PALMER -v- CITIC LTD [No 13] [2024] WASC 325 (10 September 2024)

(a) as to [7J] of the QNI ASD, which concerns the onus arising under cl 9.1(e) of the FCD, see [48] of these reasons;

(b) as to [44(b)(v)], [44A(c)(i)], [50(g)] and [50A] of the QNI ASD, which concern the pleading as to 'Palmer's Own Decision', see [75] of these reasons; and

(c) as to [50C], [53A] and [53B] of the QNI ASD, which concern the allegation of failure to take reasonable steps, see [101] of these reasons.

1. To assist in understanding these reasons, I have set out the relevant terms of the FCD in Attachment A to these reasons. The further and better particulars which have been requested in the QNI Proceeding are in Attachment B, and the relevant pleadings under challenge in the two actions are extracted in Attachments C and D.

1. The principles informing applications of this nature are well-settled. I collected the authorities and the principles in my reasons in Palmer v CITIC Ltd [No 7] [8]and Palmer v CITIC Ltd [No 8].[9] In both of those decisions, I referred to the observations of Smith J in Vantage Holdings Group Pty Ltd v Donnelly [No 4].[10] The principles collected by Smith J are summarised below.
2. Strike‑out applications, in a modern context, must be assessed in the context of case management techniques. Case management considerations are not, however, necessarily antithetical to the observance of pleading rules. The objects of O 1 r 4A and r 4B RSC are often promoted by a clear and precise statement of the issues for decision.[11]
3. Provided a pleading fulfils its basic functions of identifying the issues, disclosing an arguable cause of action (or defence), and apprising the parties of the case that has to be met, the court ought properly be reluctant to allow the time and resources of the parties and the limited resources of the court to be spent extensively debating the application of technical pleading rules that evolved in, and derive from, a very different case management environment.[12]
4. Moreover, the mere fact that a case appears weak is not of itself sufficient to strike‑out the action.[13] As a general rule, a party is entitled as of right to have his or her case heard, to have the facts found and then to argue the question of law as it arises before the trial judge upon the facts as found.
5. It is fundamental that, on a strike‑out application, not only must all the facts alleged in the pleading be accepted as true, but it must be taken for granted that on all other points the pleading is unassailable.[14]
6. Pleadings may be struck out on the ground that they may prejudice, embarrass or delay the fair trial of the action because they are evasive, they conceal or obscure the real questions in controversy, they are ambiguous or not reasonably intelligible, they raise immaterial or irrelevant issues, they fail to confine the issues or state the case of the party in question with reasonable particularity, or they raise a case in terms which are simply too general.[15]
7. Irrelevant or unnecessary pleas in a statement of claim will be struck out on the grounds that they will prejudice, embarrass or delay the fair trial of the action where the defendant must traverse the allegations and, thereby, raise false issues.[16]
8. Where difficult questions of law are raised on the pleadings, including questions of contractual or statutory construction, caution should be exercised before the pleading is struck out on the ground that it does not disclose a reasonable cause of action. It would usually be appropriate to leave the determination of such questions for trial.[17]
9. In those earlier decisions, I also made reference to the observations of Martin CJ in Barclay Mowlem Construction Ltd v Dampier Port Authority,[18] which I need not repeat, and the subsequent reasons of Archer J in Trackem Pty Ltd v Revenue Partners (A Partnership).[19] In that later decision, Archer J referred to the requirement for a witness outline to be disclosed prior to trial, which serves to reduce the risk of ambush and provides clarity to an opposing party. In actions in the CMC List, the holding of strategic and other conferences also serve to identify the issues to be determined at trial.[20]
10. Finally, I refer to the statements of Vaughan J (as his Honour then was) in National Australia Bank Limited v Rowe,[21] which were endorsed by the Court of Appeal in Rowe v National Australia Bank.[22] In Rowe, Vaughan J drew particular attention to the terms of O 20 r 8(1) RSC, which relevantly provides:

... every pleading must contain, and contain only, a statement in a summary form of the material facts on which the party pleading relies for his claim or defence, as the case may be, but not the evidence by which those facts are to be proved, and the statement must be as brief as the nature of the case admits. (emphasis added)

1. None of the foregoing means that the need for a proper pleading can be ignored. The pleading must still fulfil its basic functions. It remains important for a pleading to inform the opposing party of the case it must meet at trial and it will not do so unless it includes every material fact which, if not pleaded, might take an opposing party by surprise.

1. I have had the benefit during the course of previous interlocutory hearings in this matter to be taken through the parties' pleadings by senior counsel for both parties. At the most recent hearing, the Court was again reminded of the detail of the pleaded cases, and both senior counsel subjected the pleadings to close scrutiny.
2. I now have the additional benefit of the Mineralogy Parties' reply pleadings in both actions. The filing of the replies demonstrates that the Mineralogy Parties have, at the very least, not been precluded from answering the CITIC Parties' defences by reason of the asserted pleading deficiencies therein.
3. Before I descend into the detail of the pleading arguments, it is helpful to explain the broad cases to be presented by these parties, as emerges from a review of the pleadings.

1. The Mineralogy Parties advance a claim in the QNI Proceeding that CITIC Ltd is required to indemnify the Mineralogy Parties for the loss suffered by Mr Palmer in accordance with cl 11.5(c) of the FCD.[23] The quantum sought by the Mineralogy Parties is in the order of $1.8 billion. As appears from cl 11.5(c) of the FCD, the indemnity which CITIC Ltd has given is with respect to 'any loss suffered, paid, or incurred' by Mr Palmer or Mineralogy 'in relation to' two subject matters. The subject matters identified in the instrument are:

(a) the failure of Sino Iron and Korean Steel to perform their obligations under the MRSLAs; or

(b) CITIC Ltd's failure to cause those entities to perform their obligations under the MRSLAs.

1. The case advanced by the Mineralogy Parties, at a factual causal level, is largely found in [44] and [44A] of the 7ASOC, and the pleading then ultimately returns to the contractual language of the FCD at [50] of the 7ASOC, under the heading 'Relational Loss'.
2. At [44], it is alleged that the CITIC parties did not pay the RCB payments to Mineralogy, which were due and owing under the MRSLAs, in the period between December 2013 and March 2017 (in general terms), although there is a particular focus on the period towards the end of 2015 when the Mineralogy Parties assert that working capital in the amount of $28m was required by QNI.[24]
3. At [44A], it is asserted that, if the RCB payments had been made, Mineralogy would have provided funds to QNI to enable it to continue to manage and operate the joint venture business. It is largely common ground that QNI went into voluntary administration and then liquidation during the early months of 2016.
4. At [48], Mr Palmer alleges he suffered a loss by reason of the foregoing matters in that he was unable to sell his shares on the basis the Yabulu Refinery was a going concern. Mr Palmer is pleaded to have had a beneficial shareholding in QNI and the other related entities.[25] At [49], Mr Palmer alleges he suffered a loss in the diminution in value of his shareholding in the Nickel Consolidated, Nickel Processing and Nickel House entities.
5. In the alternative to [48] and [49], there is a loss of opportunity case pleaded at [49A], to the effect that Mr Palmer lost the opportunity to sell his shareholding for market value.
6. As noted, the pleader then returns to the text of the FCD, and the essence of the contractual indemnity which is the sole cause of action pleaded, in [50] of the 7ASOC. The pleading expressly alleges that the loss suffered by Mr Palmer is in relation to the failures of Sino Iron or Korean Steel to perform their obligations under the MRSLAs, and CITIC Ltd's failure to cause those entities to perform their obligations under the MRSLAs.

1. Within the QNI ASD, the CITIC Parties have alerted the Mineralogy Parties, and the Court, to their intention to raise arguments as to the proper construction of the FCD. I refer to [7C], [7D], [7DB], [7F] and [7J] of the QNI ASD.
2. The construction issues raised will require close attention to be paid to the text of the FCD. For example, [7DB] advances a construction that the indemnity obligation in cl 11.5(c) was limited to loss suffered, paid, or incurred by Mr Palmer in relation to failures to perform obligations owed to Mr Palmer (not to Mineralogy). An alternative construction emerges in [7F], to the effect that cl 11.5(c) is limited to loss suffered, paid, or incurred by Mineralogy (not Mr Palmer). These two pleas are not presently under challenge. The plea in [7J] is challenged, however, on the present applications.
3. At a structural level, insofar as the present applications are concerned, the defence pleaded by the CITIC Parties then operates as follows.
4. First, at [49A] of the QNI ASD, the CITIC Parties allege that Mr Palmer has not suffered any loss given the matters pleaded at [37] to [44] of the QNI 7ASOC.
5. Second, at [50], the CITIC Parties assert that any loss suffered by Mr Palmer was not 'in relation to' the failures by the CITIC Parties to comply with their obligations because his loss:

(a) is not direct loss or damage attributable to the breach of the MRSLAs (see [50A(a)] and the proper construction pleaded at [7C]);

(b) does not arise naturally from the breach of the MRSLAs (see [50A(b)] and the proper construction pleaded at [7D(a)]);

(c) cannot reasonably be supposed to have been contemplated by the parties, when they made the FCD in October 2008, as the probable result of the breach (see [50A(c)] and the proper construction pleaded at [7D(b)]);

(d) is not loss suffered, paid or incurred by Mr Palmer in relation to a failure of Sino Iron or Korean Steel (or both) to perform its obligations to Mr Palmer under the FCD or the Takeover Agreements or the failure of CITIC to cause Sino Iron or Korean Steel (or both) to perform its obligations to Mr Palmer under the FCD or the Takeover Agreements (see [50A(d)] and the proper construction pleaded at [7DB]); and

(e) was in relation to 'Palmer's Own Decision' (see [50(g)]), which is said to be supported by the matters at (i) to (x) thereof.

1. The full detail of the matters pleaded in support of [50(g)] can be seen in the extract at Attachment C to these reasons, but in essence the plea includes allegations that Mr Palmer 'used, or caused to be used, significant sums from the Joint Venture business to fund other Palmer-related investments, including during periods when the Joint Venture business was loss making and cash flow from operating activities was negative'.
2. Further, the CITIC Parties plead within [50(g)] that there was a course of conduct on the part of Mr Palmer by which he caused 'QNI to make significant payments that were not for the purposes of the Joint Venture business, including during periods when the Joint Venture business was loss making and cash flow from operating activities was negative'.
3. The pleading relevantly incorporates an allegation within [50(g)] that by making Palmer's Own Decision, Mr Palmer 'was likely to be in a position to avoid or mitigate liabilities associated with a solvent closure of the Yabulu Refinery'.
4. The case to be advanced at trial by the CITIC Parties, insofar as the causal plea as to Mr Palmer's 'own decision' is concerned, is further explained at [50A] of the QNI ASD. It is pleaded that this decision is constituted by, or can be inferred from, thirteen matters pleaded as [50A(a)] to [50A(m)] of the QNI ASD. Those matters are, in summary:

(a) Mr Palmer had 'previously provided material financial support' to QNI in 2013, but chose not to do so in late 2015;

(b) Mr Palmer could have, but chose not to, cause Mineralogy to repay the Mineralogy Debt;

(c) Mr Palmer could have, but chose not to, repay other debts that were owed by Mr Palmer to QNI;

(d) Mr Palmer could have, but chose not to, make available assets which QNI had previously disposed of to, or for the benefit of, Mr Palmer;

(e) Mr Palmer could have, but chose not to, cause QNI to realise available assets;

(f) Mr Palmer could have, but chose not to, issue call notices prior to the appointment of administrators;

(g) Mr Palmer could have, but chose not to, cause QNR or QNM to indemnify QNI in circumstances where QNI was and is entitled to an indemnity or right of exoneration against the QNI Joint Venturers jointly and severally;

(h) Mr Palmer could have, but chose not to, make assets owned by Mr Palmer available as security to enable QNI to obtain loans or other funding from financiers;

(i) Mr Palmer could have, but chose not to, make assets owned by entities directly or indirectly controlled by Mr Palmer (other than QNI, QNR, QNM and QNS) available as security to enable QNI to obtain loans or other funding from financiers;

(j) Mr Palmer could have, but chose not to, provide funds or other assets to QNI to enable QNI to avoid the appointment of administrators;

(k) Mr Palmer could have, but chose not to, provide funds to the administrators of QNI to meet projected cash shortfalls, after the administrators had made Mr Palmer aware that without the funds they would cause QNI and the Joint Venture business to cease trading;

(l) Mr Palmer chose to appoint QNS as general manager of the Joint Venture without QNS having attended to obtaining the necessary licenses and approvals for QNS to operate the Yabulu Refinery; and

(m) Mr Palmer did not re-open, or cause to be re-opened, the Yabulu Refinery after Mineralogy received the judgment sum in the RCB litigation (in the sum of US$1.914 billion) and payment of the royalty component A in the amount of A$171 million, and after one of Mineralogy's indirect wholly-owned subsidiaries received US$146.7 million.

