PERDAMAN CHEMICALS AND FERTILISERS PTY LTD -v- THE GRIFFIN COAL MINING COMPANY PTY LTD [No 7] [2012] WASC 502 (21 December 2012)

4 The Bluewaters Power Stations are owned and operated by two entities: the Griffin Power Entities. The Griffin Power Entities are in administration. The administrator has been negotiating their sale for more than a year. That sale, which I describe below as the Bluewaters transaction, is said to be imminent. The transaction is very large. The stamp duty alone is likely to exceed $20 million.

5 The Bluewaters transaction has a long stop date which has recently been extended only to today, 21 December 2012. If the transaction does not proceed there is a real possibility that Griffin Coal will cease supply of coal to the Griffin Power Entities which could cause them to cease operating. Evidence filed by the State of Western Australia is that a cessation of the operation of the Bluewaters Power Stations could potentially affect the reliability of supply and the cost of electricity services to customers of these services located in areas of the South West of Western Australia that receive electricity through the South West Interconnected System.

6 The Bluewaters transaction is also of immense significance to Griffin Coal which will obtain significant benefits from it. The evidence currently before the Court shows that without the support of companies in the group, particularly its ultimate parent, Griffin Coal would be in a parlous financial position. The Bluewaters transaction together with other developments may provide the ability for Griffin Coal to operate as a viable standalone entity.

7 The Bluewaters transaction is dependent upon the grant to the buyers of secured stepin rights over Griffin Coal to ensure continuity of supply to those buyers. Although the terms promised in exchange provide significant benefits to Griffin Coal, Griffin Coal cannot grant those rights without the consent of ICICI Bank (and a Syndicate of lenders) to whom it has granted a Negative Pledge. ICICI Bank will not consent without various terms including the grant of security to it from Griffin Coal.

8 Perdaman does not want the security to be provided to ICICI Bank. First, it seeks an injunction to prevent the Bluewaters transaction. Secondly, it seeks the appointment of a provisional liquidator to Griffin Coal. A third interlocutory application concerning caveats that Perdaman lodged over mining licences held by Griffin Coal was resolved by orders made, almost by consent, after a short hearing on 18 and 19 December 2012.

9 A key reason why Perdaman does not want the security provided to ICICI Bank is because Perdaman has sued Griffin Coal and others for damages arising from the loss of the Perdaman Project. Amongst Perdaman's claims are claims for damages for alleged losses of $3.387 billion. It also claims damages, described as exemplary or aggravated damages, based on alleged wrongful gains to other defendants of $2.4 billion. The effect of the grant of security to the ICICI Bank is that if Perdaman succeeds in the litigation in such an amount that Griffin Coal becomes insolvent then the secured lenders will take priority over Perdaman.

10 Perdaman's current applications, in two of the substantive actions, are considered together in these reasons. They are an application for an interlocutory injunction to restrain the proposed Bluewaters transaction and an application for the appointment of a provisional liquidator. Both applications are refused.

11 In these applications the parties have relied upon more than 30 affidavits involving thousands of pages of evidence. The affidavits were sworn or affirmed over several weeks. The applications were heard over two days on 30 November 2012 and 13 December 2012. Submissions were, in some parts, necessarily abbreviated, although both written and oral submissions from all counsel were extremely helpful and I acknowledge my debt to counsel and their instructors for their assistance which made possible the preparation of these reasons in the short time available.

12 Unlike the focussed submissions in this matter, the evidence was not abbreviated. Perdaman filed evidence, particularly evidence concerning the financial affairs of Griffin Coal and its ultimate parent, which descended to factual issues in considerable detail. Griffin Coal responded. The level of evidence that is appropriate for interlocutory hearings of this nature is a matter of degree. The hearing must not descend into a minitrial. Although I have discussed much of that evidence below to place it in context, the course adopted by the parties in filing of evidence came close to treating the applications as if they were minitrials.

13 The applications were considered as a matter of extreme urgency. In a hearing on 30 November 2012 I was told that satisfaction of the conditions precedent to the Bluewaters transaction was imminent. The long stop date for the Bluewaters transaction was extended only until 21 December 2012. The buyers in the Bluewaters transaction sought leave to file evidence including evidence asserting that the transaction might not complete if the sale agreement did not occur on or shortly after 30 November 2012. But most of the conditions precedent still had not been satisfied by the hearing on 13 December 2012.

14 It is unclear how many of the conditions precedent to the transaction been satisfied as at today's date, 21 December 2012. Nor is it possible to assess conclusively the accuracy of the assumption by Griffin Coal of extreme urgency. But these reasons are provided by 21 December on the basis of the assumption. They are necessarily less considered than would otherwise have been the case.

