragraph 3 below, and on the giving of the undertakings by Stephen James Parbery for an on behalf of the First Plaintiffs in paragraph 4 below, Waratah Coal Pty Ltd and China First Pty Ltd undertake to this Honourable Court, not to exercise any rights under any charge or security over the Assets until 4pm on the date of delivery of judgment in this application.
Undertaking by the Commonwealth
The Commonwealth of Australia (Commonwealth) undertakes to this Honourable Court and to the Defendants:
(a)to submit to such order (if any) as the Court may consider just for the payment of damages (to be assessed by the Court or as it may direct) to any person (whether or not a party) affected by the QR/QM Undertaking;
(b)to pay any orders of costs (as assessed or agreed with the Commonwealth’s consent or taxed) which the Court makes in Proceedings BS6593/17, against the First Plaintiffs, in favour of the Defendants;
Undertakings by the First Plaintiffs
Stephen James Parbery, for, and on behalf of the First Plaintiff, the Special Purpose Liquidators (SPLs of Queensland Nickel Pty Ltd (in Liquidation) ACN 009 842 068, hereby undertake to the Supreme Court of Queensland, and to the Defendants in Proceedings BS6593/17, that:
(a)The SPLs undertake to submit to such order (if any) as the Court may consider just for the payment of compensation (to be assessed by the Court or as it may direct) to any person (whether or not a party) affected by the operation of the order;
(b)As soon as practicable, the SPLs will cause anyone notified of this order to be given a copy of it;
(c)The SPLs will pay the reasonable costs of anyone other than the respondents which have been incurred as a result of this order, including the costs of finding out whether that person holds any of the respondents’ assets;
(d)If this order ceases to have effect the SPLs will promptly take all reasonable steps to inform in writing anyone who has been notified of this order, or who the SPLs have reasonable grounds for supposing may act upon this order, that is has ceased to have effect;
(e)The SPLs will not, without leave of the Court, use any information obtained as a result of this order for the purpose of any civil or criminal proceedings, either in or outside Australia, other than in this proceeding;
(f)The SPLs will, to the extent obligations are owed in their favour by the Commonwealth of Australia as to damages, enforce those obligations if damages are awarded against the respondents;
(g)The SPLs will notify the respondents if any existing fund arrangements with the Commonwealth are terminated.
Form of Commonwealth undertaking of 2 March 2018
The Commonwealth of Australia (Commonwealth) hereby undertakes to the Supreme Court of Queensland (the Court) and to the Defendants in Proceedings BS6593/17 that:
the Commonwealth will pay any order of costs (as assessed or agreed with the Commonwealth’s consent or taxed) which the Court makes in Proceedings BS6593/17, against the First Plaintiffs and/or the Second Plaintiff, in favour of the Defendants;
it will submit to such order (if any) as the Court may consider just for the payment of damages (to be assessed by the Court or as it may direct) to any person (whether or not a party) affected by the operation of the freezing orders made by the Court at the request of the First Plaintiffs by way of interlocutory application dated 2 August 2017 and amended on 11 August 2017 and further amended on 14 September 2017; and
The Commonwealth’s undertaking does not extend to any order of costs that may be made against John Park, Stefan Dopking, Kelly-Anne Trenfield and Quentin Olde in their capacity as joint and several liquidators of the Second Plaintiff (General Purpose Liquidators) or against the Second Plaintiff in respect of actions or claim made on its behalf by the General Purpose Liquidators including in circumstances where Proceeding BS6593/17 (or claims made in Proceeding BS6593/17) are consolidated with other proceedings and/or claims.
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