1. Third, returning to the broad structure of the defence, the CITIC Parties set out an alternative plea at [50C] of the QNI ASD that if

Mr Palmer did suffer loss, CITIC Ltd is not required to indemnify him for that loss in accordance with cl 11.5(c) because of his failure to take all reasonable steps to minimise and, where possible, avoid any loss or damage suffered by him, which is said to be in breach of cl 9.1(e) of the FCD. This failure is pleaded to be constituted by the matters pleaded at [50A(b)] to [50A(k)], to which I have referred above. The CITIC Parties contend at [50C(b)] that these matters 'would have produced funds which could have been used to satisfy QNI's liabilities as and when they fell due to avoid QNI going into voluntary administration and to enable QNI to continue managing and operating the Joint Venture business'. 2. Fourth, there is a related plea at [52] of the QNI ASD, which is pleaded in the alternative, that if Mr Palmer has suffered loss in respect of which CITIC Ltd is required to indemnify him, that liability is excluded because of Mr Palmer's failure to take all reasonable steps to minimise and where possible avoid any loss or damage, in breach of cl 9.1(e) of the FCD. 3. Fifth, the CITIC Parties plead set-offs as further alternatives, at [53A] and [53B] of the QNI ASD.

1. By [1AA] of the QNI Reply, a broad response to the entirety of the QNI ASD is pleaded, which:

(a) reiterates the core contention of the Mineralogy Parties that Mineralogy would have provided funds to QNI to enable it to continue to manage and operate the Joint Venture business ([1AA(a)]);

(b) reiterates that the loss which is alleged is in relation to the matters expressly identified and covered by cl 11.5(c) of the FCD ([1AA(b)]);

(c) asserts that it is the indemnifying party under the FCD who bears the onus of proving, for the purposes of cl 9.1(e) of the FCD, that the indemnified party has not taken all reasonable steps to minimise and, where possible, avoid any loss or damage suffered by the indemnified party ([1AA(c)]);

(d) asserts that to the extent the CITIC Parties rely on acts or omissions before about January 2013, such acts or omissions occurred before the Mineralogy Parties received notice that Sino, Korean and/or CITIC would refuse to pay Royalty Component B in accordance with their obligations in the MRSLAs and/or the FCD ([1AA(d)]);

(e) asserts that to the extent the CITIC Parties rely on the circumstance that the Mineralogy Parties were allegedly on notice from about January 2013 that the CITIC parties were refusing to pay RCB in accordance with their obligations in the MRSLAs and/or the FCD, on a proper construction of cl 9.1(e) of the FCD, the Mineralogy Parties are not required to restructure their affairs to accommodate the CITIC Parties' persistent breaches of contract and the CITIC Parties are purporting to take advantage of their own persistent breaches of contract ([1AA(e)]);

(f) asserts that to the extent the CITIC Parties rely on acts or omissions before about August 2015, such acts or omissions occurred before the Mineralogy Parties were aware of the downturn in the price of nickel ([1AA(f)]); and

(g) asserts that to the extent the CITIC Parties allege that Mr Palmer could have provided funds directly or indirectly to QNI to enable it to continue to manage and operate the Joint Venture business, this was not a reasonable step for him to take in the circumstances ([1AA(g)]).[26]

1. Further, the QNI Reply includes responsive pleas to the proper construction pleas at [7B], [7C], [7D], [7DA], [7DB], [7F] and [7J] of the QNI ASD. Relevantly, the QNI Reply also responds to [44], [44A], [50], [50A] and [50C] of the QNI ASD.

E. The pleas concerning the onus under cl 9.1(e) of the FCD Overview

1. The first aspect of the QNI ASD challenged by the Mineralogy Parties concerns the pleas to the effect that the Mineralogy Parties (as the plaintiffs) bear the onus of proving compliance with cl 9.1(e) of the FCD before the CITIC Parties are obliged to indemnify the plaintiffs.
2. The relevant sub-paragraphs of the pleading under challenge are [7J(a)] and [7J(b)]. These sub-paragraphs have been a fixture of the QNI ASD for some considerable time.[27]
3. It will be recalled from earlier decisions of the Court in these actions that the Mineralogy Parties advance a claim in the QNI Proceeding that CITIC Ltd is required to indemnify the Mineralogy Parties for the loss suffered by Mr Palmer in accordance with cl 11.5(c) of the FCD.[28] The quantum sought by the Mineralogy Parties is in the order of $1.8 billion. The Mineralogy Parties contend that cl 11.5(c) is a promise of indemnity and in that sense bears similarity with contracts of insurance where it is settled that the burden of proof depends on the construction of the particular policy.[29] When bringing a claim, the insured will need to establish that the loss falls within the promise to insure. In the case of exceptions, the burden depends on the breadth of the exception. If it qualifies the entirety of the promise, the burden rests with the insured, and vice versa, according to the Mineralogy Parties' submissions.[30]
4. The effect of the plea in the QNI ASD, if accepted, is that at trial the Mineralogy Parties would bear the onus of proving satisfaction of cl 9.1(e) as a condition precedent to the indemnity conferred by cl 11.5(c). The Mineralogy Parties contend that, whether cl 9.1(e) operates in this manner depends on its proper construction. It is contended by the Mineralogy Parties that the construction which underpins the CITIC Parties' plea is wrong as a matter of law.[31] The Mineralogy Parties submit that the Court is able to resolve this question at an interlocutory level, ahead of trial, and further, by striking out the impugned portion of the QNI ASD, the parties will have greater certainty when completing interlocutory steps leading to trial and during the trial.[32]
5. I have received detailed submissions from the Mineralogy Parties as to the proper construction of the FCD.[33] The CITIC Parties have similarly presented detailed arguments explaining the correctness of their pleaded constructions, and further explaining why, in their clients' view, the issues as to the construction of cl 9.1(e) are not apt for summary determination.[34]

1. The starting point for the analysis of the present application, as initially framed by the Mineralogy Parties and as filed pursuant to O 20 r 19(1) RSC, is that it is typically not the function of the Court at this stage to 'determine' the constructional issues arising on the pleadings. By this, I mean it is not the function of the Court to express an opinion as to whether the instrument should be construed in a particular manner, such as the manner which is pleaded in [7J] of the QNI ASD.
2. Rather, the question for the Court on the applications as filed is to assess whether the grounds identified in sub-rule (1) are engaged, including as to whether the pleading discloses no reasonable defence, or is frivolous or vexatious etc. It is orthodox that a strike-out application must be assessed having regard to the principles identified at [13] to [22] above. Thus, if the pleading of the construction question is clearly untenable, or otherwise answers the descriptions of the grounds identified in sub-rule (1), the pleading ought be struck out.
3. In my view, the pleading cannot be characterised as untenable in the relevant sense, and is otherwise not liable to be struck out. The constructional issues which are raised by [7J] are at least arguable and appropriate questions for determination at trial. The competing submissions of the parties, and the oral arguments developed by both senior counsel at the hearing, provide an adequate basis to reach this conclusion. I accept it is at least arguable that the proper construction of the contractual indemnity in the FCD, and cl 9.1(e) in particular, is that it casts the sub-clause as an essential element of the cause of action afforded by the instrument, namely a condition precedent to the right to maintain the action or perhaps an integral element of the scope of the indemnity. That conclusion is reasonably arguable having regard to a fair reading and application of the general principle stated by Jordan CJ in Kodak (Australasia) Pty Ltd v Retial Traders Mutual Indemnity Insurance Association,[35] an authority cited and closely examined by both parties in their written submissions. Jordan CJ, speaking for the Court, expressed the principle as follows:[36]

Again, a plaintiff seeking to enforce an obligation qualified by a general exception which is applicable to all cases must negative the exception; but if the obligation is general and qualified only by particular exceptions, a person seeking to rely on an exception must prove himself within it...

1. The indemnity granted by the FCD arguably falls within the first part of Jordan CJ's statement. This is not a clear case in which the pleaded construction is manifestly deficient.
2. In reaching this view, I am mindful of the well-known observations of Barwick CJ in General Steel Industries Inc v Commissioner for Railways (NSW).[37] Barwick CJ pointed out that great care was to be exercised to ensure that a plaintiff was not improperly deprived of the opportunity for the trial of the case 'under the guise of achieving expeditious finality'.[38] To a similar effect, in Agar v Hyde,[39] Gaudron, McHugh, Gummow and Hayne JJ would later observe:[40]

It is, of course, well accepted that a court whose jurisdiction is regularly invoked in respect of a local defendant (most often by service of process on that defendant within the geographic limitations of the court's jurisdiction) should not decide the issues raised in those proceedings in a summary way except in the clearest of cases. Ordinarily, a party is not to be denied the opportunity to place his or her case before the court in the ordinary way, and after taking advantage of the usual interlocutory processes. The test to be applied has been expressed in various ways, but all of the verbal formulae which have been used are intended to describe a high degree of certainty about the ultimate outcome of the proceeding if it were allowed to go to trial in the ordinary way. (footnotes omitted)

1. That said, Barwick CJ also observed that the summary intervention of the court was not reserved for cases where 'argument is unnecessary to evoke the futility of the plaintiff's claim',[41] and accepted that argument, 'perhaps even of an extensive kind, may be necessary to demonstrate that the case of the plaintiff is so clearly untenable that it cannot possibly succeed'.[42] There are cases, Lepcanfin Pty Ltd v Lepfin Pty Ltd[43] is one of them, where extensive argument may be needed to reveal the case is one suitable for summary disposal. Indeed, in earlier litigation in this Court between these parties, Kenneth Martin J entertained and determined a construction question on a strike-out application. His Honour did so because he identified the issue as a 'clear case' with an 'obvious textual conclusion', and a 'critical issue of divergence as between the parties'.[44] Not all of those epithets can be applied to the constructional question raised on the present strike-out summons.
2. I have read the persuasive arguments prepared by Mr Dunning KC for the Mineralogy Parties, which explain that the pleaded construction advanced by the CITIC Parties is incorrect. That may prove to be a conclusion which the Court accepts at trial. It may not. As matters stand, the construction advanced by the CITIC Parties in [7J] of the QNI ASD is at least arguable and I would decline to strike it out.

Should the question of construction be decided on this application?

