PALMER -v- CITIC LTD [No 11] [2024] WASC 210 (10 June 2024)

B. The claims advanced by the Mineralogy Parties Fortescue Coordination Deed

1. The two actions are connected with the instrument known as the Fortescue Coordination Deed or the FCD.[5] In both actions, the Mineralogy Parties claim damages against the CITIC Parties pursuant to the indemnities given to the Mineralogy Parties under the FCD.
2. The primary provision upon which the Mineralogy Parties rely is cl 11.5 of the FCD, which is in the following terms:

(c) CITIC indemnifies Clive F Palmer and Mineralogy against any loss suffered, paid, or incurred by it in relation to the failure of Sino Iron and/or Korean to perform its obligations under this Deed or the Project Agreements or the failure of CITIC to cause Sino Iron and/or Korean to perform its obligations under this Deed or the Project Agreements.

1. This clause is engaged when there are relevant failures by Sino Iron or Korean Steel to perform their obligations, and where there are relevant failures by CITIC to cause either of those aforementioned companies to perform their obligations. The obligations in central focus in these proceedings are the obligations on the CITIC Parties to pay the Royalty Component B (or RCB) to the Mineralogy Parties, which was the subject of proceedings before Kenneth Martin J and thereafter on appeal to the Court of Appeal.
2. Upon these relevant failures being found, and leaving to one side for now issues concerning the identification of relevant parties and the ability of persons to claim for loss which may have been suffered by others, the indemnity extends to 'any loss suffered, paid, or incurred' by Mr Palmer or Mineralogy 'in relation to' the failures just mentioned.

1. In general terms, the Mineralogy Parties have made claims against the CITIC Parties in the QNI Proceeding under the indemnity in the FCD. The Mineralogy Parties point to the failure of the CITIC Parties to pay the RCB.[6]
2. The Mineralogy Parties claim that Mineralogy would have provided the funds to QNI to enable it to continue to manage and operate the Queensland Nickel Joint Venture, being the nickel and cobalt refinery business located at Yabulu in Queensland (Yabulu Refinery).[7]
3. The Mineralogy Parties thus allege a connection between the failure to pay the RCB amounts and the closure of the Yabulu Refinery in the sense that there were cash flow problems experienced by the joint venture which managed the refinery, and payment of the RCB amounts would have enabled Mineralogy to provide funds to QNI to avoid the external administration which resulted.[8]
4. QNI ultimately proceeded into voluntary administration and then liquidation, which is alleged to have had a negative effect on the management and operation of the Yabulu Refinery as a going concern.[9] It is alleged that Mr Palmer lost his ability to sell his shareholding on the basis that Yabulu Refinery was a going concern.[10] A diminution in the value of the shareholding is claimed in the sum of $1.95 billion.[11]
5. An alternative loss of opportunity claim is pleaded by the Mineralogy Parties as well, to the effect that Mr Palmer lost the opportunity to sell his shareholding for market value.[12]
6. The case advanced by the Mineralogy Parties is that, by making good the counterfactual, Mr Palmer's loss ought be found to be 'in relation to' the failure of the CITIC Parties to perform and is thus covered by the indemnity in cl 11.5(c) of the FCD.[13]
7. The CITIC Parties' defences raise a number of responses to the indemnity claim under the FCD, which are summarised in their submissions.[14] The CITIC Parties have also made submissions to the effect that the reply pleaded by the Mineralogy Parties does not operate to render irrelevant a range of issues in respect of which the CITIC Parties seek further discovery.[15]

1. In the Palmer Petroleum Proceeding, Mineralogy claims that the failure by the CITIC Parties to make the RCB payments meant that Mineralogy did not provide funds to Palmer Petroleum Pty Ltd, in consequence of which the latter did not pay a debt to a service provider. By reason of the failure to pay the debt, Palmer Petroleum was wound up in insolvency.
2. Within the 4ASOC, the Mineralogy Parties allege that Mineralogy 'would have' provided funds to Palmer Petroleum Pty Ltd. The pleading asserts an alleged loss of petroleum prospecting licences, an alleged diminution in the value of the shares in Palmer Petroleum Pty Ltd or Blaxcell, and a lost opportunity claim.[16]
3. As with the QNI Proceedings, a range of defences are pleaded by the CITIC Parties, and the CITIC Parties contend that the present state of the pleadings is such that the further discovery which is sought pertains to issues which remain relevant.[17]

1. The defendants' applications seek orders against the plaintiffs for previously ordered discovery to be provided, and for new discovery categories to be ordered.
2. The first application was filed in the QNI Proceeding, brought by chambers summons dated 30 April 2024 (QNI Discovery Application). The second application was filed in the Palmer Petroleum Proceeding, also brought by chambers summons dated 30 April 2024 (PP Discovery Application). In advance of the hearing, the parties helpfully populated a Redfern Schedule to assist the Court in its assessment and determination of these applications.
3. As noted, the CITIC Parties also sought orders for the filing of a 'discovery audit affidavit' by the Mineralogy Parties, stating the sources of documents and the searches undertaken over those documents by them, or on their behalf, in respect of each category.
4. The previously ordered discovery is a reference to the various discovery categories which were the subject of discovery orders made in both actions on 22 October 2019. At that time, Kenneth Martin J made orders in the actions for discovery to be given by the Mineralogy Parties by reference to various categories, which categories had largely been agreed by the parties.