15 Counsel for Perdaman boldly suggested, apparently against interest, that there is a preliminary issue whether the Bluewaters transaction warrants the grant of injunctive relief when it remains subject to a number of conditions precedent and in circumstances, addressed below, in which the terms of the transaction are said to have changed between the 30 November 2012 hearing and the 13 December 2012 hearing.[1] I do not accept this submission. It is sufficient to say that there is substantial evidence that suggests that the Bluewaters transaction might indeed go ahead. It is appropriate that Perdaman's applications be heard and decided.

16 Perhaps underlying this submission, and also in the final sentence of the final set of submissions filed by Perdaman on 19 December 2012, is a controversial assumption. The assumption appears to be that the undertaking about notice given by Griffin Coal, which I describe below, requires a further 10 days notice of any transaction from being undertaken which is, in any material respect, different from the transaction about which notice has already been given to Perdaman. It is not necessary to decide this point but there must be doubt concerning whether the intention of the undertaking (objectively construed) could be that parties negotiating a transaction would be required to issue a fresh notice every time any of the terms of the transaction changed in some material detail and then wait for 10 days while another injunction application is considered by Perdaman. It may even be that the force of the undertaking is already spent by this application and by the terms of this decision on the substance of the proposed application.

17 The applications are treated together in these reasons. They raise overlapping issues. In numerous instances, the parties relied upon affidavits filed in one matter in support of submissions in another. There was, sensibly, no objection to this course. I have followed the same approach.

18 The application in CIV 1925 of 2011 is for an interlocutory injunction. Perdaman seeks the injunction against the first to seventh and ninth defendants in that action. The central defendant is Griffin Coal. The other corporate defendants are members of a (Lanco) group with the ultimate holding company described, as in previous decisions in this matter, as Lanco India. For the sake of simplicity and clarity, the latter being something to which in the very short time available these reasons can only desperately aspire, I have referred to Griffin Coal as the relevant defendant in CIV 1925 of 2011 although the reasons apply to all the defendants and the submissions and appearances were also on behalf of the others except the eighth defendant.

19 The application by Perdaman in COR 190 of 2012 is for the appointment of a provisional liquidator to Griffin Coal. The defendant is Griffin Coal.

20 Perdaman's applications for an injunction and for appointment of a provisional liquidator were listed to be heard on 30 November 2012. In submissions filed on 29 November 2012, Perdaman foreshadowed an application to adjourn its applications as a matter of natural justice to it to allow it a fair opportunity to respond to evidence against it.[2] Perdaman pointed to (i) unexplained failures by Griffin Coal to comply with the timetable for provision of evidence for the applications; (ii) the inability of Perdaman to provide complete submissions in time. Substantial further evidence and submissions, including proposed submissions and evidence from third parties, was also filed shortly before the hearing on 30 November 2012, some of it only minutes beforehand.

21 At the hearing on 30 November 2012, Perdaman made the foreshadowed application to adjourn. The application was initially, and vigorously, opposed by Griffin Coal. But the hearing of the matter could not be completed in a single day in any event. Indeed, as I explain below, it was only completed in two days because neither Perdaman nor Griffin Coal made submissions concerning the arguability or strength of Perdaman's case in the primary proceedings in CIV 1925 of 2011. And once it became apparent that Perdaman did not seek any interim relief, Griffin Coal accepted that there was no prejudice to the matter being heard on 30 November 2012 and then adjourned until 13 December 2012 to allow Perdaman the opportunity to respond to evidence and to make further responsive submissions. As it turned out, there was substantial additional evidence from both Griffin Coal and Perdaman prior to the 13 December 2012 hearing.

The prelitigation transaction: sale of the shares in Griffin Coal

22 Griffin Coal produces 3.5 million tonnes of coal annually from its Collie mines and is one of the largest coal suppliers in Western Australia. On 3 January 2010, Griffin Coal and other companies in the Griffin Energy Group were placed into voluntary administration.

23 On 28 February 2011, the administrators finalised the sale of Griffin Coal and Carpenter Mine Management Pty Limited (CMM).

24 The purchaser of the shares in Griffin Coal and CMM was the third defendant, Lanco Resources Australia Pty Ltd (Lanco Australia). The shares in Lanco Australia are held by the eighth defendant, Lanco Resources International Pte Ltd (Lanco Singapore). And the parent of Lanco Singapore is Lanco Infratech Limited (Lanco India). Lanco India is a major infrastructure developer in India.