1. As I apprehend the course of the argument, the Mineralogy Parties invite the Court to go further than is ordinarily required on a strike-out application, and nonetheless proceed to determine the constructional question on its merits.
2. The Mineralogy Parties recognise that arguments as to constructional issues are 'sometimes not amenable to a strike out application'.[45] Nonetheless, the Mineralogy Parties explain the present case is one in which the questions of construction should be determined at an interlocutory level.[46] I respectfully disagree.
3. Where constructional questions are raised in the context of a summary dismissal application, the court may exercise its discretion to refrain from determining the issue in an interlocutory setting, particularly where the question is of some complexity, and it is being considered in an evidential vacuum without a full consideration of the context and purpose of the instrument under review. It is open to the court to form the view that it is inappropriate to finally resolve a construction question on an interlocutory application, such as the present. I refer in this regard to the analysis of Smith J in BGC Contracting Pty Ltd v Cliffs Asia Pacific Iron Ore Pty Ltd,[47] upheld on appeal by the Court of Appeal in NRW Contracting Pty Ltd v Cliffs Asia Pacific Iron Ore Pty Ltd,[48] and my subsequent analysis in Fremantle Port Authority v Cosco Shipping Bulk (South East Asia) Pte Ltd.[49]
4. The approach adopted by the Court of Appeal in this State, as explained above, is no different to the approach of the New South Wales Court of Appeal. So much is evident from the fate of the interlocutory application which had been brought by the plaintiff in Doyle's Farm Produce Pty Ltd v Murray Darling Basin Authority (No 2),[50] an authority upon which the Mineralogy Parties relied. I refer in particular to the reservations of Bell P (as his Honour then was) in that case, as to the determination of complex statutory construction questions within the vehicle of an interlocutory application, initially framed as a strike-out. His Honour's reservations were ultimately overcome once the parties re-formulated the application as a series of separate questions, to be determined against a series of agreed facts.[51]
5. The strike-out application brought by the Mineralogy Parties would require the Court, at this interlocutory stage, to undertake a trial-like, final assessment of complex, constructional issues in relation to the FCD instrument. Such an endeavour might be suitable for a preliminary question or for the separate determination of issues, but is typically not appropriate to be dealt with on a strike-out application such as this. The factors which point against the determination of this issue in the context of the present interlocutory application include the complexity of the construction questions, the additional judicial time which would be required to undertake the construction exercise, and the possibility of fragmentation of the litigation through appellate review of that interlocutory assessment.
6. Further, to the extent the Mineralogy Parties seek to persuade the Court to exercise the discretion to consider this issue, the absence of any evidentiary material to justify that course renders that task beyond difficult. I would not be prepared to pursue a course such as the one proposed, with all of the attendant potential difficulties, including the potential fragmentation of the proceeding through appellate review, solely on the strength of inferences to be drawn from the pleaded contentions and the course of the litigation to date. Compelling affidavit material, demonstrating the case management benefits and potential savings of time and costs, would be needed to justify a course of the kind the Mineralogy Parties invite me to travel down.
7. Whether the discretion should be exercised so as to address construction questions such as those raised in the present case may well be impacted by broader case management considerations. For example, in the present circumstances, the Mineralogy Parties point to the broader issues which were the subject of the sequencing applications in these (and other related actions), heard on 5 August 2024. In the context of the pending Cape Preston Proceedings between these parties, there are certainly larger-scale factors requiring consideration, which may influence a determination as to the most efficient manner in which the actions should be progressed to trial, and as to how significant interlocutory disputes might best be resolved.
8. For my part, I would therefore accept there may be circumstances in which early resolution of important construction questions might assist in the efficient progress of a suite of litigation to final determination. Even so, such questions would typically best be determined as preliminary issues or separate questions, upon a sound and ideally agreed factual premise, rather than by employing the blunt-edged device of a strike-out application.
9. One of the authorities relied on by the Mineralogy Parties, the decision of the NSW Court of Appeal in Lepcanfin, is said to support an approach in the present circumstances whereby summary determination of a construction question should be entertained. Lepcanfin is a vastly different case to the present, though. It involved a challenge to an expert determination process. The primary judge determined the questions summarily, an approach which also found favour with the Court of Appeal. The resolution of those questions effectively resolved the dispute which had been brought before the Court. The early determination of the legal questions raised by the proceedings, which were narrow questions of construction, brought with it considerable benefits from an overall efficiency and costs perspective.
10. In contrast, the Mineralogy Parties invite the Court to determine a question of construction which is but one of many questions falling for determination in a complex commercial case, the determination of which will not obviate the need for a trial. At best, on the Mineralogy Parties' submission, the early determination will bring some benefits in terms of preparation of the case. That is a justification which is not verified by any affidavit material.
11. In any event, the broad issues which were the subject of the parties' submissions during the sequencing hearing, do not materially alter the proper course which should be followed, in my view. As matters stand, on my assessment, these actions are in a position to proceed to trial by about April 2025. Any determination of the construction issues raised on the present applications will likely be the subject of appellate challenge, which may delay the trial listing. That would be an undesirable outcome. Further, without some evidentiary foundation, I do not think I can safely draw an inference that the pre-trial determination of this construction question will greatly reduce the length of the trials or reduce the costs of the parties to the actions, or otherwise be productive of material efficiency in some respects. I appreciate the Mineralogy Parties wish to know whether they bear the onus on certain matters, ahead of trial. But I cannot simply infer these matters in a vacuum, without some evidentiary material which mighty support a decision to determine this construction question in advance of trial.
12. Finally, the history of these actions and previous procedural steps, are relevant factors to the exercise of the discretion as to the determination of the Mineralogy Parties' present strike-out application. Most relevantly, the Mineralogy Parties previously (and unsuccessfully) applied to the predecessor case manager of these actions, Kenneth Martin J, to have a multitude of constructional issues connected with the FCD, and arising from the pleadings, determined as preliminary issues. His Honour refused that application.[52] The issues raised by [7J] of the QNI ASD were not among the putative preliminary issues sought to be agitated before Kenneth Martin J. Nonetheless, it strikes me as highly unusual that the Mineralogy Parties would seek to agitate an issue such as the present on a strike-out application given the history of this litigation, as just mentioned.
13. In my view, given the nature of the present application and the issues raised by the parties in their submissions, it is not appropriate that I undertake the construction task which this challenge requires, in an abstract setting, without reference to the particular factual context. The discretionary factors point strongly against the applicants' construction questions being determined on the merits. Additionally, the strike-out application is itself late and requires an extension of time, although not so late that I would have refused the extension of time per se if the application had merit.
14. Having regard to the foregoing analysis, the application insofar as the challenge to [7J] of the QNI ASD is concerned is without merit. The application as filed should be dismissed, and the application as developed in argument should not be entertained.
15. The relevant paragraph of the QNI ASD will need to stand, and these construction questions must await trial. I pause to observe that the application does not pursue any further and better particulars as an alternative position to the strike-out of [7J] of the QNI ASD.

F. The pleas concerning 'Palmer's Own Decision'

1. The second aspect of the Mineralogy Parties' pleading challenge concerns the responsive contention pleaded by the CITIC Parties that the loss in respect of which indemnification is sought is not 'in relation to' the subject matter of cl 11.5(c) of the FCD.
2. The relevant subject matter identified in the instrument is either:

(a) the failure of Sino Iron and Korean Steel to perform their obligations under the MRSLAs; or

(b) CITIC's failure to cause those entities to perform their obligations under the MRSLAs.

1. This responsive contention is pleaded across several paragraphs of the defence, being [44(b)(v)], [44A(c)(i)], [50(g)] and [50A] of the QNI ASD. Each of those paragraphs alleges that if Mr Palmer or Mineralogy had suffered the alleged loss, such loss is not in relation to the failure of the CITIC Parties' to perform because it was in relation to the alleged decision described in the pleading. That is, 'Palmer's Own Decision' in the case of the QNI Proceeding and 'Mineralogy's Own Decision' in the Palmer Petroleum Proceeding.
2. The Mineralogy Parties submit that these paragraphs in the QNI Proceeding should be struck out insofar as they describe and rely upon the concept referred to as 'Palmer's Own Decision'.
3. I disagree.
4. The Mineralogy Parties' concerns as to the effect of the pleas are misplaced, and have been clarified, to the extent that was needed, by the submissions filed by the CITIC Parties on this application. My reasoning is as follows.
5. First, as to the question of onus of proof, it is common ground that it is for the plaintiffs to establish that the losses claimed are losses 'suffered, paid or incurred in relation to' the late payment of RCB.[53] There remain more complex onus questions in relation to the operation of cl 9.1(e) of the FCD.
6. Second, before examining the adequacy of the CITIC Parties' pleading, it is appropriate to be clear as to the manner in which the plaintiffs' case has been articulated. That requires one to revisit [44] to [51] of the 7ASOC. I have reviewed the relevant paragraphs earlier in these reasons. At [44], the Mineralogy Parties allege that Mineralogy would have provided funds to QNI to enable it to continue to manage and operate the joint venture business, and it would have provided to QNI funds required to meet the identified cashflow deficits. At [45] and [46], it is pleaded that QNI was placed into voluntary administration and then into liquidation. The joint venture business ceased operating thereafter, and the diminution in the value of the relevant shareholdings flowed from that point.
7. Third, it is prudent to recall the pleading challenges brought in relation to the paragraphs of the Mineralogy Parties' statement of claim which plead causation and loss. The pleading in this regard was the subject of some considerable interlocutory debate during 2023.
8. In the first of those challenges, the Court was called on to consider whether certain amendments promoted by the Mineralogy Parties should be allowed: Palmer v CITIC Ltd [No 8]. In the QNI Proceeding, I refused certain amendments to the statement of claim, being the sixth version of the pleading at that stage. One of the core challenges was to the aspect of the statement of claim whereby it was pleaded that Mineralogy 'would have' provided funds to QNI, which was said to be devoid of any coherent narrative of the material facts. I accepted that submission: Palmer v CITIC Ltd [No 8] [84] -[ 98].
9. Subsequently, in the return bout between these parties on the question as to the adequacy of the Mineralogy Parties' pleading of its causation case, I upheld the sufficiency of the revised plea: Palmer v CITIC Ltd [No 10]. The central area of the contest at the hearing was as to whether or not sufficient particularity had been provided by the plaintiffs as to the nature of the causal link which is said to support the indemnity claim. I concluded that the Mineralogy Parties had, through the revised pleading, properly exposed the arguable causal connection which was essential to the indemnity claim. The connection was pleaded as being established by:[54]

(a) the corporate relationship between Mineralogy, Mr Palmer and the Queensland entities;

(b) the significant influx of RCB payments which Mineralogy would have received in this scenario;

(c) the fact that (in 2015) Mineralogy brought an application to compel payment of the RCB payments and asserted in that application that the funds were required at least in part to fund the Queensland joint venture business; and

(d) the historical provision of funds by Mineralogy to QNI.

1. In the course of the foregoing reasons, I emphasised the importance of pleading the material facts necessary to establish a causal link between a breach or contravention, on the one hand, and the relevant loss, on the other. I referred to the decision of the Court of Appeal in English v Vantage Holdings Group Pty Ltd,[55] the passages from which I need not now repeat.
2. Fourth, the outworking of the above pleading disputes was that the CITIC Parties were faced with the plea which now appears at [50] of the QNI 7ASOC. By that plea, the Mineralogy Parties assert that the loss suffered by Mr Palmer is 'in relation to' the matters identified within the text of cl 11.5(c) of the FCD. The plea at [50] of the QNI ASD is a response to this assertion, and advances an allegation that any loss on the part of Mr Palmer is not 'in relation to' the subject matter identified in cl 11.5(c) of the FCD, because that loss:

(a) is not direct loss or damage attributable to the breach of the MRSLAs;

(b) does not arise naturally from the breach of the MRSLAs;

(c) cannot reasonably be supposed to have been contemplated by the parties, when they made the FCD in October 2008, as the probable result of the breach;

(d) is not loss suffered, paid or incurred by Mr Palmer in relation to a failure of Sino Iron or Korean Steel (or both) to perform its obligations to Mr Palmer under the FCD or the Takeover Agreements or the failure of CITIC to cause Sino Iron or Korean Steel (or both) to perform its obligations to Mr Palmer under the FCD or the Takeover Agreements; and

(e) was in relation to 'Palmer's Own Decision' (which is pleaded in [50(g)] of the QNI ASD).