1. In the QNI Proceeding, some 43 categories were ordered, described as categories Q1 to Q43. In the Palmer Petroleum Proceeding, some 45 categories were ordered, described as categories P1 to P45.
2. The applications were filed together with an affidavit from Mr Philip Blaxill, a partner at the law firm representing the CITIC Parties, sworn on 3 May 2024 (Blaxill Affidavit). The CITIC Parties also relied upon earlier affidavits of Mr Blaxill sworn on 21 July 2023 and 27 July 2023, both of which were filed for the purposes of the strategic conference held on 28 July 2023. Finally, the CITIC Parties relied upon the affidavit of Ms Monisha Sequeira sworn 18 August 2022, which was filed for the purposes of addressing certain discovery and privilege issues.[18]
3. No affidavit material was adduced by the Mineralogy Parties.
4. Both parties filed detailed written submissions addressing the applications.[19] On the morning of the hearing, I also received three aides-memoire from the CITIC Parties (to summarise the plaintiffs' responses to the CITIC Parties' discovery requests,[20] to provide a chronology of the plaintiffs' change of solicitors,[21] and to show the relevance of the plaintiffs' applications to strike-out the defences[22]).
5. The QNI Discovery Application sought the following orders:

1. By 4.00pm WST on 28 May 2024, the plaintiffs give further and better discovery of categories Q32 and Q38 in Appendix A. 2. By 4.00pm WST on 18 June 2024:

(a) the plaintiffs give further and better discovery of categories Q4, Q5, Q6, Q26, Q31 and Q42 in Appendix A pursuant to Order 26 rule 6 of the Rules of the Supreme Court 1971 (WA) (Rules), alternatively pursuant to Order 26 rule 7(3) of the Rules or the inherent jurisdiction of the Court; and
>
> (b) the plaintiffs give discovery of the categories of documents in Appendix B pursuant to Order 26 rule 7(3) of the Rules.

1. By 18 June 2024, the plaintiffs file and serve an affidavit:

(a) stating the sources of documents and the searches undertaken over those documents by them, or on their behalf, in respect of each of the categories of documents for which discovery is given pursuant to orders 1 and 2 above (including those categories for which no documents are discovered); and
>
> (b) verifying a supplementary list of discovered documents for the discovery given pursuant to orders 1 and 2 above, including to confirm that any documents not discovered are not in the plaintiffs' possession, custody, or power.

1. The plaintiffs pay the defendants' costs of this application.
2. Attached to the QNI Discovery Application were two appendices. The first appendix (Appendix A) identified 8 categories of discovery which had previously been ordered by the Court and in respect of which the CITIC Parties seek further and better discovery (described as Q4, Q5, Q6, Q26, Q31, Q32, Q38 and Q42). The second appendix (Appendix B) identified 43 new categories of discovery which the CITIC Parties seek (described as QN1 to QN43).
3. The scheme of the application was thus as follows.
4. First, the CITIC Parties seek discovery of the documents in the categories in Appendix A, being the previously ordered categories of discovery (see orders 1 and 2(a)). Some of those documents are sought on a more urgent basis than others (see order 1, which sought the documents in Q32 and Q38 before the balance of the documents in the categories in Appendix A).
5. Second, the CITIC Parties sought orders that new discovery categories be ordered, being the categories in Appendix B (see order 2(b)).
6. Third, the CITIC Parties sought orders as to the terms of the discovery affidavit to be filed by the Mineralogy Parties (see orders 3(a) and 3(b)).

1. The PP Discovery Application sought the following orders:

1. By 4.00pm WST on 28 May 2024, the plaintiff give further and better discovery of categories P7, P9, P13, P14, P16, P17, P18, P19, P20, P30, P31, P32, P33, P34, P35, P36, P37, P39 and P40 in Appendix C. 2. By 4.00pm WST on 18 June 2024:

(a) the plaintiff give further and better discovery of categories P28 and P44 in Appendix C pursuant to Order 26 rule 6 of the Rules of the Supreme Court 1971 (WA) (Rules), alternatively pursuant to Order 26 rule 7(3) of the Rules or the inherent jurisdiction of the Court; and
>
> (b) the plaintiff give discovery of the categories of documents in Appendix D pursuant to Order 26 rule 7(3) of the Rules.

1. By 18 June 2024, the plaintiff file and serve an affidavit:

(a) stating the sources of documents and the searches undertaken over those documents by it, or on its behalf, in respect of each of the categories of documents for which discovery is given pursuant to orders 1 and 2 above (including those categories for which no documents are discovered); and
>
> (b) verifying a supplementary list of discovered documents for the discovery given pursuant to orders 1 and 2 above, including to confirm that any documents not discovered are not in the plaintiff's possession, custody, or power.

1. The plaintiff pay the defendants' costs of this application.
2. Attached to the PP Discovery Application were two appendices. The first appendix (Appendix C) identified 21 categories of discovery which had previously been ordered by the Court and in respect of which the CITIC Parties seek further and better discovery (described as P7, P9, P13, P14, P16, P17, P18, P19, P20, P28, P30, P31, P32, P33, P34, P35, P36, P37, P39, P40 and P44). The second appendix (Appendix B) identified 21 new categories of discovery which the CITIC Parties seek (described as PN1 to PN21). The scheme of the application is thus similar to the scheme of the QNI Discovery Application.