25 The purchase price for the shares in Griffin Coal and CMM was $740 million. An upfront payment of $490 million was made as required. A second payment was deferred by the sale agreement until the earlier of (i) the date that Griffin Coal receives approvals for the development and operation of a railway line from the mining operations of Griffin Coal to the Bunbury export facility; and (ii) two years from the acquisition date (being February 2013). A final payment is due on the earlier of (i) the date of first export from the newly constructed Bunbury export facility, or (ii) four years from the acquisition date (being February 2015).

26 The remainder of this section deals with the relevant provisions of the transaction documents from the sale of the shares in Griffin Coal to Lanco Australia and the relevant posttransaction contracts.

27 Lanco Australia obtained the finance for the purchase of the shares in Griffin Coal and CMM from an $800 million Facility Agreement. The Facility Agreement was provided by ICICI Bank Ltd, Singapore Branch (ICICI Bank). The deferred payments were secured by letters of credit provided under the Facility Agreement. After the sale, on 21 June 2011, and in circumstances which are controversial, Griffin Coal executed a Negative Pledge Deed in favour of ICICI Bank (as agent for the Syndicate).

28 As I have explained, Lanco India is the parent company of Lanco Singapore which, in turn, is the parent company of Lanco Australia. On 28 February 2011, Lanco Australia acquired all the shares of Griffin Coal and CMM. Lanco India is therefore the great grandparent company of Griffin Coal.

29 The funding for Lanco Australia's purchase of the shares in Griffin Coal and CMM was provided by a US$800 million bank facility from ICICI Bank as mandated lead arranger (the Facility Agreement). The Facility Agreement is dated 9 February 2011. The facility borrowers are Lanco Singapore and Lanco Australia. The guarantor is Lanco India. ICICI Bank has sold down part of the loan to a syndicate of banks (the Syndicate).

30 In accordance with an ICICI Bank credit sanction letter dated 17 October 2010 and with the Facility Agreement, Griffin Coal and CMM subsequently became additional guarantors.

31 Clause 3.1 of the Facility Agreement is entitled 'Purpose'. It provides as follows:

A Borrower shall apply all Loans borrowed by it under the Facility only towards:

(a) the Acquisition;

(b) equity infusion (whether direct or indirect) in the Targets to be utilised by the Targets towards: (a) meeting their working capital requirements, (b) meeting their capital expenditure requirements, or (c) scheduled repayment of their existing indebtedness; and

(c) payment of Ancillary Costs.

32 The definitions section of the Facility Agreement (cl 1.1) defines 'Target' as Griffin Coal and CMM.

33 On 21 June 2011, after litigation had commenced between Perdaman and Griffin Coal and others, Griffin Coal and CMM executed a Negative Pledge Deed with ICICI (as agent for the Syndicate). Perdaman amended its pleading to plead that the entry into the Negative Pledge Deed by Griffin Coal was a breach of the Coal Supply Agreement between it and Griffin Coal.

34 The Negative Pledge Deed includes a clause as follows:

2.3.1 Each Obligor shall (and each Obligator shall ensure that each member of the Group will) grant equal ranking Security for the benefit of the Finance Parties as security for all amounts outstanding under the Finance Documents on substantially the same terms and in all respects in form and substance acceptable to the Agent (in its discretion) as any Security (Proposed Security) granted in connection with any Financial Indebtedness provided to or for the benefit of any Obligor or member of the Group (Proposed Financing) and be subject to an Intercreditor Agreement in form and substance acceptable to the Agent (in its discretion). For the avoidance of doubt, all such Security must rank equally in terms of priority and payment.

2.3.2 The amount outstanding under any Proposed Financing must not exceed:

(a) US$300,000,000 for the period from the date of this document to the third anniversary of the first Utilisation under the Facility Agreement; and

(b) US$800,000,000 for the period from the third anniversary of the first Utilisation under the Facility Agreement to the Final Maturity Date.

35 The Obligors as defined in cl 1.1 include Griffin Coal and CMM. The Finance Parties as defined include ICICI Bank Ltd (as Agent), a Lender (as defined in the Facility Agreement) and any other Finance Party (as defined in the Facility Agreement). Financial Indebtedness is defined in the Facility Agreement in very broad terms, encompassing any indebtedness for or in respect of moneys borrowed and numerous other matters (cl 1.1). The definitions from the Facility Agreement are picked up in the Negative Pledge (cl 1.4).

36 One effect of cl 2.3.1 is that once any Security is granted in connection with any 'Financial Indebtedness' provided to Griffin Coal then Griffin Coal is required to grant equal ranking Security for the benefit of the Finance Parties as security for all amounts outstanding under the Finance Documents (which include the Facility Agreement and extends to, at least, the borrowing of $490 million which has been drawn down).