1. Fifth, the manner in which the concept of 'Palmer's Own Decision' has been defined requires analysis. The CITIC Parties have structured their pleading to define the concept of 'Palmer's Own Decision' in [44(b)(v)] of the QNI ASD, which concept is also deployed in [44A(c)(i)] of the QNI ASD.
2. In a definitional sense, the pleader explains that, at some time before 13 January 2016, Mr Palmer made a decision 'not to provide funds for the continued operation of the Joint Venture business', and absent such funds being provided, 'QNI should or would be placed into voluntary administration'. The allegation is expressly particularised by reference to a prior decision of the Queensland Supreme Court: Parbery & Ors v QNI Metals Pty Ltd & Ors.[56] I will briefly address this decision.
3. The proceedings to which the Parbery decision related had been brought by the general purpose liquidators and the special purpose liquidators of QNI. Two of the defendant companies were the joint venture companies which owned the Yabulu nickel refinery and conducted the Queensland Nickel Joint Venture (referred to as QNI Metals and QNI Resources). These companies were all ultimately owned by Mr Palmer. Both Mineralogy Pty Ltd and Mr Palmer were also named as defendants.
4. Mullins J identified several issues which would need to be determined in the proceedings, including the following:[57]

(a) the nature of the relationship between QNI and the joint venture companies, that is, whether the funds in QNI's bank accounts that were used in the operation of the refinery were held by QNI on an express trust for the benefit of those JV entities, as contended by the plaintiffs, or as the agent only of those entities under the JVA, so that QNI held the funds as a bare trustee, as contended by the corporate defendants;

(b) whether payments made from QNI's bank accounts to or at the request, or on behalf, of Mineralogy were loans by QNI to Mineralogy; and

(c) whether QNI was insolvent on 13 January 2016.

1. The particulars subjoined to [44(b)] of the QNI ASD emphasise the finding at [248] of Mullins J's decision. That paragraph reads as follows:

[248] The documentary evidence and the evidence from Mr Wolfe and Mr Park shows that Mr Palmer was closely involved in the discussions with FTI Consulting and others about the options open to QNI in early January 2016. As at 13 January 2016, QNI did not have the liquidity or access to funds (whether through Metals and Resources or otherwise) to pay the Aurizon debt on 18 January 2016. Metals and Resources as the owners of the refinery and associated joint venture property were asset rich, but there were no plans for realisation of assets prior to 13 January 2016 that would meet the ongoing cash shortfalls in January 2016 and going forward to at least May 2016. I find that Metals and Resources did not have the capacity to address the cash flow shortages that QNI was experiencing as at 13 January 2016. It is axiomatic that if Metals and Resources had that capacity, they would have addressed the liquidity problems of QNI. The fact that Mr Palmer did not pay, or would not procure any finance or loans for QNI to pay, the debts that were outstanding and either had fallen or were falling due as at 13 January 2016 means Mr Palmer and his related entities were not a source of support that precluded QNI's insolvency on and from 13 January 2016. The question of insolvency is being determined as at 13 January 2016 before QNI entered into the China First and Waratah Coal transactions, but when the arrangements were in place for QNI (together with Resources and Metals) to enter into those transactions. Even though Ms McCallum did not rely on the potential financial support from China First and Waratah Coal in determining solvency as at 13 January 2013, the corporate defendants assert that the potentiality of funding as a result of the transactions with China First and Waratah Coal that were in the process of being finalised has to be taken into account in assessing the solvency of QNI as at 13 January 2016. For the reasons that I have set out in the section of the judgment dealing with the China First and Waratah Coal transactions, there is a lack of evidence of any plans by QNI as at 13 January 2016 to pursue finance on the basis of the China First and Waratah Coal transactions, instead of entering voluntary administration. The potentiality of finance from the China First and Waratah Coal transactions is therefore not a matter that saves QNI from being found to be insolvent as at 13 January 2016.

1. At [44A] of the QNI ASD, the CITIC Parties plead that if the RCB payments had been made to the Mineralogy Parties, Mr Palmer would still have made 'Palmer's Own Decision' and Mineralogy would not have provided funds, including the RCB payments, for the continued operation of the joint venture business.[58]
2. As earlier noted, the pleading then purports to build on the foregoing allegations, in the manner set out at [50] of the QNI ASD. Further, the pleader sets out a number of facts in [50A] of the QNI ASD which are said to constitute 'Palmer's Own Decision', or from which that decision can be inferred.
3. Sixth, in light of the foregoing, it is next appropriate to consider whether the defence which is pleaded to the causation and loss case advanced by the Mineralogy Parties' discloses a reasonably arguable defence which also apprises the plaintiffs of the case they must meet at trial. If so, any further critique of the causation pleas are matters which should await determination at trial. On my assessment, the pleading meets these criteria and is not pleaded in such a manner as to justify being struck out at this stage, in that the relevant paragraphs of the QNI ASD plead out material facts which are arguably responsive to the causation and loss case pleaded by the Mineralogy Parties, and which provide an arguably coherent foundation for the case which the CITIC Parties say they intend to advance at trial.
4. At trial, the CITIC Parties will contend that Mr Palmer: [59]

...made a deliberate, voluntary and informed decision not to support QNI [and Palmer Petroleum insofar as the other proceedings are concerned] by providing funds and to allow them to go into voluntary administration and that, as a matter of common sense, his decision was the cause of any loss.

1. The CITIC Parties will contend at trial that the pleaded facts, if proven, will prevent the plaintiffs from discharging their onus of demonstrating that the causal link required by cl 11.5(c) has been met. Further, the CITIC Parties expressly disavow that any aspect of their defence depends on them establishing a novus actus interveniens. That is not the case they intend to advance.[60] Further still, the CITIC Parties have clarified that the factual allegations in [50(g)(i)] to [50(g)(x)] are not relied upon to demonstrate any causal impact on the financial position of the joint venture. Rather, the CITIC Parties' allegation is that:[61]

...over the course of several years, [Mr] Palmer had a practice of diverting funds away from QNI towards other ventures, including at times where QNI required financial assistance and also at times where [Mr] Palmer was on notice that the calculation of Royalty Component B was disputed [and proof] of Mr Palmer's practice historically of draining funds from QNI is a matter from which the Court can infer that Mr Palmer was more likely to have decided to allow QNI to enter voluntary administration, rather than to have decided to provide funds, including Royalty Component B.

1. This case is evident from the terms of [50(g)(viii)] and [50(g)(ix)] of the QNI ASD, which expressly assert that:

(a) Mr Palmer used, or caused to be used, significant sums from the joint venture business to fund other Palmer-related investments, including during periods when the joint venture business was loss making and cash flow from operating activities was negative;[62] and

(b) there was a course of conduct by which Mr Palmer caused QNI to make significant payments that were not for the purposes of the joint venture business, including during periods when the joint venture business was loss making and when cash flow from operating activities was negative.[63]

1. This case is also evident from the pleas contained within [50A] of the QNI ASD. In that paragraph, the pleader identifies various actions which Mr Palmer could have taken, but which it is alleged he did not, in support of the contention that a course of conduct was demonstrated on the part of Mr Palmer.[64]
2. The Mineralogy Parties' criticisms of the pleas in the QNI ASD are not made out and I consider the relevant paragraphs in the pleading should stand. Further, I see no utility in requiring that the CITIC Parties provide the particulars requested in [9] of the request for further and better particulars (see Attachment B to these reasons). In any event, particulars of the type which are sought by the Mineralogy parties are more properly a matter for submissions at trial.

G. The pleas concerning the failure to take reasonable steps

1. The third aspect of the QNI ASD challenged by the Mineralogy Parties concerns the pleas alleging that Mr Palmer and Mineralogy failed to take all reasonable steps to minimise or, where possible, avoid the claimed loss. Several paragraphs of the QNI ASD are impugned in this regard, being [50C], [53A] and [53B]. The pleadings rely upon and invoke cl 9.1(e) of the FCD, to which I have earlier referred.
2. The essence of the Mineralogy Parties' challenge is that the CITIC Parties' pleading does not, it is said:[65]

(a) plead the material facts relied on to contend at trial that a given step was reasonable for the indemnified party to take (and the failure to so plead would take the indemnified party, that is the Mineralogy Parties, by surprise); and

(b) plead, in a direct and unambiguous manner, in a sensible narrative fashion, the material facts which demonstrate that the failure to take the step, alone or with other matters, caused part or all of the loss (which is that the loss is either 'minimised' or 'avoided').

1. I do not consider these criticisms can be sustained.
2. Within [50C] and [53A] of the QNI ASD, the pleading employs the device of picking up the material facts which are earlier pleaded in [50A] of the QNI ASD. Within [50A(b)] to [50A(k)], in particular, the CITIC Parties plead out ten matters of fact (as opposed to abstract matters) which are said to represent the failures on the part of the Mineralogy Parties for the purposes of cl 9.1(e) of the FCD. Those matters concern:

(a) repayment of the Mineralogy Debt;

(b) repayment of other debts that were owed by Mr Palmer to QNI;

(c) making available assets which QNI had previously disposed of to, or for the benefit of, Mr Palmer;

(d) causing QNI to realise available assets;

(e) issuing call notices prior to the appointment of administrators;

(f) causing QNR or QNM to indemnify QNI in circumstances where QNI was and is entitled to an indemnity or right of exoneration against the QNI Joint Venturers jointly and severally;

(g) making assets owned by Mr Palmer available as security to enable QNI to obtain loans or other funding from financiers;

(h) making assets owned by entities directly or indirectly controlled by Mr Palmer (other than QNI, QNR, QNM and QNS) available as security to enable QNI to obtain loans or other funding from financiers;

(i) providing funds or other assets to QNI to enable QNI to avoid the appointment of administrators; and

(j) providing funds to the administrators of QNI to meet projected cash shortfalls, after the administrators had made Mr Palmer aware that without the funds they would cause QNI and the Joint Venture business to cease trading.

1. The identification of the foregoing matters is adequate, in my view, to put the Mineralogy Parties on notice of the case to meet at trial and avoid surprise. The issue in question, it must be remembered, is fundamentally fact-based, as to whether 'reasonable steps' were taken. In this regard, the pleading presents a clear and digestible narrative which the Mineralogy Parties ought be in a position to understand and respond at trial. To the extent to which any aspects of these matters could benefit from greater particularity, it seems to me that such a criticism must be assessed against two broad contextual matters.
2. The first is that several of these matters are peculiarly within the knowledge of the Mineralogy Parties. For example, I refer to the assets owned by Mr Palmer and the companies controlled by him which could have been made available as security to enable QNI to obtain loans or other funding. Further, the material terms of the loans in respect of which such assets could have been made available as security, would be within the knowledge of the Mineralogy Parties.
3. The second is that these are matters which will in due course, and indeed relatively shortly, be the subject of lay and expert evidence. Any perceived deficiency in the pleadings will be cured once that evidence has been served.
4. The pleading should stand. Given the above analysis, particularly the matters at [106] and [107] above, the alternative request for further particulars should also be dismissed (see [10] of the request for further and better particulars at Attachment B to these reasons), subject to the rider mentioned at [112] below.

1. The conclusions I have reached with respect to the pleading challenges in the QNI Proceeding apply equally to the Palmer Petroleum Proceeding, given the similarity in the pleadings and the core submissions advanced by the parties in relation to the attacks on the pleadings. Similar orders should therefore be made in the Palmer Petroleum proceeding.

1. For the foregoing reasons, I will grant the extensions of time which are sought by the Mineralogy Parties to bring the strike-out application in respect of the QNI ASD and the PP ASD and also to seek the further and better particulars of those pleadings. The applications are late, but in the context of this large scale litigation between these parties, which has been the subject of numerous interlocutory applications over the past two years, it seems to me the applications are not so late as to justify a refusal of the extensions of time which are sought.
2. However, the chamber summonses in the actions, insofar as the strike-out and requests for particulars are substantively concerned, should be dismissed.
3. To the extent foreshadowed by the CITIC Parties in their pleading in both actions, once the parties have attended to their respective discovery obligations, the Court expects that further appropriate particulars would thereafter be assembled and provided to the Mineralogy Parties.
4. I will hear from counsel as to the orders which should now be made in this regard, including as to costs.