1. In summary, the position of the Mineralogy Parties in opposition to the discovery applications is that they agree the Court should presently order that the Mineralogy Parties discover a limited number of the previously ordered discovery categories, but otherwise say the applications should be adjourned.
2. The applications should be adjourned, according to the Mineralogy Parties, after determination of the plaintiffs' previously filed applications or in parallel therewith. Those earlier applications consist of a strike-out application, an application to discharge the previous discovery categories, and an application seeking discovery against the defendants.[23]
3. Principally, the Mineralogy Parties submitted that:

(a) the pleadings in the actions had not yet closed;[24]

(b) the fresh defences filed by the CITIC Parties had deployed general joinders which had inappropriately enlarged the apparent scope of matters in issue in the actions;[25]

(c) the discovery of documents concerning the financial capacity of Mr Palmer and Mineralogy was irrelevant or disproportionate to a just and expeditious resolution of the issue in dispute;[26]

(d) there was no change in circumstances which justified a departure from the original discovery regime which had been ordered in 2019 by Kenneth Martin J;[27] and

(e) the 'discovery audit affidavit' was premature, even if there was power to order such an affidavit.[28]

1. As to the argument identified at [43(c)] above, the Mineralogy Parties drew my attention to their pleading in both actions to the effect that the plaintiffs accepted that they could have provided other funds to QNI or Palmer Petroleum to enable those entities to continue to manage and operate their businesses and meet their funding requirements. The plaintiffs submitted that these pleadings effectively removed the factual controversy from the proceedings in respect of which the defendants were seeking discovery in various respects. I refer to [27AB(d)(i)] of the QNI Reply and to [23G(f)(i)] of the PP Reply.
2. As to the argument identified at [43(d)] above, the Mineralogy Parties submitted there was no proper basis to order new categories of discovery given the previous categories had largely been made by consent. In this regard, the Mineralogy Parties initially placed a great deal of emphasis on the principles considered in cases such as Commonwealth of Australia v Albany Por[29]Authority,29 as to the power of the Court to vary its previous orders. The Mineralogy Parties submitted that, as there was no suggestion that the prior consent orders were made under a mistake by either party, there was no basis to revisit the previous categories.
3. There is, of course, a power in O 26 r 16 RSC which permits previous discovery orders in an action to be revoked or varied. The existence of that power obviates the need to address the principles detailed in Commonwealth of Australia v Albany Port Authority. The rule states:

Any order which has been made under this Order, including an order made on appeal, may, on sufficient cause being shown, be revoked or varied by a subsequent order or direction of the Court made or given at or before the trial of the cause or matter in relation to which the original order was made.

1. Given the presence of the power in O 26 r 16 RSC the Mineralogy Parties were permitted an opportunity to provide further submissions on this point following the hearing. With particular focus on this rule, the plaintiffs submitted in their further set of submissions[30] that the 'sufficient cause' criterion was not engaged on the merits and resisted the exercise of the power accordingly.
2. As to the argument identified at [43(e)] above, the Mineralogy Parties opposed any order that they be required to file a 'discovery audit affidavit'. The Mineralogy Parties opposed such an order on the basis there was no power to ground an order of that type (or at least none had been identified by the CITIC Parties) and also on the merits, including by pointing to the relatively limited time in which the plaintiffs' current solicitors had been on the record.
3. The limited discovery the Mineralogy Parties accepted should now be ordered is confined to the following previously ordered categories:

(a) categories Q4, Q5, Q6, Q31, Q32 and Q38 in the QNI Proceeding; and

(b) categories P7, P9, P13, P14, P16, P17, P18, P19, P20, P30, P31, P32, P33, P34, P35, P36, P37, P39 and P40 in the Palmer Petroleum Proceeding.

1. As earlier noted, the precise position of the Mineralogy Parties became evident through the filing of drafts minutes of orders, which I gave leave to be filed at the conclusion of the hearing on 21 May 2024.

1. The present applications for discovery orders were brought by the CITIC Parties on the three bases which support the making of discovery orders in this Court, namely the inherent jurisdiction of the Court, O 26 r 6 RSC, and O 26 r 7 RSC.
2. An explanation of these bases for ordering discovery was recently given by Hill J in Destec Pty Ltd v Mineral Resources Ltd [No 3].[31] Earlier analyses of these sources of power can be found in the decisions of Murphy JA in Technomin Australia Pty Ltd v Xstrata Nickel Australasia Operations Pty Ltd [32] and Edelman J in Perpetual Trustees Company Ltd v Burniston.[33] I respectfully endorse those statements, without repeating them here.
3. I also respectfully refer to and endorse the principles expressed in Maek Pty Ltd v Ibrahim[34] and in Roe v Western Australia[35] concerning the approach to be adopted by this Court in ordering discovery. The broad power in O 26 r 7 RSC is subject to these principles, as well as the principles enunciated in O 1 r 4A and r 4B RSC. Indeed, O 26 r 7(3) RSC in terms states that the court is to have regard to O 1 r 4B RSC.
4. As noted above, the 'discovery audit affidavit' order sought by the CITIC Parties was opposed by the Mineralogy Parties, who disputed the existence of the power to make such an order. Given the dispute between the parties on this issue, it is appropriate I comment on the existence of the power in brief terms.
5. For my part, I have little doubt the Court has power to make an order of the type sought by the CITIC Parties, in an appropriate case.
6. The Court is empowered to order a party to civil proceedings to give such an affidavit, whether to be sworn by the party or its solicitor, through the exercise of the specific power in O 26 r 15 RSC. The Court has specific power under this rule to make such orders 'as it thinks just' where there has been a failure to comply with any of the rules in Order 26 or with any discovery orders. The power is specifically drafted to extend to include the making of quite grave orders, such that an action be dismissed or a defence be struck out, with judgment being entered.
7. The terms of O 26 r 15 are as follows:

15. Non‑compliance with requirements for discovery etc.

(1) If any party who is required by any of the rules of this Order or by any order made thereunder, to give discovery of documents or to produce any documents for the purpose of inspection or any other purpose fails to comply with any provisions of that rule or with that order, as the case may be, then without prejudice, in the case of a failure to comply with any such provision, to rules 7 and 9(1) the Court may make such order as it thinks just including in particular, an order that the action be dismissed or as the case may be, an order that the defence be struck out and judgment entered accordingly.