37 The effect of cl 2.3.2 of the Negative Pledge Deed quoted above, to which I return later in these reasons, is therefore that Griffin Coal is restricted from obtaining more than US$300 million in finance from 21 June 2011 until 28 February 2014 (the third anniversary of the first Utilisation under the Facility Agreement) and prevented from obtaining more than US$800 million in finance from 28 February 2014 until 28 February 2016.

Perdaman's claims against Griffin Coal A broad overview of the claims by Perdaman

38 It is not necessary for the purposes of this application to engage in any detailed examination of the nature of Perdaman's claim against Griffin Coal or any of the other defendants. As I explain below, neither party made any submissions concerning the substance or strength of Perdaman's claim in the main proceedings. A very broad overview of the claim will suffice.

39 Perdaman's claim for damages is for loss suffered as a result of the conduct of the defendants.

40 The corporate defendants, with the descriptions which I explain in more detail below, are Griffin Coal, its parent (Lanco Australia), its grandparent (Lanco Singapore) and its great grandparent, the ultimate holding company (Lanco India). Perdaman pleads that Lanco India has a market capitalisation of over US$2 billion and an annual income in the financial year 2009 2010 of approximately US$2.05 billion.[3]

41 The individual defendants at relevant times were (i) the Chief Executive Officer of Griffin Coal (Mr Conley); (ii) the Chief Operating Officer - Business Development, of Lanco India, a director of Lanco Australia and Griffin Coal (Mr Agarwal); (iii) a director of Griffin Coal (Mr Prasad); (iv) the Executive Chairman and Director of Lanco India and Director of Lanco Singapore (Mr Rao); (v) the directorfinance of Lanco India and DirectorCommercial of Griffin Coal (Mr Amarendran).

42 Perdaman is the promoter of a proposed project involving the planned construction of a urea plant using coal as feedstock. The urea plant, and 'Perdaman Project' is located a short distance east of Collie in southwest Western Australia. Perdaman entered a Coal Supply Agreement with Griffin Coal. Perdaman claims that by April 2011 it was on the cusp of achieving Financial Close the achievement of which by 28 August 2011 is a condition precedent to the operation of some of the provisions in the Coal Supply Agreement. Perdaman pleads that conduct by Griffin Coal and other defendants from May 2011 caused Perdaman to fail to obtain the finance necessary to enable the establishment of the urea plant, with the result that Perdaman was unable to achieve the requirement of Financial Close by 28 August 2011. Perdaman says that it would otherwise have achieved Financial Close, alternatively that it lost the opportunity of doing so by the defendants' wrongful conduct.

43 The wrongful conduct pleaded by Perdaman is (i) breach of the Coal Supply Agreement by Griffin Coal; (ii) conduct by Griffin Coal and (separately) the other defendants which was unconscionable within the meaning of s 20, s 21(1) and s 22(1) of the Australian Consumer Law; and (iii) tortious interference by the defendants other than Griffin Coal in Griffin Coal's performance of the Coal Supply Agreement.

44 Perdaman claims damages which include damages for its loss of the Perdaman Project of $3.387 billion.

45 Perdaman also claims aggravated or exemplary damages based on the claim that Lanco India, and Lanco India's related entities, derived a substantial commercial advantage by their wrongful conduct. Their advantage is pleaded to be the ability to procure coal from the Griffin Coal Mines for supply to power stations they operate and propose to operate. That advantage is quantified at $2.4 billion.

The Coal Supply Agreement (the CSA) generally[4]

46 Perdaman and Griffin Coal entered the CSA on 21 December 2010.

47 Clause 1.1, the CSA provides that the contract has a term of 25 years, or as extended.

48 Clause 2.11 of the CSA requires Griffin Coal to maintain Marketable Reserves (as defined) within the Griffin Mine to meet its coal supply obligations. The obligation includes maintaining those reserves at no less than (i) 44 million tonnes of coal as at the date of Financial Close; (ii) 59 million tonnes of coal as at the date 12 months after the date of Financial Close; (iii) 74 million tonnes of coal as at the date 24 months after the date of Financial Close; (iv) 88.5 million tonnes of coal as at the Supply Commencement Date which is defined by cl 1.3, subject to various provisos, as 42 months after the date of Financial Close.

49 The Griffin Mine, within which the reserves must be maintained by Griffin Coal, is defined in cl 1.6 by cross reference from the definition clause, cl 25. Relevantly, cl 1.6 is not confined to Griffin Coal's Ewington mines. It contemplates the need for Griffin Coal to develop its Muja (including Muja South) deposits.

50 The effect of the increasing obligations in relation to reserves, coupled with the definition of Griffin Mine, makes clear that the CSA was enacted against an intention that Griffin Coal would undertake significant expansion.