1. Sino Iron and Korean hold Mining Rights granted by Mineralogy.
2. Mineralogy and each of the Mining Right Holders is a party to the State Agreement and certain other Project Agreements described in this Deed.

1. CITIC has taken control over Sino Iron and Korean. CITIC has an option to acquire ownership and control over a Third Company which holds the right to mine one (1) billion tonnes of magnetite iron ore from Mineralogy ('CITIC Option').

1. Mineralogy, the Mining Right Holders and CITIC enter into this Deed in order to confirm the manner in which each of the Mining Right Holders will carry out and coordinate their respective Project activities, and to confirm the Project Area that will apply to such activities.

In this Deed, unless the context otherwise requires:

Project Agreements means the following agreements (each as amended from time to time) between the Company and the Seller and which have been disclosed to CITIC:

(a) the Korean Facilities Deed;

(b) the Korean Mining Right Agreement;

(c) the Korean Sublease;

(d) the Korean Steel Takeover Agreement;

(e) the Consolidation Agreement;

(f) the Sino Iron Facilities Deed;

(g) the Sino iron Mining Right Agreement;

(h) the Sino iron Sublease;

(i) this Co-Ordination Deed; and

(j) the Sino Iron Takeover Agreement.

9.1 The following provisions will apply to each indemnity provided for under this Deed:

(a) Each indemnity will survive the expiry or any termination (for cause or otherwise) of this Deed.

(b) Each indemnity will be deemed to extend to and for the benefit of the directors, agents, representatives, advisers, consultants and employees of the indemnified party, subject to the express terms of the indemnity.

(c) No indemnity is waived by any provision of this Deed with regard to insurance or by approval of any insurance policy.

(d) If Sino Iron or Korean become aware of any incident likely to give rise to a claim under an indemnity contained in this Deed, they will notify Mineralogy and Clive F Palmer and will cooperate fully in investigating the incident. The indemnifying party has the obligation and right to handle and defend any claim under the indemnity and the indemnified party will give the indemnifying party notice of any such claim and will supply the indemnifying party with details and information it may have relating to the claim in an expeditious manner and will take no action to compromise the indemnifying party's legal position in relation to the claim.

(e) Each party claiming the benefit of an indemnity must take all reasonable steps to minimise and, where possible, avoid any loss or damage suffered by it.

(a) In consideration of Mineralogy granting the further rights to Sino Iron and Korean under this Deed and in further consideration of the sum of five thousand dollars ($5000.00) paid on the date hereof by CITIC to Mineralogy, CITIC unconditionally and irrevocably guarantees to Mineralogy the performance of Korean's or Sino Iron's obligations under this Deed and the Project Agreements.

(b) If Korean or Sino Iron fails to perform its obligations under this Deed or the Project Agreements when they are due, CITIC must immediately on demand from Mineralogy cause Sino Iron or Korean as the case may be to perform its obligations under this Deed or the Project Agreements as applicable. If Sino Iron or Korean fail to perform the obligation CITIC must itself perform the obligation within 7 days of a demand by Mineralogy to do so (which, for the avoidance of doubt, includes the payment of an amount which is due to be paid but which has not been paid by Sino Iron or Korean).

(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.

Further and better particulars requested in the QNI Proceeding**

1. In this schedule, "full particulars" means:
   1. each act, omission, fact, matter or circumstance relied upon;
   2. date or dates on which the alleged fact took place;
   3. place or places on which the alleged fact took place;
   4. identities of the persons present when the alleged fact took place;
   5. whether oral, in writing, or partly oral and partly in writing;
   6. insofar as it is oral, identify:
      1. between whom the conversation took place;
      2. when the conversation took place;
      3. where the conversation took place;
      4. the words used; and
      5. whether and to what extent the conversation was recorded.
   7. insofar as it is in writing, identify the writing, produce a copy of it and state where the original now is or is believed to be;
   8. insofar as it was implied, state the acts, facts, matters or circumstances from which the implication arises;
   9. whether it is wholly or partly implied; and
   10. if the thing alleged is an agreement, in addition to the above matters and insofar as it is not in writing, set out in full the relevant terms of the agreement.
2. In this schedule, where required to provide any particulars of any payment, provide particulars of:
   1. the amount of the payment;
   2. the date the payment was made;
   3. the manner in which the payment was made;
   4. if the payment was made by cheque, telegraphic transfer or by direct debit from an account with a financial institution (including any credit card account):
      1. on whose account, held at which financial institution, was the cheque, telegraphic transfer or direct debit drawn;
      2. to whom was the cheque, telegraphic transfer or direct debit made payable or paid;
      3. the date on which the cheque, telegraphic transfer or direct debit was drawn;
      4. the date on which the cheque was delivered to the payee and by whom and to whom it was delivered;
      5. the date on which the cheque, telegraphic transfer or direct debit was negotiated or paid.

1. As to paragraph 50(g) of the defence, provide full particulars of how it is alleged that the circumstances pleaded in subparagraphs (g)(i) to (x) are such as to make Palmer's loss in relation to "Palmer's Own Decision", by reason of which his loss is not "in relation to" the failure of Sino Iron and Korean Steel to perform their obligations under the MRSLAs or CITIC's failure to cause Sino Iron and Korean Steel to perform their obligations under the MRSLAs within the meaning of clause 11.5(c).
2. As to paragraph 50C of the defence, provide full particulars of how it is alleged that the matters pleaded in paragraph 50A(b) to (k):
   1. constitute, or give rise to the inference of, a failure by Palmer to take all reasonable steps to minimise and, where possible, avoid any loss or damage suffered by him in breach of clause 9.1(e) of the FCD;
   2. would have produced funds which could have been used to satisfy QNI's liabilities and [sic] as and when they fell due to avoid QNI going into voluntary administration and to enable QNI to continue managing and operating the Joint Venture business, including full particulars of:
      1. the "funds" described in paragraph 50C(b);
      2. when the aforementioned funds were required to satisfy QNI's liabilities as and when they fell due to avoid QNI going into voluntary administration and to enable QNI to continue managing and operating the Joint Venture Business;
      3. when the matters pleaded in paragraph 50A(b) to (k) ought to have occurred to produce the aforementioned funds.

[7J] Further or alternatively to paragraphs 7C to 7F above, on the proper construction of clauses 9.1(e) and 11.5(c) of the FCD, CITIC's obligation to indemnify Palmer and Mineralogy in accordance with clause 11.5(c):

(a) is subject to and conditional upon the indemnified party satisfying the obligations imposed by clause 9.1(e) by first taking all reasonable steps to minimise and, where possible, avoid any loss or damage suffered by it;

(b) only encompasses loss that the indemnified party establishes could not have been minimised or, where possible, avoided by the indemnified party taking all reasonable steps;

(c) only encompasses loss that the indemnified party establishes was in causal relation to the failure of Sino Iron or Korean Steel (or both) to perform its obligations under the MRSLAs, or CITIC to cause Sino Iron or Korean Steel (or both) to perform its obligations under the MRSLAs;

(d) does not encompass any loss that was caused by Mineralogy or Palmer.

(a) as to sub-paragraph (a), admit that Mineralogy did not provide funds to QNI equivalent to the amount of Royalty Component B payable by Sino Iron and Korean Steel under the MRSLAs for the period ended 30 September 2015 or 31 December 2015, or in the order of $28 million;

(b) otherwise deny paragraph 44 and say that:

(i) Mineralogy was on notice from at least January 2013 that there was a dispute between the parties regarding the calculation of Royalty Component B;

Letter from CITIC Pacific Mining Management Pty Ltd to Mineralogy dated 21 January 2013.

(ii) in respect of that dispute, Mineralogy commenced the RCB Proceeding on or about 18 March 2013 in the Supreme Court of New South Wales as SC 2013/82818, which was transferred to this Honourable Court on 30 April 2013 and became the RCB Proceeding;

(iii) during the course of the RCB Proceeding, Mineralogy made numerous and extensive changes to its pleading, including to: (A) admit in December 2013 that Royalty Component B was not capable of calculation; (B) allege in the Second Further Amended Statement of Claim filed on 10 December 2013 that the MRSLAs were terminated by frustration; and (C) claim in April 2016 that the MRSLAs, which contain the Royalty Component B payment obligation, had been terminated by Mineralogy in October 2014;

Further Amended Reply and Amended Defence to Amended Counterclaim filed on 2 December 2013 in the RCB Proceeding.

Second Further Amended Statement of Claim filed on 10 December 2013 in the RCB Proceeding.

Fourth Further Amended Statement of Claim filed on 1 April 2016 in the RCB Proceeding.

(iv) at any time prior to the appointment of administrators to QNI or QNI's liquidation or the Joint Venture business ceasing to operate, Mineralogy or Palmer could have provided funds to the manager of the Joint Venture business, QNI and later QNS, to enable the manager to continue managing and operating the Joint Venture business;

(v) at some time before 13 January 2016, Palmer decided not to provide funds for the continued operation of the Joint Venture business and, absent such funds, QNI should or would be placed into voluntary administration (Palmer's Own Decision); and

The defendants refer to the decision of the Supreme Court of Queensland in Parbery & Ors v QNI Metals Pty Ltd & Ors [2020] QSC 143 (Mullins J), in particular [248] as to the fact that Palmer and his related entities were not a source of support that precluded QNI's insolvency on and from 13 January 2016. The defendants refer to paragraph 46D below.

(a) as to sub-paragraph (a)(i), admit that if Sino Iron, Korean Steel and CITIC had paid Royalty Component B to Mineralogy in accordance with their obligations under the MRSLAs and the FCD, "Mineralogy would have received the funds alleged in paragraph 28 herein and by the dates alleged therein";

(b) as to sub-paragraph (a)(ii), do not admit that "Mineralogy would have expected to receive timeous payment of Royalty Component B thereafter, the quarterly amounts of which would be expected to increase as Sino and Korean's mining and production operations ramped up"; and

(c) otherwise deny the paragraph and say that if Royalty Component B had been paid as pleaded in paragraph 28 of the statement of claim:

(i) in the circumstances pleaded in paragraph 50(g)(i) to (x) below, Palmer would have still made Palmer's Own Decision and Mineralogy would not have provided funds, including Royalty Component B, for the continued operation of the Joint Venture business; and

(ii) the total amount of Royalty Component B payable by Sino Iron and Korean Steel to Mineralogy under the MRSLAs was not sufficient to enable Mineralogy to provide funds to both:

(A) QNI for its pleaded funding requirements for the period to JuneMarch 2016 as alleged in paragraph 44A of the statement of claim, which are denied; and

(B) Palmer Petroleum Pty Ltd for the debt which it owed to BGP Geoexplorer Pte Ltd as alleged in paragraph 39AA of the ThirdFourth Amended Statement of Claim filed 10 November 202323 April 2024 in CIV 1267/2018.

Particulars will be provided upon completion of interlocutory processes, including the exchange of expert reports.

...

[50] They deny paragraph 50 and say that if, which is denied, Palmer has suffered loss, his loss is not "in relation to" the failure of Sino Iron and Korean Steel to perform their obligations under the MRSLAs or CITIC's failure to cause Sino Iron and Korean Steel to perform their obligations under the MRSLAs within the meaning of clause 11.5(c) because his loss:

(a) is not direct loss or damage attributable to the breach of the MRSLAs;

(b) does not arise naturally from the breach of the MRSLAs;

(g) was in relation to Palmer's Own Decision in circumstances where:

(i) the Joint Venture business was loss making in each financial year from FY12;

The Joint Venture business incurred a $430m underlying EBIT loss over the period from FY12 to January 2016.

(ii) from FY12, there was a sustained decline in the Joint Venture business' net asset position when the effect of the internal asset revaluation as at 30 June 2015 is excluded;

From 1 July 2011 to 31 December 2015, there was a decline in the value of the Joint Venture business' net assets of approximately $600m or approximately 68%, excluding the effect of the internal asset revaluation as at 30 June 2015.