(2) If any party fails to comply with an order for discovery or production of documents then, without prejudice to subrule (1) he shall be liable to attachment.

(3) Service of an order for discovery or production of documents on the solicitor for the party against whom the order has been made shall be sufficient service to found an application to enforce the order, but it shall be an answer to the application if the party shows that he had no notice or knowledge of the order.

(4) A solicitor on whom an order against his client for discovery or production of documents is served under subrule (3) who fails without reasonable excuse to give notice thereof to his client shall be liable to attachment. (underlining added)

1. The power in O 26 r 15 RSC delineates between failures to comply with provisions of O 26 RSC and failures to comply with orders made by the Court. In the case of failures to comply with provisions of O 26 RSC, rule 15 recognises the potential operation of rules 7 and 9(1) which permit specific applications to be made thereunder to secure further orders for discovery or inspection. Where there have been failures to comply with orders of the Court, rules 2, 3 and 4 are engaged and render the party in default (and their solicitor) liable to attachment.
2. The power in O 26 r 15 RSC has been exercised in circumstances in which quite dramatic failings in the provision of discovery have occurred, with orders being made to strike-out a pleading or part of a pleading, or to have judgment entered.
3. For example, in Magenta Nominees Pty Ltd v Bonini,[36] the defendant had taken out a summons for orders striking out the plaintiff's claim and defence to counterclaim, and for judgment pursuant to O 26 r 15 RSC. In considering the court's use of the power to enter judgment, Wheeler J opined:[37]

It appears to me that the principles governing an application of this kind are to be found in J & J Products (a firm) v Ken Gray & Co (a firm) unreported; FCt SCt of WA; Library No 960219; 24 April 1996. Such an order may be appropriate in the case of contumacy, but it may also be appropriate in a case in which a party has 'been persistently dilatory in taking steps in the action, or where it can be inferred, for instance, from non-appearance on interlocutory proceedings, that the party will not or is unlikely to take the necessary steps.' The power of the court to strike out for failure to comply with an order for discovery is to be exercised in such manner as seems to the court best calculated to do justice in the particular case. It is a power that a court will exercise only with some reluctance, because of its serious consequences. However, the orders of the court must be obeyed. A point is reached at which a litigant, who deliberately and without proper excuse disobeys an order, will not be allowed to proceed.

1. By way of further example, in Rapid Metal Developments (Australia) Pty Ltd v Anderson Formrite Pty Ltd (No 4),[38] Hasluck J considered an application made to the court pursuant to O 26 r 15 by the plaintiff for a springing order, arising out of a failure by the defendant to comply with discovery orders. In doing so, his Honour observed as follows:[39]

The court will have regard to the general context of the litigation and not just the particular noncompliance when considering this equivalent of its inherent power to deal inter alia with gross disregard of its orders; see [1.4B.1A]. Because of the serious consequences of doing so, the Court will exercise the discretion with some reluctance and in such manner as seems to the Court best calculated to do justice in the particular case; see Magenta Nominees Pty Ltd v Bonini [1999] WASC 88.

1. Though generally applied to make orders for the purpose of striking out pleadings or for 'springing' orders, the terms of the rule are broader than this, affording the court power to make such orders as it thinks just. That said, the breadth of the power does not permit orders to be made which exceed the purpose of the provision. The power has limits including the precondition there has been a demonstrated failure as described in rule 15(1).
2. In my view, the exercise of this power to compel the filing of an affidavit to explain the steps taken to comply with discovery orders made by the court, and to identify the sources or repositories which have been interrogated to assemble the party's discovery, is supported by the terms of O 26 r 15 RSC and consistent with the evident purpose of the provision. The power affords the court the ability to enforce the orders it had made and to ensure serious deficiencies in the provision of discovery by a party do not work an unfairness to the opposing party.
3. Consistent with the statements of principle made by Wheeler J and Hasluck J referred to above, the power should be exercised with caution and be precise in its terms. The power can only be exercised where there have been demonstrated failures to comply with the discovery orders made by the Court, and with the discovery obligations imposed on a party. That said, the exercise of the power to compel the provision of a compliance affidavit will require less cogent material and a lower degree of contumacy, in general terms, in contrast to a springing order or an order by which judgment is entered adverse to the party. Those types of orders are quite extreme and made in exceptional circumstances.
4. The requirement that a party must file a compliance affidavit will of course not deny that party the ability to maintain their pleading or their claim. The order is of a much lower level of severity. Such an order would also not intrude into the party's right to maintain legal professional privilege. Rather, it will permit the Court to assess whether there has been proper compliance with its orders and with the rules. That is, the affidavit is directed to compliance with the orders which have been made, or with requirements of the rules, through an identification of matters such as the steps taken by the party to discharge the discovery obligations including the repositories of documents which have been searched.
5. Ordinarily, it should be noted, compliance with a party's discovery obligations will be achieved by a combination of the discharge of a legal practitioner's paramount duty to the court to ensure full and frank compliance with its orders and the rules, by a party's obligation to adhere to the orders of the court and the rules, by the requirement to file and serve a list or sworn affidavit in accordance with O 26 RSC, and by the requirement for a legal practitioner to file (but not serve) the certificate described in O 26 r 16A RSC. Rule 16A states:

16A. Certificate by legal practitioner

The legal practitioner of a party giving discovery must -

(a) sign a certificate addressed to the Court that -

(i) states that the duty of discovery has been fully explained to the party; and

(ii) if the party is a corporation, identifies the individual, or individuals, to whom the duty was explained; and

(b) file the certificate when or immediately after the party's list of documents is served.