51 Clause 16 of the CSA is concerned with default. Clause 16.5 is entitled 'Remedies for Default by the Seller [Griffin Coal]'. Defaults are divided into Financial Defaults and Nonfinancial Defaults. The definition section (cl 25) relevantly defines a Nonfinancial Default as a party's 'failure to observe or perform any Nonfinancial Obligation required to be performed by that Party under this Agreement but does not include [Griffin Coal] not meeting its coal delivery obligations' (emphasis added). A Nonfinancial Obligation is negatively defined as anything which is not a Financial Obligation, which is 'an obligation to pay or cause to be paid an amount of money'.

52 If the default is a Financial Default, Perdaman may terminate the CSA if, after five working days' notice to Griffin Coal stating its intention to terminate, the default is not cured.

53 If the default is a Nonfinancial Default, there is provision in cl 16.5(b) for damages and legal and equitable remedies. But, apart from a failure to pay damages for breach of a Nonfinancial Obligation, there is no provision for termination for breach of a Nonfinancial Obligation.

54 Clause 16.6 is entitled 'Coal delivery obligations'. Clause 16.6(f) provides as follows:

If:

(i) the Seller does not meet its coal delivery obligations due to an Insolvency Event;

(ii) the Seller does not provide an Cure Plan within the time specified in Clause 4.6;

(iii) in the ICE's opinion (acting reasonably), the Seller is not (other than due to Force Majeure) Implementing the Cure Plan In accordance with Clause 4.6; or

(iv) the Seller does not pay liquidated damages to the Buyer within the time set out in Clause 12.4 or paragraph (c) as applicable,

then the Buyer will, subject to paragraph (g), have a right to stepin to the Seller's operations to the extent, and for so long as, necessary to ensure deliveries from the Griffin Mine have been restored and maintained in accordance with the terms of this Agreement and the Buyer's Stockpile contains no less than 100,000 tonnes of coal and provided that in exercising any such step-in right, the Buyer:

(i) ensures the Griffin Mine is operated in a manner consistent with Good Industry Practices and according to all legislative requirements applicable to the Griffin Mine;

(ii) ensures that the operations are conducted so as to meet the contractual obligations owed by the Seller to all customers, Including the Buyer, supplied from the Griffin Mine and, to the extent not otherwise provided, on the basis that all such contracts rank equally. Both Parties agree to use reasonable endeavours to give effect to the Buyer's stepin right, including In negotiations and documentation with financiers (the Buyer acknowledging that its interests and rights in this regard will rank after those of the Sellers financiers); and

(iii) act in good faith in regard to the Seller's Interests,

and the Seller must pay liquidated damages in accordance with paragraph (c) until restoration of coal deliveries by the Seller in fact occurs or the maximum amount recoverable under paragraph (c) is paid, whichever is the earlier. For clarity, where the Buyer stepsin on the occurrence of one or more of the events set out In paragraph (d), paragraph (e) or subparagraphs (f) (i) to (e) (iv) inclusive, such step-in does not result in a change of ownership. Rather, stepin allows the Buyer to take management and control of the Seller's coal delivery operations as they relate to the Buyer so that delivery of coal to the Buyer can be restored and maintained.

55 The reference in (f)(ii) above to the acknowledgement by Perdaman that its interests and rights will rank after those of Griffin Coal's financiers directs attention to the financing provisions in cl 24.6 and cl 24.7. Those clauses provide as follows:

24.6 Financing for the Seller

To the extent requested by [Griffin Coal], [Perdaman] agrees to use reasonable endeavours to assist [Griffin Coal] in obtaining finance necessary to fund the expenditure required by [Griffin Coal] to enable it to meet its delivery obligations under this Agreement. However, nothing in this clause will oblige [Perdaman] to expend any sum of money to assist [Griffin Coal] to obtain the necessary finance.

24.7 Financing

(a) The Parties acknowledge that the Plant[5] and the Griffin Mine will be funded by project finance from [Perdaman's] Financiers (in the case of the Plant) and [Griffin Coal's] financiers (in the case of the Griffin Mine). Each Party will cooperate to satisfy all reasonable requirements of the financiers of either Party. Each Party acknowledges and agrees that either Party, and their Affiliates, may finance all or part of their interest in the Griffin Mine (in the case of [Griffin Coal]) or the Plant (in the case of [Perdaman]) and agrees that either Party may finance all or part of their interest in the Griffin Mine (in the case of [Griffin Coal]) or the Plant (in the case of [Perdaman]) on a limited recourse or nonrecourse basis.