Further particulars may be provided upon completion of interlocutory processes, including the exchange of expert reports.

(iii) the trading performance of the Joint Venture business had materially deteriorated in the 6 months prior to the appointment of the administrators to QNI;

During FY16, QNI generated losses at a faster rate than in previous years, losing on average, $10m a month mainly due to rapid and sustained decline in nickel prices.

(iv) according to QNI's Monthly Report dated January 2016, the Joint Venture business was forecasting significant unbudgeted losses;

In the QNI Monthly Report dated January 2016 the Joint Venture business downgraded its full year FY16 forecast to an EBIT loss of $218 million against its original budgeted FY16 EBIT of a $72 million profit, a decline of $290 million.

(v) by at least 6 January 2016, QNI was aware of the September 2015 Wood Mackenzie Report and the December 2015 Wood Mackenzie Report, which provided the forecasts set out in paragraphs 37AA(a) and (b) above;

Email from Daren Wolfe to Clive Palmer and Clive Mensink, dated 28 September 2015, attaching the September 2015 Wood Mackenzie Report.

Email from Daren Wolfe to Clive Mensink dated 9 October 2015, attaching the September 2015 Wood Mackenzie Report.

Email from Daren Wolfe to Charmaine Crouch (QNI) dated 6 January 2016, attaching the December 2015 Wood Mackenzie Report.

Email from Daren Wolfe to Jovan Singh (Hall Chadwick) dated 6 January 2016, attaching the December 2015 Wood Mackenzie Report.

Further particulars may be provided following discovery, subpoenas and the issue of interrogatories.

(vi) based on the December 2015 Wood MacKenzie report, QNI would continue to incur significant losses during at least FY16 and FY17 and would have required significant and ongoing funding during at least FY16 and FY17 if QNI was to continue to manage and operate the Joint Venture business during that time;

Particulars will be provided upon completion of interlocutory processes, including discovery and the exchange of expert reports.

(vii) by the end of December 2015, in addition to the funding required to meet forecast losses, QNI would also have required substantial working capital to address creditor arrears, depleted inventory and deferred expenditure;

The QNI Monthly Report for December 2015 reported that QNI's closing ore inventory as at 31 December 2015 was $15 million against a budget of $48m (a shortfall of approximately $33m or 70%).

The QNI Monthly Report for December 2015 reported that QNI had placed $55m of capital expenditure on hold and had only spent approximately $85,000 of its FY16 capital expenditure budget of $23m.

QNI had a pattern of deferral of payment of trade creditors outside the usual terms that was discernible from September 2015 onwards. The defendants refer to the decision of the Supreme Court of Queensland in Parbery & Ors v QNI Metals Pty Ltd & Ors [2020] QSC 143, [249] (Mullins J).

(viii) Palmer used, or caused to be used, significant sums from the Joint Venture business to fund other Palmer-related investments, including during periods when the Joint Venture business was loss making and cash flow from operating activities was negative;

Investment expenditure as recorded in the QNI Monthly Reports from FY10 to January 2016. Special Purpose Financial Statements for QNR and QNM, FY13 and FY14.

(ix) there was a course of conduct of Palmer causing QNI to make significant payments that were not for the purposes of the Joint Venture business, including during periods when the Joint Venture business was loss making and cash flow from operating activities was negative.

Schedules 1A and 1B to this defence. Special Purpose Financial Statements for QNR and QNM, FY13 and FY14.

(x) by making Palmer's Own Decision, Palmer was likely to be in a position to avoid or mitigate liabilities associated with a solvent closure of the Yabulu Refinery.

Prior to 18 January 2016, QNI had employee liabilities of $74,031,845.17, as set out in Schedule 4 to this defence. Further particulars may be provided upon completion of interlocutory processes, including discovery and the exchange of expert reports.

[50A] Further to paragraph 50(g) above, Palmer's Own Decision is constituted by, or can be inferred from, the following:

(a) Palmer, through Mineralogy, had apparently previously provided material financial support to QNI in 2013 when QNI was experiencing financial difficulties due to fluctuations in the nickel price, yet in late 2015 Palmer chose not to do the same and confirmed that on oath in the public examinations conducted by the special purpose liquidators as pleaded in paragraphs 46C and 46D above;

The defendants refer to the affidavit Daren Bruce Wolfe affirmed 17 November 2015, paragraph 39 as to the financial support provided to QNI in 2013.

(b) Palmer could have, but chose not to, cause Mineralogy to repay the Mineralogy Debt;

The defendants refer to paragraph 4(c) above and that Palmer was the ultimate beneficial owner of all of the shares in Mineralogy.

Schedule 1A to this defence sets out the transactions comprising the Mineralogy Debt.

(c) Palmer could have, but chose not to, repay other debts that were owed by him to QNI, or cause his associates or companies controlled by him to do the same;

The defendants refer to the fact that Palmer was the ultimate beneficial owner of all of the shares or a majority shareholder in entities including: Cart Provider Pty Ltd, Fairway Coal Pty Ltd, Palmer Leisure Coolum Pty Ltd, and Palmer Leisure Australia Pty Ltd.

Schedule 1B to this defence sets out the transactions comprising debts that were owed to QNI other than the Mineralogy Debt.

(d) Palmer could have, but chose not to, make available to QNI assets which QNI had previously disposed of to, or for the benefit of, Palmer;

Schedule 1C to this defence sets out the assets which could have been available to QNI.

(e) Palmer could have, but chose not to, cause QNI to realise available assets;

The defendants refer to paragraph 4(e) above and that Palmer was the ultimate beneficial owner of all of the shares in QNI.

Prior to 18 January 2016, QNI failed to realise available real property, comprising Lot 1 on RP 7300220 (Title Reference 21019214), Lot 2 on RP 709243 (Title Reference 20314194), Lot 3 on RP 709243 (Title Reference 20314195) and Lot 277 on CP K124656 (Title Reference 21300136).

(f) Palmer could have caused QNI to make calls prior to the appointment of administrators, but chose not to;

The defendants refer to paragraph 4(e) above and that Palmer was the ultimate beneficial owner of all of the shares in QNI.

Prior to 18 January 2016, QNI failed to issue call notices to QNR and QNM pursuant to the JVA (as defined in paragraph 35 of the statement of claim) and the defendants refer to:

(A) clause 6.4(a) of the JVA which entitled QNI to make calls on the Joint Venturers for funds to meet all costs, liabilities and expenses of the Joint Venture properly incurred;

(B) QNI's failure to issue call notices to QNR and QNM; and

(C) Parbery & Ors v QNI Metals Pty Ltd & Ors [2020] QSC 143 [65] (Mullins J).

(g) Palmer could, and should, have caused QNR and QNM to indemnify QNI in circumstances where QNI was and is entitled to an indemnity or right of exoneration against the QNI Joint Venturers jointly and severally, but chose not to;

The defendants refer to the fact that Palmer was the ultimate beneficial owner of all of the shares in QNR and QNM.

QNR and QNM failed to indemnify or exonerate QNI in respect of liabilities incurred prior to 18 January 2016 in acting as General Manager of the Joint Venture as set out in Schedule 4 to this defence and, in circumstances where clauses 3.1 and 5.5(s) of the JVA and clause 6 of the Administration Agreement (referred to in paragraph 35 of the statement of claim) provided an express right of indemnity and exoneration in favour of QNI from the QNI Joint Venturers.

(h) Palmer could have, but chose not to, make assets owned by Palmer available as security to enable QNI to obtain loans or other funding from financiers;

Assets owned by Palmer at the relevant times which could have been made available as security are set out in Schedule 2 to this defence.

The defendants refer to the information given by Palmer, on affirmation, set out at paragraph 46D above.

Further particulars may be provided following discovery, subpoenas and the issue of interrogatories.

(i) Palmer could have, but chose not to, make assets owned by entities directly or indirectly controlled by Palmer (other than QNI, QNR, QNM and QNS) available as security to enable QNI to obtain loans or other funding from financiers;

The defendants refer to the fact that Palmer was the ultimate beneficial owner of all of the shares or a majority shareholder in entities including: Australasian Resources Ltd, Cart Provider Pty Ltd, Closeridge Pty Ltd, Coeur De Lion Investments Pty Ltd, Cold Mountain Stud Pty Ltd, Fairway Coal Pty Ltd, Mineralogy Canada Acquisition Corp Pty Ltd, Mineralogy Pty Ltd, Nickel Consolidated Pty Ltd, Nickel Processing Pty Ltd, Nickel House Pty Ltd, Palmer Coolum Resort Pty Ltd, Palmer Leisure Australia Pty Ltd, Palmer Leisure Coolum Pty Ltd, River Crescent Pty Ltd, and Waratah Coal Pty Ltd.

Assets owned by companies directly or indirectly controlled by Palmer (other than QNI, QNR, QNM and QNS) at the relevant times which could have been made available as security are set out in Schedule 3 to this defence.

The defendants refer to the information given by Palmer, on affirmation, set out at paragraph 46D above.

Further particulars may be provided following discovery, subpoenas and the issue of interrogatories.

(j) Palmer could have, but chose not to, provide funds or other assets to QNI to enable QNI to avoid the appointment of administrators;

The defendants refer to the fact that Palmer was the ultimate beneficial owner of all of the shares or a majority shareholder in the entities listed in the particulars to paragraph 50A(i) above.

Assets owned by Palmer and companies directly or indirectly controlled by Palmer (other than QNI, QNR, QNM and QNS) at the relevant times which could have been sold to provide funds to QNI are set out in Schedules 2 and 3 to this defence.

The defendants refer to the information given by Palmer, on affirmation, set out at paragraph 46D above and to Parbery & Ors v QNI Metals Pty Ltd & Ors [2020] QSC 143 [136] (Mullins J).

Mineralogy was entitled to and received from Sino Iron and Korean Steel payments of Royalty Component A, as set out in Schedule 5 to this defence.

Mineralogy received a tax refund of approximately $45 million from the Australian Taxation Office (ATO) during the financial year ended 30 June 2014 pursuant to a Deed of Settlement between Mineralogy and the ATO dated 3 September 2013.

Further particulars may be provided following discovery, subpoenas and the issue of interrogatories.

(k) Palmer could have, but chose not to, provide funds to the administrators of QNI to meet projected cash shortfalls, after the administrators had made Palmer aware that without the funds they would cause QNI and the Joint Venture business to cease trading;

(A) section 4.6 of the Report of the Administrators of QNI dated 11 April 2016;

(B) paragraphs 13 and 24 of the Affidavit of K Trenfield dated 19 April 2016 and filed in the now discontinued proceeding BS3849/16 commenced by QNR, QNM and QNS as plaintiffs against the Liquidators of QNI as defendants in the Supreme Court of Queensland; and

(C) paragraphs 12, 13, 29 and 30 of the Affidavit of John Park dated 6 February 2017 and filed in proceeding BS6150/16 commenced by Cart Provider Pty Ltd, China First Pty Ltd, Waratah Coal Pty Ltd, Palmer, QNR and QNM as applicants against the Liquidators of QNI and QNI as respondents in the Supreme Court of Queensland.

The defendants refer to the evidence given by Palmer, on oath, set out at paragraph 46I above.

(l) Palmer chose to, and procured QNM and QNR to, appoint QNS as General Manager of the Joint Venture without QNS having attended to obtaining the necessary licenses and approvals for QNS to operate the Yabulu Refinery;

Palmer did not himself, and did not procure QNM, QNR or QNS, to attend to:

(A) obtaining necessary government licenses and approvals, including key environmental approvals and the major hazard facility license;

(B) obtaining leases, licenses and permits with the Port of Townsville, which were critical to the transportation of nickel; and

(C) accepting the assignment of ore supply contracts from QNI to QNS, which were critical for production at the Yabulu Refinery.