1. Quite apart from the power in O 26 r 15 RSC, the court has an inherent jurisdiction to control its own processes so as to prevent those processes being used to achieve injustice, as well as a general power to make case management directions pursuant to O 4A r 2(1) and r 5(2) RSC. Both of these powers may also support an order which requires an affidavit to be filed of the type sought by the CITIC Parties, in an appropriate case where there has been an established dereliction or disregard by a party in attending to its discovery obligations.

E. Disposition Matters favouring the immediate determination of the discovery applications

1. The position of the Mineralogy Parties, that the determination of the QNI Discovery Application and the PP Discovery Application should be delayed until the other dormant applications are ready for hearing, does not immediately strike one as compelling.
2. First, it was a position that was not supported by any evidentiary material, at least no material sworn by the plaintiffs or their legal representatives which specifically explains the evident delays to date. It was open to the Mineralogy Parties to file affidavit evidence in opposition to the present applications in order to raise evidentiary responses to the applications.
3. Second, it was a position which was also difficult to accept when regard is had to the delays in the discovery process to date. In particular, it is apparent from the Blaxill Affidavit, as explained in the CITIC Submissions,[40] that the CITIC Parties have pursued the Mineralogy Parties in respect of compliance with discovery orders over some years, bearing in mind the primary discovery orders were made some 4½ years ago. The correspondence emanating from the CITIC Parties' representatives has been met with either inadequate responses, and on some occasions, no response. Again, I only have the CITIC Parties' affidavit material before me in this regard, together with the chronology detailed in Aide Memoire #2.
4. The pursuit of discovery continued during 2023 and into 2024, and appeared to result in a concession by the Mineralogy Parties that discovery was deficient in both actions in several respects. However, there remained requests for discovery which were opposed by the Mineralogy Parties. I have already mentioned that there are several categories of discovery (previously ordered) which the Mineralogy Parties accept should be provided to the CITIC Parties.
5. The CITIC Parties have thus actively pursued their discovery requests, over many years, and fully prepared the present applications seeking interlocutory relief from the Court. Directions were made by the Court to facilitate the hearing and determination of these applications.
6. Third, the pending applications filed by the Mineralogy Parties have not been prepared by those parties so that they may be ready for hearing and determination by the Court in parallel with the CITIC Parties' discovery applications. Indeed, the hearing of those pending applications will be delayed for some weeks, to ensure that affidavits and submissions can be filed and the matter is made ready for final hearing.
7. Let me pause at this point to provide an explanation of the pending applications. In May 2023, I heard applications which had been filed by the Mineralogy Parties in January 2023 in both actions, seeking orders to vary the discovery orders made in October 2019. These applications were brought pursuant to O 26 r 16 RSC and the inherent jurisdiction of the court.
8. In broad terms, the categories in respect of which the Mineralogy Parties sought to be discharged were the categories that related to the financial position of Mr Palmer and the entities related to him (including their assets and liabilities and the value thereof). For example, the Mineralogy Parties sought to discharge category Q26 and Q42 in the QNI Proceeding and P28 and P44 in the Palmer Petroleum Proceeding.
9. These applications were heard in May 2023. Having heard from the parties, the view the Court ultimately formed was that the best course, having regard to the status of the FCD Proceedings as a whole, was to defer any determination of the discharge applications. In reaching this view, the following observations were made:[41]

[24] I consider this is the most appropriate course for the following reasons:

...

1. Fundamentally, whether the power in O 26 r 16 RSC to discharge previous discovery orders of this court should be exercised is a matter which should be approached with a degree of caution, particularly when those orders have been in place for an extended period of time and were made by the previous case manager. In the present context, this means, in my view, that the task should preferably be embarked upon once the pleadings have settled down to a more significant degree than appears at the present. There is a risk that a decision on these applications, made at the present time, might be based on a temporary (or at least non-final) snapshot of the pleadings.
2. The determination of the Discovery Discharge Applications should therefore be deferred until such time as the court can be confident that the pleadings in the QNI Proceeding and the Palmer Petroleum Proceeding (or at least those aspects of the pleadings which directly impact the disputed discovery categories) have been clarified. Once that point is reached, the court can appropriately consider whether the criterion of 'sufficient cause', which conditions the exercise of the power in O 26 r 16 RSC, has been met.

7. In the meantime, the extant obligation on the Mineralogy Parties to provide the discovery required by categories 25, 26 and 42 of the QNI Discovery Orders, and the discovery required by categories 28 and 44 of the PP Discovery Orders, can be addressed through the making of appropriate case management orders. This should be done to ensure the compliance obligation is clear and certain.

1. Case management directions were made to extend the time for compliance with the orders made on 22 October 2019 through to 30 September 2023, with liberty to the parties to apply. Significantly, the discharge applications have not been re-enlivened by the Mineralogy Parties until now, and only in response to the CITIC Parties' discovery applications.
2. As earlier noted, the Mineralogy Parties propose that much of the present discovery applications filed by the CITIC Parties should be adjourned while the pending applications, filed by the Mineralogy Parties in early 2023, are programmed through to hearing.
3. The pending applications are now quite stale. They have laid dormant since around January 2023 or perhaps mid-2023 in one case. It was open to the Mineralogy Parties to re-enliven those applications at any point in time.
4. Further, I made orders at the strategic conference held on 28 July 2023 that parties were to 'confer as to the timetable for filing and determination of any applications as to discovery, with at least an aspirational timetable which includes the filing of applications prior to the end of 2023'. Self-evidently, the Mineralogy Parties did not take steps to ready their applications.
5. The pending applications are now being erected as something of a shield, if I understand the import of the defendants' submissions correctly, to persuade the Court to delay its assessment of the discovery applications filed by the CITIC Parties.