(b) The Parties also acknowledge that where all or part of the Plant or Griffin Mine is financed, then the Parties will enter into a tripartite deed which will:

(i) in the case of the Plant, be in the form attached at Schedule 5 to this Agreement; and

(ii) in the case of the Griffin Mine, in a form reasonably required by [Griffin Coal's] financiers.

56 Griffin Coal's financiers, after whom Perdaman acknowledges that its interests and rights will rank, are those financiers which it was contemplated would be needed to finance the development of the Griffin Mine which, as I have explained, includes financing for Griffin Coal to develop its Muja (including Muja South) deposits.

57 Clause 24 is central to the dispute in the main action. It provides for the conditionality of clauses in the agreement subject to various exceptions. By cl 24.1(a), the clauses of the CSA other than those excepted, are conditional on

(i) Financial Close; and

(ii) execution of an intercreditor deed in the form of Schedule 6, a Deed of Charge in the form of Schedule 7 and a Mortgage of Mining Licence in the form of Schedule 8,

occurring on or before the Condition Precedent Date.

58 The 'Condition Precedent Date' is defined to mean 30 June 2011, unless extended in accordance with cl 24.1(b).

59 Clause 24.1(b) provides that Perdaman requires six months from the date when Griffin Coal exits administration to enable Perdaman to achieve Financial Close. Because Griffin's administration ended on 28 February 2011, cl 24.1(b) means that the Condition Precedent Date is 28 August 2011.

(i) use reasonable endeavours to satisfy the condition precedent set out in Clause 24.1(a)(i) by the Condition Precedent Date; and

(ii) report to [Griffin] promptly after any event which is material to satisfaction of the condition precedent set out in Clause 24.1 and provide detailed updates every Month or at such other intervals as may reasonably be requested by the [Griffin].

(b) [Griffin] must cooperate and use all reasonable endeavours to assist [Perdaman] with any due diligence obligations relating to achieving Financial Close.

(c) The Parties must use reasonable endeavours to satisfy the condition precedent in Clause 24.1(a)(ii) by the Condition Precedent Date.

61 Clause 24.3 provides that if the condition precedent in cl 24.1 has not been waived or satisfied by the Condition Precedent Date, then either party may, while the condition precedent remains unsatisfied and not waived, terminate the agreement immediately.

62 Clause 24.4(a) and cl 24.4(b) provide as follows:

(a) If an event occurs which indicates or is likely to indicate that [Perdaman] will be unable to reach Financial Close by the Condition Precedent Date, [Perdaman] must inform [Griffin Coal], within 1 week of such event occurring, of the details and likely impact of such event on [Perdaman] reaching Financial Close.

(b) As soon as reasonably practicable and in any event by no later than 2 weeks after [Griffin Coal] is informed of an event referred to in paragraph (a), [Perdaman] and [Griffin Coal] must meet to discuss such event and the possible steps and actions which can be taken by [Perdaman] and [Griffin Coal] to mitigate the effect of such event on [Perdaman] reaching Financial Close.

63 The Perdaman CSA provides rights to secure a consistent coal supply for Perdaman in various circumstances. Clause 16.6 of the CSA provides that in certain circumstances, and in the event of certain breaches by Griffin Coal, Perdaman is given the right to step in to Griffin's operations to take over management and control so that delivery of coal to Perdaman can be restored and maintained. See cl 16.6(d)(ii), cl 16.6(e)(ii) and cl 16.6(f) (the stepin provisions).

64 Those stepin provisions are secured by a Deed of Charge (sch 7 of the CSA) and a Mortgage of Mining Licence (sch 8 of the CSA), as described in cl 24.1(a)(ii).

65 Perdaman pleads, and Griffin Coal generally admits,[6] that on 26 August 2011, Griffin Coal advised Perdaman in writing that, among other things, it had executed the Deed of Charge and Mortgage of Mining Licence referred to in cl 24 of the CSA and that those documents were available for inspection at its solicitor's offices. Although Perdaman pleads that Griffin Coal wrongfully failed to deliver to it the Deed of Charge and Mortgage of Mining Licence at relevant times, it is clear from discovery that those securities have been executed.[7]

66 By the Mortgage of Mining Licence in sch 8, Griffin Coal mortgaged various mining tenements in favour of Perdaman to secure Griffin Coal's obligations under the stepin provisions of the CSA. Clause 2.2 of the Mortgage of Mining Licence provides that the mortgage is collateral to the Deed of Charge and secures the same obligations.