(m) Palmer has not re-opened, or caused to be re-opened, the Yabulu Refinery in circumstances where:

(i) Mineralogy received the judgment sum in CIV 1808 of 2013 on 12 January 2018 and payment of Royalty Component B thereafter, with a total of US$1,856,641,704.58 US$1,914,107,918.58 of Royalty Component B paid to Mineralogy as at the date of this defence (excluding GST and interest).

(ii) Mineralogy has received a total of A$166,200,868.65 A$171,259,245.92 of Royalty Component A as at the date of this defence (excluding GST and interest).

(iii) Cape Preston Resource Holdings Pty Ltd, an indirect wholly- owned subsidiary of CITIC, paid Mineralogy a total of US$146,701,557.00 for the acquisition of Balmoral Iron Pty Ltd in instalments during 2021 and 2022.

Schedule 5 to this defence sets out the Royalty Component B and Royalty Component A payments as at the date of this defence.

...

[50C] Further or alternatively, if, which is denied, Palmer has suffered loss, CITIC is not required to indemnify Palmer for that loss in accordance with clause 11.5(c) because of Palmer's failure to take all reasonable steps to minimise and, where possible, avoid any loss or damage suffered by him in breach of clause 9.1(e) of the FCD:

(a) which failure is constituted by, or is to be inferred from the matters pleaded in paragraph 50A(b) to (k) above; and

(b) where the matters pleaded in paragraph 50A(b) to (k) above would have produced funds which could have been used to satisfy QNI's liabilities as and when they fell due to avoid QNI going into voluntary administration and to enable QNI to continue managing and operating the Joint Venture business.

...

[53A] Further or alternatively:

(a) in breach of clause 9.1(e) of the FCD, Palmer failed to take all reasonable steps to minimise and, where possible, avoid any loss and damage suffered by him;

The defendants repeat paragraphs 50A(b) to (k) above.

(b) by reason of such breach, if (which is denied) CITIC is obliged to indemnify Palmer against any loss claimed by Palmer in this proceeding, CITIC has suffered loss and damage.

CITIC's loss and damage is the amount, if any, claimed by Palmer in this proceeding in respect of which it is obliged to indemnify Palmer.

[53B] Further or alternatively, if contrary to the defendants' case, this Honourable Court finds that Palmer has suffered any loss in respect of which CITIC is obliged to indemnify him, then CITIC will seek to set off its claim against Palmer for loss and damage set out in paragraph 53A above against and in satisfaction of Palmer's claim against CITIC for indemnity.

(a) say that:

(i) the word 'which' appears after the words 'otherwise affected by anything' in clause 11.6(b); and

(ii) the word 'or' (not 'of') appears after the word 'payment' in clause 11.6(c); and

(b) otherwise admit paragraph 6, and say further as set out in paragraphs 6A to 6G below.

...

[6G] Further or alternatively to paragraphs 6C to 6D above, on the proper construction of clauses 9.1(e) and 11.5(c) of the FCD, CITIC's obligation to indemnify Mineralogy in accordance with clause 11.5(c):

(a) is subject to and conditional upon the indemnified party satisfying the obligations imposed by clause 9.1(e) by first taking all reasonable steps to minimise and, where possible, avoid any loss or damage suffered by it;

(b) only encompasses loss that the indemnified party establishes could not have been minimised or, where possible, avoided by the indemnified party taking all reasonable steps;

(c) only encompasses loss that the indemnified party establishes was in causal relation to the failure of Sino Iron or Korean Steel (or both) to perform its obligations under the MRSLAs or the failure of CITIC to cause Sino Iron or Korean Steel (or both) to perform its obligations under the MRSLAs;

(d) does not encompass any loss that was caused by Mineralogy or Palmer.

[7] They deny paragraph 7 and refer to paragraphs 6 to 6G above.

[8] They deny paragraph 8 and refer to paragraphs 6 to 6G above.

...

[39AA] They deny paragraph 39AA and say that:

(a) Mineralogy and/or Palmer could have provided or could have procured others to provide funds to Palmer Petroleum at the relevant times to:

(i) pay for the services rendered under the BGP Contract referred to in paragraphs 38A to 38C of the statement of claim (or could have satisfied its obligation to pay funds to BGP under the Guarantee);

(ii) pay the amount in the Statutory Demand by the due date for compliance (or could have satisfied its obligation to pay funds to BGP under the Guarantee); and

(iii) pay the amount in the Statutory Demand and/or any further amount owing to BGP (or could have satisfied its obligation to pay funds to BGP under the Guarantee),

before Palmer Petroleum was ordered to be wound up in insolvency.

(b) at some time before 8 January 2016, Mineralogy decided not to provide funds or procure others to provide funds to Palmer Petroleum (or to satisfy its obligation to pay funds to BGP under the Guarantee) for the purposes set out in paragraph 39AA(a) above (Mineralogy's Own Decision);

(c) Mineralogy's Own Decision is constituted by, or to be inferred from, the following:

(i) the defendants refer to the circumstances pleaded in paragraphs 38E(a), 38F and 38G above and paragraphs 39B(a), 43B(aa) and 43B(a) to (f) below;

(ii) the failure by Palmer Petroleum to borrow sufficient funds from financiers to enable it to pay its debt to BGP as and when it fell due or at any time prior to 8 January 2016;

(iii) on 5 April 2016, Mineralogy commenced proceedings against BGP in the Supreme Court of Queensland to set aside the Guarantee;

(iv) on or about 1 August 2017, Mineralogy sought leave to amend its pleading in those proceedings to include a claim against BGP alleging misleading or deceptive conduct and breach of contract resulting in Palmer Petroleum being prevented or delayed in selling or otherwise exploiting PPL380 and suffering loss in an amount of $2.674 billion. The Court dismissed Mineralogy's application for leave;

(v) on 9 October 2017, the Court ordered Mineralogy to pay US$17,629,673.68 to BGP in respect of outstanding amounts owed by Palmer Petroleum to BGP under the BGP Contract, relevantly finding that:

(A) the Guarantee was not discharged by Mineralogy having waived or released BGP from alleged breaches of the BGP Contract by it;

(B) recovery under the Guarantee was not barred by a clause of the BGP Contract which Mineralogy claimed allowed it to withhold payment for unsatisfactory performance by BGP and, in any event, Mineralogy had not proved unsatisfactory performance by BGP;

(C) BGP had made out its counterclaim for payment of unpaid invoices issued under the BGP Contract; and

The defendants refer to the decision of the Supreme Court of Queensland in Mineralogy Pty Ltd v BGP Geoexplorer Pte Ltd [2017] QSC 219.

(vi) on 20 November 2017, before judgment in the RCB Proceeding was handed down on 24 November 2017, Mineralogy paid US$17,629,673.68 to BGP's solicitors, to be held on trust pending the outcome of an appeal by Mineralogy against the Court's orders;

The defendants refer to the decision of the Queensland Court of Appeal in Mineralogy Pty Ltd v BGP Geoexplorer Pte Ltd [2017] QCA 275, the decisions of the Supreme Court of Queensland in Mineralogy Pty Ltd v BGP Geoexplorer Pte Ltd (No 2) [2018] QSC 42, and Parbery v QNI Metals Pty Ltd [2018] QSC 107 [281], the decision of the Queensland Court of Appeal in Mineralogy Pty Ltd v BGP Geoexplorer Pte Ltd [2018] QCA 256 and special leave refused in Mineralogy Pty Ltd v BGP Geoexplorer Pte Ltd [2019] HCASL 43.

(d) if Royalty Component B had been paid as pleaded in paragraph 25 of the statement of claim:

(i) in the circumstances pleaded in paragraphs 38E, 38F and 38G above, Mineralogy would have still made Mineralogy's Own Decision and would not have provided Palmer Petroleum funds for the purposes set out in paragraph 39AA(a) above; and

(ii) the total amount of Royalty Component B payable by Sino Iron and Korean Steel to Mineralogy under the MRSLAs was not sufficient to enable Mineralogy to provide funds to both Palmer Petroleum for its funding requirements as alleged in paragraph 39AA of the statement of claim and to Queensland Nickel Pty Ltd (QNI) for its funding requirements for the period to JuneMarch 2016 as alleged in paragraph 44A of the SixthSeventh Amended Statement of Claim filed 10 November 202323 April 2024 in CIV 2072 of 2017.

...

[43A] They say that if, which is denied, Mineralogy has suffered loss, its loss was "in relation to" Mineralogy's Own Decision in the circumstances pleaded in paragraphs 38D, 38E, 38F, 38G and 39AA above.

[43B] Further or alternatively, they say that if, which is denied, Mineralogy has suffered loss, CITIC is not required to indemnify Mineralogy for that loss in accordance with clause 11.5(c) because of Mineralogy's failure to take all reasonable steps to minimise and, where possible, avoid any loss or damage suffered by it in breach of clause 9.1(e) of the FCD, which failure is constituted by, or to be inferred from, the following:

(aa) if, which is not admitted, Mineralogy was granted the Option, failing to:

(i) exercise the Option in the circumstances set out in paragraph 39B(a) above;

(ii) take transfer of the PPLs; and

(iii) procure the registration of the PPLs in its name or the name of a nominee,

prior to Palmer Petroleum being placed into liquidation;

The defendants refer to Blaxcell Limited v Hon Dr Fabian Pok MP, Minister for Petroleum and Energy and Independent State of Papua New Guinea OS (JR) No. 888 of 2017 (Unreported, delivered on 15 December 2023), [6], [7], [9], [10], [12], [13].

(ab) failing to seek to have the substantive hearing of the Blaxcell Proceeding before the natural expiration of the PPLs;

(ac) failing, directly or indirectly, to maintain the PPLs in good order (including not liable to cancellation under section 138 of the Oil and Gas Act 1998 (PNG));

The defendants refer to Blaxcell Limited v Hon Dr Fabian Pok MP, Minister for Petroleum and Energy and Independent State of Papua New Guinea OS (JR) No. 888 of 2017 (Unreported, delivered on 15 December 2023), [6], [7], [9], [12], [13].

(a) failing, directly or indirectly, to make assets owned by Mineralogy available as security to enable Palmer Petroleum to obtain loans or other funding from financiers;

Assets owned by Mineralogy at the relevant times which could have been made available as security are set out in items 2.1 - 2.5 of Schedule 2 to this defence.

Further particulars may be provided following discovery, subpoenas and the issue of interrogatories.

(b) failing, directly or indirectly, to provide funds or other assets to Palmer Petroleum to enable Palmer Petroleum to avoid the appointment of liquidators;

Assets owned by Mineralogy which could have been sold to provide funds to Palmer Petroleum are set out in items 2.1 - 2.5 of Schedule 2 to this defence.

Further, Mineralogy was entitled to and received from Sino Iron and Korean Steel payments of Royalty Component A.

Further, Mineralogy received a tax refund of approximately $45 million from the Australian Taxation Office (ATO) during the financial year ended 30 June 2014 pursuant to a Deed of Settlement between Mineralogy and the ATO dated 3 September 2013.

Further particulars may be provided following discovery, subpoenas and the issue of interrogatories.

(c) failing to indemnify BGP in relation to the debt owed to it by Palmer Petroleum;

The defendants refer to the decision of the Supreme Court of Queensland in Mineralogy Pty Ltd v BGP Geoexplorer Pte Ltd [2017] QSC 219 and the decision of the Queensland Court of Appeal in Mineralogy Pty Ltd v BGP Geoexplorer Pte Ltd [2018] QCA 174.

(d) failing, directly or indirectly, to make assets owned by Palmer available as security to enable Palmer Petroleum to obtain loans or other funding from financiers;

Assets owned by Palmer at the relevant times which could have been made available as security are set out in Schedule 1 to this defence.