Matters favouring the adjournment of the discovery applications

1. Given the matters set out above, the proper course would ordinarily be for the Court to determine the CITIC Parties' discovery applications immediately. Indeed, the Court should be very reluctant to allow a party in commercial litigation to file, but not properly progress, an interlocutory application or applications, and then allow the pendency of those applications to spike the guns of an opponent seeking to efficiently progress their applications. Such an approach is not consonant with the goal and objects in O 1 r 4A RSC and O 1 r 4B RSC.
2. However, in the very particular circumstances of these actions, but not without some hesitancy on my part, I have concluded that the determination of the present discovery applications should be delayed until all applications can be heard.
3. First, the determination of the CITIC Parties' applications necessarily requires a concentrated focus upon the pleadings of the parties, given the contest between the parties as to which matters remain in issue and which do not. The position of the Mineralogy Parties, that the discovery applications should be delayed, is founded upon an analysis of the pleadings and what is fundamentally put as a logical need for the Court to have before it the final pleadings and for the Court to address outstanding pleading disputes ahead of undertaking a further deep dive into the discovery disputes. I consider there is some force in this submission.
4. The pleadings in both actions have been amended in recent months. There have, over the last 6 or 7 years, been many iterations of the pleadings, some of which are identified in Attachment B to the Court's reasons in Palmer v CITIC Ltd [No 8].
5. The latest pleadings in the QNI Proceeding are the Seventh Amended Statement of Claim dated 22 April 2024, the Amended Substituted Defence dated 17 May 2024, and the Reply to the Substituted Defence to the Substituted Statement of Claim dated 8 March 2024.
6. In the Palmer Petroleum Proceeding, the latest pleadings are the Fourth Amended Statement of Claim dated 22 April 2024, the Amended Substituted Defence dated 17 May 2024, and the Reply to the Substituted Defence to the Substituted Statement of Claim dated 4 March 2024.
7. The plaintiffs have confirmed they propose to amend (and seek leave to amend as necessary) the present replies on foot in light of the amendments to the prior pleadings. Accordingly, in responding to the present discovery applications, the plaintiffs highlighted that the 'pleadings were not closed'.
8. Strictly speaking, for the purposes of O 20 r 20 RSC, it may be true to say that the pleadings are not closed, although the reality is the parties have been exchanging versions of the pleadings over some years now.
9. I note that several versions of the reply pleading in each action have been filed over time and, although the latest amendments to the defences were made only on 17 May 2024, that particular round of amendments was quite modest in scope. The immediately preceding round of amendments to the defences were made in February 2024 which has afforded the plaintiffs some time to consider and take instructions in relation thereto.
10. That said, the further amended reply in each action has not yet been filed and may well see a further change in the scope of the pleaded issues in the proceedings. The prospect of determining extensive discovery applications when the plaintiffs say the pleadings are close to amendment does not present as an attractive or efficient use of judicial resources. It may involve the determination of contested issues and the making of orders for discovery which become inutile through pleading amendments in the near-term. This outcome should be avoided if possible, in my view.
11. Second, and allied to the first point, there is a central question as to the scope of the matters in issue on the pleadings which requires resolution for the purposes of these applications.
12. That question is whether the admission made by the Mineralogy Parties that they could have provided other funds to QNI or Palmer Petroleum to enable those entities to continue to manage and operate their businesses and meet their funding requirements, effectively removes the factual controversy from the proceedings in respect of which the defendants are seeking discovery in various respects. I refer in this regard to the submissions of the Mineralogy Parties at [10] ‑ [13].
13. The Mineralogy Parties submit that they have accepted, at least for the purposes of the litigation, that Mr Palmer 'could have provided other funds to QNI to enable it to continue to manage and operate the Joint Venture Business, and that Mineralogy could have done similarly for Palmer Petroleum to meet its funding requirements at relevant times'.[42] The Mineralogy Parties reject the submission that the CITIC Parties' defences introduce novel issues which breathe life into this issue, and say that, inasmuch as the 'existence of the alleged decisions relies on the ability of Palmer and Mineralogy to provide funds, the plaintiffs have removed that factual controversy from the proceedings'.[43]
14. The parties are thus in fundamental disagreement as to the effect of the admission.
15. The resolution of this issue is important to the progress of the actions in their entirety, not only in relation to the scope of discovery, and thus should only be undertaken by the Court once the pleadings are in final form. These matters also give rise to the potential for consideration by the Court as to which party bears the onus on certain issues, as well as questions of construction of the provisions of the FCD. I would not wish to undertake a detailed analysis of those matters, to the extent they can be addressed in an interlocutory setting, before all relevant applications are ripe for determination. To do so gives rise to potential inefficiencies and the possible need for the Court to consider these key issues on more than one occasion in the future.
16. Third, a range of the categories of documents sought by the CITIC Parties will likely capture sensitive internal documents of Mr Palmer and Mineralogy, relating to the financial position of those parties and the valuation of the assets held by those parties. The Court should be careful not to order the coercive disclosure of sensitive commercial information in litigation which is not strictly necessary for the just determination of the issues in dispute in the litigation.
17. I refer by way of example, but without limitation, to the following new categories in the QNI Proceeding and the Palmer Petroleum Proceeding which appear on their face as being likely to contain sensitive commercial information:

(a) Category QN1 - which seeks discovery of any documents constituting profit and loss forecasts or cashflow forecasts for the Yabulu Refinery or the Joint Venture business prepared since the cessation of the Joint Venture business in around March 2016, including all documents evidencing or recording: (a) any financial model used to generate the profit and loss forecast or cashflow forecast; (b) the assumptions made in the generation of the profit and loss forecast or cashflow forecast; and (c) the bases of those assumptions.