67 By cl 2.1 of the Deed of Charge, Griffin Coal charged all of its interest in the Charged Property (which included the mining tenements and other commercial assets of Griffin Coal), to Perdaman for the due and punctual performance of the Secured Obligations. The Secured Obligations were defined as being the stepin rights (ie cl 16.6(d)(ii), cl 16(e)(ii) and cl 16(f) of the CSA).

68 Clause 2.2 of the Deed of Charge provides that the intention of the parties is that in respect of Griffin Coal's present and future undertaking, asset and rights relating to the operation of the Griffin mine necessary to meet Griffin Coal's coal delivery obligations under the CSA, the charge takes priority over all other encumbrances of Griffin Coal other than a Finance Security or any other Encumbrance mandatorily preferred by law.

69 'Finance Security' is defined to have the meaning given to that term in the Intercreditor Deed. In the Intercreditor Deed, Finance Security is defined to mean the security interests (of the Security Trustee) described in sch 1 which is a pro forma for security interests to be inserted.

70 The proposed Intercreditor Deed described in cl 24.1(a)(ii) is sch 6 of the CSA. It was to be between Griffin Coal, Perdaman and the Security Trustee for Griffin Coal's financiers. The purpose of the proposed Intercreditor Deed was to regulate the priorities between Perdaman's security under the CSA created by the Deed of Charge and Mortgage of Mining Licence and the finance securities held by the Security Trustee for Griffin Coal's financiers. The intended effect was to give priority to Perdaman's stepin rights under cl 16 of the CSA, and otherwise to give priority to the Security Trustee's rights: cl 3.2 and cl 3.3 of the Intercreditor Deed.

71 It appears that Griffin Coal had no secured financier creditors. Thus, there was no need for execution of the Intercreditor Deed.[8] It was common ground that the Intercreditor Deed was not executed.

72 Clause 18 of the CSA provides that, subject to par (b), each party will only be liable for direct and foreseeable loss incurred by any other party as a result of its default under the agreement. It further provides that in no event will any party have any liability for any Consequential Loss (as defined) suffered by the other party.

Griffin Coal's purported termination of the Coal Supply Agreement

73 On 5 May 2011, Griffin Coal wrote to the Griffin Power Entities, to which reference is made below, and to Perdaman raising matters concerning coal supply agreements with those persons.

74 Although matters surrounding the 5 May 2011 letter, and some of the events described in it, are in dispute, some of the words used in the 5 May 2011 letter from Griffin Coal to Perdaman are pleaded in Perdaman's amended statement of claim, and admitted by Griffin Coal.[9]

As you know Griffin Coal was acquired by Lanco Resources Australia Pty Ltd from the administrators of Griffin Group of companies on 28 February 2011.

We wish to raise two matters with you concerning the CSA. We feel it is important to raise them with you now so that you (and your stakeholders) remain fully informed.

The first concerns the requirement the parties use reasonable endeavours to achieve execution on or prior to the CSA's Condition Precedent Date of an Intercreditor Deed, a Deed of Charge and a Mortgage of Mining Licence as contemplated in the CSA. The acquisition of Griffin Coal was agreed on terms prior to Lanco being provided with a copy of the final CSA (including the final terms of those three security documents). The acquisition was financed by ICICI Bank Limited, under the financing terms ICICI has certain rights as regards securities over Griffin Coal. Pursuant to our obligations under the CSA we have attempted to procure ICICI's consent to the grant of securities by Griffin Coal for the purposes of the CSA. ICICI has so far refused to grant that consent. We will however continue to endeavour to procure its consent and to bring about the execution of the CSA securities.

The second matter is that since completion of the acquisition, we have commenced a review of our operations and customer arrangements. The review so far has raised serious concerns that our operations may not be financially sustainable in their present form. We may need to make changes to the business of Griffin Coal and its operations in order to make its operations sustainable. We believe it is not in either party's interests that there be a recurrence of the recent financial difficulties. In light of the close business relationship between us, we would like to give you more information about our operations and to discuss our future business plans.

75 On 30 August 2011, Griffin Coal gave notice to Perdaman, which was said to be under cl 24.3 of the CSA and without prejudice to any other right or remedy which Griffin Coal may have, purporting to terminate the CSA.[10]

76 Griffin Coal's evidence in these proceedings[11] is that subsequently on 30 August 2011 Griffin Coal offered to withdraw the termination notice and to extend the condition precedent date (as defined in the CSA) subject to certain conditions. Griffin Coal said that upon satisfaction of those conditions it would provide securities to Perdaman under the CSA.[12] On 6 September 2011, Perdaman formally rejected this offer.[13]

The proposed sale of the Griffin Power Entities: the Bluewaters transaction Background to the Bluewaters transaction

77 Griffin Power Pty Ltd and Griffin Power 2 Pty Ltd (the Griffin Power Entities) own and operate the Bluewaters 1 and 2 power stations (the Bluewaters Power Stations). The Bluewaters Power Stations generate a material part of the electricity generation capacity for the South West of Western Australia. They also supply one of Western Australia's major energy retailers, Synergy.