The defendants refer to the information given by Palmer, on affirmation, during his public examination before the Federal Court of Australia in QUD 580 of 2016 on 12 September 2016 regarding his capacity, and the capacity of entities controlled by him, to obtain funds to meet the liabilities of QNI (Transcript, 12 September 2016, T462.2-8; T646.12-T464.32; T464.40-T464.44; T465.19-T466.42; T477.24-T477.44; T479.38-T479.45; T480.1- T480.13; T494.20-T495.37; T496.23-T496.35).

Further particulars may be provided following discovery, subpoenas and the issue of interrogatories.

(e) failing, directly or indirectly, to make assets owned by entities directly or indirectly controlled by Palmer available as security to enable Palmer Petroleum to obtain loans or other funding from financiers;

The defendants refer to the fact that Palmer was the ultimate beneficial owner of all of the shares or a majority shareholder in entities including: Australasian Resources Ltd, Cart Provider Pty Ltd, Closeridge Pty Ltd, Coeur De Lion Investments Pty Ltd, Cold Mountain Stud Pty Ltd, Fairway Coal Pty Ltd, Mineralogy Canada Acquisition Corp Pty Ltd, Mineralogy Pty Ltd, Nickel Consolidated Pty Ltd, Nickel Processing Pty Ltd, Nickel House Pty Ltd, Palmer Coolum Resort Pty Ltd, Palmer Leisure Australia Pty Ltd, Palmer Leisure Coolum Pty Ltd, River Crescent Pty Ltd and Waratah Coal Pty Ltd.

Assets owned by companies directly or indirectly controlled by Palmer at the relevant times which could have been made available as security are set out in Schedule 2 to this defence.

The defendants refer to the information given by Palmer, on affirmation, during his public examination before the Federal Court of Australia in QUD 580 of 2016 on 12 September 2016 regarding his capacity, and the capacity of entities controlled by him, to obtain funds to meet the liabilities of QNI (Transcript, 12 September 2016, T462.2-8; T646.12-T464.32; T464.40-T464.44; T465.19-T466.42; T477.24-T477.44; T479.38-T479.45; T480.1- T480.13; T494.20-T495.37; T496.23-T496.35).

Further particulars may be provided following discovery, subpoenas and the issue of interrogatories.

(f) failing, directly or indirectly, to provide or procure an entity or entities directly or indirectly controlled by Palmer to provide funds or other assets to Palmer Petroleum to enable Palmer Petroleum to avoid the appointment of liquidators,

The defendants repeat the particulars to sub-paragraphs (d) and (e) above.

Assets owned by companies directly or indirectly controlled by Palmer at the relevant times which could have been sold to provide funds to Palmer Petroleum are set out in Schedule 2 to this defence.

in each case, in the circumstances set out in paragraphs 38D, 38E, 38F, 38G, 39AA and 43A above.

...

[44] They deny paragraph 44 and say that if, which is denied, Mineralogy has suffered loss:

(a) its loss is not "in relation to" the failure of Sino Iron and Korean Steel to perform their obligations under the MRSLAs or CITIC's failure to cause Sino Iron and Korean Steel to perform their obligations under the MRSLAs within the meaning of clause 11.5(c) because its loss:

(i) is not direct loss or damage attributable to the breach of the MRSLAs;

(ii) does not arise naturally from the breach of the MRSLAs;

(iii) cannot reasonably be supposed to have been contemplated by the parties, when they made the FCD in October 2008, as the probable result of the breach;

(iv) is not loss suffered, paid or incurred by Mineralogy in relation to a failure of Sino Iron or Korean Steel (or both) to perform its obligations to Mineralogy under the FCD or the Project Agreements or the failure of CITIC to cause Sino Iron or Korean Steel (or both) to perform its obligations to Mineralogy under the FCD or the Project Agreements;

(v) not used;

(vi) not used;

(vii) was "in relation to" Mineralogy's Own Decision as pleaded in paragraph 43A above;

(b) further or alternatively, as to the loss alleged in paragraph 42(c) of the statement of claim, such loss would be "in relation" the wrongful cancellation of the PPLs by the Minister for Petroleum and Energy of PNG and the Minister's failure to approve and register the transfer of the PPLs to Blaxcellnot used.

...

[46] Further or alternatively, if, contrary to the defendants' case, this Honourable Court finds or would otherwise find that Mineralogy has suffered any loss in respect of which CITIC is required to indemnify Mineralogy, then CITIC's liability is excluded because of Mineralogy's failure to take all reasonable steps to minimise and, where possible, avoid such loss or damage in breach of clause 9.1(e) of the FCD as pleaded in paragraph 43B above.

[46A] Further or alternatively:

(a) in breach of clause 9.1(e) of the FCD, Mineralogy failed to take all reasonable steps to minimise and, where possible, avoid any loss and damage suffered by it; and

PARTICULARS

The defendants repeat paragraph 43B above.

(b) by reason of such breach, if (which is denied) CITIC is obliged to indemnify Mineralogy against any loss claimed by it in this proceeding, CITIC has suffered loss and damage.

CITIC's loss and damage is the amount, if any, claimed by Mineralogy in this proceeding in respect of which it is obliged to indemnify it.

[46B] Further or alternatively, if contrary to the defendants' case, this Honourable Court finds that Mineralogy has suffered any loss in respect of which CITIC is obliged to indemnify it, then CITIC will seek to set off its claim against Mineralogy for loss and damage set out in paragraph 46A above against and in satisfaction of Mineralogy's claim against CITIC for indemnity.

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

[1] For convenience, I note the actions are typically referred to by the parties as the QNI Proceeding and the Palmer Petroleum Proceeding, being CIV 2072 of 2017 and CIV 1267 of 2018 respectively. Together, the actions are referred to as the Indemnity Proceedings. Both actions are connected with the instrument known as the Fortescue Coordination Deed or the FCD. I will refer to the plaintiffs as Mr Palmer and Mineralogy (together, the Mineralogy Parties) and I will refer to the defendants as the CITIC Parties.

[2] Palmer v CITIC Ltd [No 12] [2024] WASC 322.

[3] There have been several interlocutory decisions published by this court in the Indemnity Proceedings since they were commenced in 2017 and 2018: Palmer v CITIC Ltd [2017] WASC 253 (Le Miere J) (Stay application); Palmer v CITIC [No 2] [2019] WASC 14 (Kenneth Martin J) (Preliminary questions application); Palmer v CITIC [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 [No 4] [2022] WASC 292 (Kenneth Martin J) (Strategic conference and timetabling); Palmer v CITIC [No 5] [2023] WASC 44 (Kenneth Martin J) (Directions and timetabling); and Palmer v CITIC [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) (Applications for leave to amend statements of claim); Palmer v CITIC Ltd [No 9] [2023] WASC 238 (Lundberg J) (Application to discharge discovery orders); Palmer v CITIC Ltd [No 10] [2023] WASC 417 (Lundberg J) (Further application to amend statement of claim); Palmer v CITIC Ltd [No 11] [2024] WASC 210 (Lundberg J) (Discovery applications); and Palmer v CITIC Ltd [No 12]. [2024] WASC 322 (Lundberg J) (Sequencing Application)

[4] In the QNI Proceeding, see the amended chamber summons dated 17 June 2024, [4] - [7] (Chamber Summons); Mineralogy submissions dated 2 July 2024; CITIC submissions dated 23 July 2024; and Mineralogy reply submissions dated 1 August 2024.

[7] Chambers summons [6] and [7]. Allied to this, the Mineralogy Parties seek an order that the Court dispense with the requirement in O 20 r 13(6) RSC.

[10] Vantage Holdings Group Pty Ltd v Donnelly [No 4] [2019] WASC 398 [60(d)] ‑ [60(j)], approved by the Court of Appeal in English v Vantage Holdings Group Pty Ltd [2021] WASCA 47 [56] (Murphy, Mitchell and Vaughan JJA) and in DFD Rhodes Pty Ltd v Hancock Prospecting Pty Ltd [2022] WASCA 97 [226] (Quinlan CJ, Beech and Vaughan JJA).

[11] Vantage Holdings Group [60(g)] (Smith J).

[12] Vantage Holdings Group [60(h)] (Smith J).

[13] Vantage Holdings Group [60(f)] (Smith J).

[14] Lampson (Australia) Pty Ltd v Fortescue Metals Group [No 3] [2014] WASC 162 [44] (Edelman J).

[15] Vantage Holdings Group [60(i)] (Smith J).

[16] Vantage Holdings Group [60(j)] (Smith J).

[17] Vantage Holdings Group [60(d)] (Smith J).

[18] Barclay Mowlem Construction Ltd v Dampier Port Authority [2006] WASC 281; (2006) 33 WAR 82 [5] ‑ [8] (Martin CJ).

[19] Trackem Pty Ltd v Revenue Partners (A Partnership) [2021] WASC 345 (Archer J).

[20] Trackem Pty Ltd v Revenue Partners (A Partnership) [25] - [30] (Archer J).

[21] National Australia Bank Limited v Rowe [2018] WASC 330 [4] ‑ [6] (Vaughan J).

[22] Rowe v National Australia Bank [2019] WASCA 140; (2019) 56 WAR 1 [15] and [165].

[24] QNI 7ASOC, [28], [28B], [38] and [44].

[25] QNI 7ASOC, [4], [4A] and [47A].

[26] The plea at [1AA(g)] is particularised in several respects, including that Mr Palmer alleges he acquired the shareholding with the expectation that the CITIC Parties would make the RCB payments, and he further alleges that nickel prices were yet to recover before QNI was placed into voluntary administration or liquidation.

[31] Mineralogy submissions [32] - [33].

[33] Mineralogy submissions [37] - [53]; and Mineralogy reply submissions [25] - [40].

[34] CITIC submissions [65] - [82].

[35] Kodak (Australasia) Pty Ltd v Retial Traders Mutual Indemnity Insurance Association [1942] NSWStRp 19; (1942) 42 SR (NSW) 231 (Kodak).

[37] General Steel Industries Inc v Cmr for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125 (General Steel).

[39] Agar v Hyde [2000] HCA 41; (2000) 201 CLR 552.

[40] Agar v Hyde [57]. See also Batistatos v Roads and Traffic Authority of NSW [2006] HCA 27; (2006) 226 CLR 256 [45] - [46].

[43] Lepcanfin Pty Ltd v Lepfin Pty Ltd [2020] NSWCA 155; (2020) 102 NSWLR 627 (Lepcanfin).

[44] Sino Iron Pty Ltd v Mineralogy Pty Ltd [2020] WASC 311 [222] (Kenneth Martin J).

[46] Mineralogy submissions [55] - [61].

[47] BGC Contracting Pty Ltd v Cliffs Asia Pacific Iron Ore Pty Ltd [2019] WASC 248 [77] (Smith J).

[48] NRW Contracting Pty Ltd v Cliffs Asia Pacific Iron Ore Pty Ltd [2020] WASC 107 [94] (Murphy JA) and [130] ‑ [132] (Beech and Vaughan JJA).

[49] Fremantle Port Authority v Cosco Shipping Bulk (South East Asia) Pte Ltd [2023] WASC 95 [19] (Lundberg J).

[50] Doyle's Farm Produce Pty Ltd v Murray Darling Basin Authority [2021] NSWSC 369 (Adamson J) at first instance, and on appeal in Murray Darling Basin Authority v Doyle's Farm Produce Pty Ltd [2021] NSWCA 191 and Doyle's Farm Produce Pty Ltd v Murray Darling Basin Authority (No 2) [2021] NSWCA 246; (2021) 395 ALR 131.

[51] Doyle's Farm Produce Pty Ltd v Murray Darling Basin Authority (No 2) [4] and [5].

[54] Palmer v CITIC Ltd [No 10] [63] - [70].

[55] English v Vantage Holdings Group Pty Ltd [2021] WASCA 47.

[56] Parbery & Ors v QNI Metals Pty Ltd & Ors [2020] QSC 143 (Mullins J) (Parbery).

[60] CITIC submissions [86] and [89].

[64] QNI ASD, [50A(b)] and [50A(c)], for example.

[65] Mineralogy submissions [77] - [79].