(b) Category QN4 - which seeks discovery of an unredacted copy of the Settlement Deed executed on or about 3 August 2019 by or on behalf of a range of persons and entities including those connected with Mr Palmer.

(c) Category QN15 - which seeks discovery of all documents directly relevant to the true and fair financial position, including full details of all assets and liabilities together with all financial statements, including balance sheets, profit and loss and cash flows and bank statements of certain Mineralogy-related entities.

(d) Category QN22 - which seeks discovery of all tax returns filed by Mineralogy for the financial years ending 30 June 2015 and 30 June 2016.

(e) Category QN23 - which seeks discovery of all tax returns filed by Clive Palmer for the financial years ending 30 June 2014 to 30 June 2016 inclusive.

(f) Category QN25 - which seeks discovery of all documents directly relevant to the true and fair financial position, including full details of all assets and liabilities together with all financial statements, including balance sheets, profit and loss and cash flows and bank statements of each of various entities directly or indirectly controlled by Clive Palmer.

(g) Category PN4 - which seeks discovery of all documents directly relevant to the source and availability of 'other funds' available to Mineralogy or Palmer referred to in [23G(f)(i)] of the Reply.

(h) Category PN5 - which seeks discovery of all documents evidencing or recording Mineralogy's 'own income generating activities' referred to in [23G(e)] of the Reply.

(i) Category PN6 - which seeks discovery of all tax returns filed by Mineralogy for the financial years ending 1 July 2015 and 30 June 2016.

(j) Category PN19 - which seeks discovery of all documents directly relevant to the value of the shares in Palmer Petroleum between 1 January 2016 to 30 September 2017.

1. In circumstances in which the amendments to the pleadings may alter the Court's determination of the issues in dispute, and the scope of the discovery to be ordered, a cautious approach is called for before such sensitive material is required to be disclosed.
2. Fourth, the period of the delay which will result from an adjournment is a relevant factor in the analysis. Having obtained a minute of proposed orders from the Mineralogy Parties following the hearing, it appeared to me that the parallel determination of the various competing applications could be accommodated in the week of 5 August 2024, which involves a delay of around two months.
3. That period of delay, in the context of litigation which has been on foot for many years and is not presently listed for trial, is not so excessive as to generate discernible prejudice to the position of the CITIC Parties, so far as I could assess the issue. Had the actions been listed for trial, the potential for further delays in the determination of interlocutory applications and the potential for case management decisions to destabilise the listed trial would introduce additional considerations for assessment by the Court (which do not here arise).
4. Fifth, at a broad level, the pending applications filed by the Mineralogy Parties overlap and intersect with the CITIC Parties' discovery applications. While there has been delay in progressing the applications by the Mineralogy Parties, the Court should be circumspect about determining a suite of applications such as this in a piecemeal fashion, particularly where the Court is on notice that prior discovery orders are sought to be discharged, and where central parts of the pleadings are under challenge.
5. Balancing these considerations against the matters identified earlier in these reasons which favoured the immediate determination of the CITIC Parties' discovery applications, the view I formed was that all matters relevant to those applications should be heard once the pleadings had been further amended and the dormant applications of the Mineralogy Parties were ready for hearing. The potential for the inefficient use of judicial resources and duplicated hearings, and the absence of material prejudice from the comparative short delay, outweigh the considerations which would otherwise favour the immediate determination of the CITIC Parties' discovery applications.

Whether a discovery audit affidavit should be ordered

1. In light of the asserted delays with the discovery process, the CITIC Parties urge the Court to make orders compelling the Mineralogy Parties to file a discovery audit affidavit. The matters which that affidavit would address are set out earlier in these reasons. The CITIC Parties submit there is power to make such an order and there are sufficient grounds to justify the exercise of the power here.
2. The order is opposed by the Mineralogy Parties, who reject the submission there have been delays and deficiencies of the magnitude suggested by the CITIC Parties. The Mineralogy Parties also call into issue the existence of the power to make such an order.
3. As I have indicated above, I am satisfied there is power to make the order sought. Should the power be exercised to grant the order sought by the CITIC Parties? In my view, it is premature to order that such an affidavit be prepared and there would be insufficient utility in so ordering, at least at this stage.
4. In saying this, I do not regard the discovery efforts of the Mineralogy Parties as timely or satisfactory. However, given my view that the question whether the contested discovery orders sought by the CITIC Parties should be held over, the utility to be gained by requiring (at this stage) a historical explanation of searches undertaken and the sources of the documents which have been discovered is minimal, at best.
5. Further consideration as to whether such an affidavit should be ordered can be revisited at the conclusion of the discovery process if there remain evident deficiencies in the process and in the documents provided. On appropriate demonstration of such matters, the power may then be exercised for the purposes of ensuring there has been proper compliance with the discovery regime.
6. I should nonetheless comment on the plaintiffs' submissions concerning the changes which have occurred as to the solicitors on the record for the plaintiffs. In opposing the making of orders in respect of the discovery audit affidavit sought by the CITIC Parties, the Mineralogy Parties emphasised that the present solicitors on the record (Alexander Law) had only come onto the record relatively recently (in fact, in April 2024). It would not be fair, it was submitted by the Mineralogy Parties, to have new solicitors swear a discovery audit affidavit in the early stages of their engagement. That may be accepted in principle, at least in general terms.
7. In my view, it is wrong to suggest that Alexander Law are new to this litigation or that the recent change of solicitors should be seen as a consideration pointing against the order sought by the CITIC Parties.
8. Alexander Law, and the relevant partner of that firm, have had a lengthy involvement with these actions.
9. That law firm was on the record for the Mineralogy Parties from around June 2017 (in the QNI Proceedings) and from around February 2018 (in the Palmer Petroleum Proceedings), until Robinson Nielsen emerged as the solicitor for the Mineralogy Parties in June 2022.
10. The partner of Alexander Law, who is identified as the present lead solicitor on the record in both the QNI Proceeding and the Palmer Petroleum Proceeding, is Mr Iskander. He was directly involved in the discovery process which was undertaken by the Mineralogy Parties in 2020 and 2022. In fact, Mr Iskander swore discovery affidavits in this regard.
11. The foregoing comments are not intended as a criticism of the solicitors involved. I simply reject the 'fairness' submission made by the Mineralogy Parties. There would be no unfairness, either to the Mineralogy Parties themselves or to the solicitors on the record for them, to order that a discovery audit affidavit now be sworn. I can reasonably infer that Mr Iskander has a close familiarity with the proceedings given he was on the record when the discovery orders were made and he has sworn affidavits in relation thereto. He is also capable of taking instructions from the plaintiffs to explain the steps which have been undertaken to comply with their discovery obligations.
12. Nonetheless, for the reasons given above, I do not propose to exercise that power at this stage.

