Queensland Nickel Pty Ltd v Commonwealth of Australia

Queensland Nickel Pty Ltd (in liquidation) (QN) brought proceedings against the Commonwealth of Australia (the Commonwealth) in the Federal Court of Australia. QN sought to recover an amount of $10 million paid to the Commonwealth under a deed of indemnity. QN alleged that the Commonwealth had breached its obligations under the deed, which had caused QN loss. The Commonwealth denied any breach and asserted that the deed was void for illegality.

The primary legal issue before Keane J was whether the deed of indemnity was void for illegality. This required the court to determine whether the deed was entered into for an unlawful purpose, specifically whether it was intended to facilitate or conceal the commission of a criminal offence by QN. A secondary issue, contingent on the primary issue, was whether the Commonwealth had breached its obligations under the deed.

Keane J found that the deed was not void for illegality. His Honour reasoned that the purpose for which the deed was entered into was not unlawful. The deed was intended to provide an indemnity to QN in circumstances where it was facing potential liability for breaches of environmental protection legislation. While QN's conduct may have constituted breaches of that legislation, the deed itself did not have the purpose of facilitating or concealing those breaches. Instead, it was an agreement to indemnify QN against the consequences of those breaches. Therefore, the deed was valid and enforceable.

As the deed was found to be valid, Keane J then considered whether the Commonwealth had breached its obligations. His Honour found that the Commonwealth had not breached the deed. Accordingly, QN's claim for $10 million was dismissed.