1. For the foregoing reasons, I made orders on 24 May 2024 as set out in Attachment A and Attachment B hereto.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

[3] Palmer v CITIC Ltd [2017] WASC 253 (Le Miere J) (Stay application); Palmer v CITIC Ltd [No 2] [2019] WASC 14 (Kenneth Martin J) (Preliminary questions application); Palmer v CITIC Ltd [No 3] [2019] WASC 424 (Kenneth Martin J) (Discovery categories); Sino Iron Pty Ltd v Mineralogy Pty Ltd [2022] WASC 151 (Quinlan CJ) (Costs application); Palmer v CITIC Ltd [No 4] [2022] WASC 292 (Kenneth Martin J) (Strategic conference and timetabling); Palmer v CITIC Ltd [No 5] [2023] WASC 44 (Kenneth Martin J) (Directions and timetabling); Palmer v CITIC Ltd [No 6] [2023] WASC 188 (Lundberg J) (Application to set aside subpoenas); Palmer v CITIC Ltd [No 7] [2023] WASC 202 (Lundberg J) (Strike‑out applications); Palmer v CITIC Ltd [No 8] [2023] WASC 221 (Lundberg J) (Amendment applications); Palmer v CITIC Ltd [No 9] [2023] WASC 238 (Lundberg J) (Discharge of prior orders); and Palmer v CITIC Ltd [No 10] [2023] WASC 417 (Lundberg J) (Application to amend statement of claim).

[4] Plaintiffs' Minute of Proposed Orders in CIV 2072 of 2017 filed on 22 May 2024; and Plaintiff's Minute of Proposed Orders in CIV 1267 of 2018 filed on 22 May 2024. The orders were further amended in one respect on 23 May 2024.

[5] It is common ground that the FCD is dated 22 October 2008 and the named parties to the instrument are Mineralogy Pty Ltd, Sino Iron Pty Ltd, Korean Steel Pty Ltd and CITIC Ltd.

[6] 7ASOC (in the QNI Proceeding) [21] - [33].

[7] 7ASOC [34] - [36A] and [44A(b)] and [44A(c)].

[16] 4ASOC (in the Palmer Petroleum Proceeding) [42] and [42A].

[17] CITIC Submissions [36] and [37] (see footnote references to the pleas in the Palmer Petroleum Proceeding).

[18] In the Blaxill Affidavit, Mr Blaxill sought leave to refer to the earlier affidavit of Mr Paynter sworn 8 December 2021, but no reliance was placed on that affidavit at the hearing and so I have put the affidavit to one side.

[19] CITIC Parties' submissions dated 3 May 2024 (CITIC Submissions) and Mineralogy Parties' submissions dated 20 May 2024 (Mineralogy Submissions).

[23] These applications had been filed in both actions by the plaintiffs in January 2023.

[24] Mineralogy submissions [7] - [9].

[26] Mineralogy submissions [10] - [16].

[27] Mineralogy submissions [17] - [24].

[28] Mineralogy submissions [25] - [31].

[29] Commonwealth of Australia v Albany Port Authority [2006] WASCA 185.

[30] Mineralogy Parties' further outline dated 22 May 2024.

[31] Destec Pty Ltd v Mineral Resources Ltd [No 3] [2024] WASC 135 [22] - [34] (Hill J).

[32] Technomin Australia Pty Ltd v Xstrata Nickel Australasia Operations Pty Ltd [2010] WASC 218 (Murphy JA).

[33] Perpetual Trustees Company Ltd v Burniston [2012] WASC 26 (Edelman J).

[34] Maek Pty Ltd v Ibrahim [2022] WASC 285 [25] ‑ [27] (Quinlan CJ).

[35] Roe v The State of Western Australia [2013] WASC 130 [10] ‑ [11] (Martin CJ).

[36] Magenta Nominees Pty Ltd v Bonini [1999] WASC 88.

[37] Magenta Nominees Pty Ltd v Bonini [89].

[38] Rapid Metal Developments (Australia) Pty Ltd v Anderson Formrite Pty Ltd (No 4) [2009] WASC 169.

[39] Rapid Metal Developments (Australia) Pty Ltd v Anderson Formrite Pty Ltd (No 4).

[40] CITIC Submissions [12] - [25].

[41] Palmer v CITIC Ltd [No 9] [24].