78 On 17 October 2006, Griffin Coal had entered into two Coal Supply Agreements (the Bluewaters CSAs) with the Griffin Power Entities. At that time, Griffin Coal and the Griffin Power Entities were under common control, as part of the Griffin Energy Group.

79 The period of the Bluewaters CSAs was 30 years, with a 30 year option to renew at the election of the respective Griffin Power Entity. The sale price for the coal was fixed.

80 On 3 January 2010, the Griffin Power Entities were placed in voluntary administration, together with Griffin Coal.

81 On 8 April 2011, a little more than a month after the administrators had completed the sale of the shares in Griffin Coal, the Administrators announced that they had agreed terms for the sale of the Griffin Power Entities. They announced that the buyers were the Australian subsidiaries of The Kansai Electric Power Company Inc (Kansai) and Sumitomo Corporation (Sumitomo).

82 However, on 5 May 2011, Griffin Coal sent letters to the Griffin Power Entities. Griffin Coal explained that since the completion of the purchase of its shares there had been a review of operations and customer arrangements. A concern was expressed that 'our operations may not be financially sustainable in their present form'. Griffin Coal explained that its review 'indicated that we may need to make certain changes to our business and operations in order to secure our financial sustainability and to avoid a recurrence of our recent financial difficulties'.

83 The evidence of Mr Prasad is that the price of coal supplied by Griffin Coal to the Griffin Power Entities, fixed pursuant to the Bluewaters CSAs, is less than the cost of Griffin Coal producing the coal and is currently resulting in a loss to Griffin Coal.[14]

84 Griffin Coal subsequently withdrew its suspension letters and entered discussions with the Griffin Power Entities and representatives from the potential buyers of the Griffin Power Entities, Kansai and Sumitomo. During the discussions, Kansai and Sumitomo said that in order to complete the acquisition of the Griffin Power Entities they required certainty of the supply of coal from Griffin Coal. Hence, they required the Bluewaters CSAs to be revised and a grant of security over Griffin Coal's mines to secure stepin rights for the Griffin Power Entities in the event of certain defaults.

85 In late 2011, Griffin Coal and the Griffin Power Entities, and Kansai and Sumitomo, reached an agreement in principle that the Bluewaters CSAs would be amended to include:

(i) a payment by the Griffin Power Entities of a lump sum to Griffin Coal;

(ii) an increase in the sale price of coal under the Bluewaters CSAs in order to meet Griffin Coal's cost of producing coal;

(iii) a payment by Griffin Power of a catch up amount to Griffin Coal in respect of coal supplied from 1 July 2011 reflecting the price of coal agreed between the parties; and

(iv) the removal of a cap relating to the recovery of liquidated damages.

86 Griffin Coal agreed, in principle, to provide the Griffin Power Entities with stepin rights in the event of various defaults by Griffin Coal such as becoming insolvent, defaults in supply of coal. Upon a default by Griffin Coal the stepin rights would permit the Griffin Power Entities to take possession of Griffin Coal's Ewington I and Ewington II mines in Collie and to operate those mines through a receiver.

87 A transaction, incorporating these matters, has been under negotiation between Griffin Coal and the Griffin Power Entities, and Kansai and Sumitomo. It is now said to be very close to completion.

Notice of the Bluewaters transaction is given to Perdaman

88 On 29 September 2011, following the decision of the Court of Appeal in relation to an appeal from a decision concerning a freezing order application by Perdaman,[15] Griffin Coal gave an undertaking to the Court in terms of order 3 of the orders made by the Court of Appeal.[16] The undertaking was as follows:

[3(i)] [Griffin Coal] will not enter into any charge, pledge or other security other than as stipulated [in 3(ii)] to secure obligations pursuant to the Negative Pledge Deed without first giving 10 prior business days' written notice to the appellant care of its solicitors Bennett + Co; and

[3 (ii)] the undertaking referred to in paragraph 3(i) shall not apply to any security arising under any retention of title, hire purchase or conditional sale arrangement or arrangements having similar effect in respect of goods supplied to the respondent in the ordinary course of trading and on the supplier's standard or usual terms (or on terms more favourable to the respondent) and not arising as a result of any default or omission by the respondent so long as the debt it secures is paid when due or contested in good faith and sufficient reserves or liquid assets have been set aside by the respondent to pay the debt if the contest is unsuccessful.

89 On 7, 13 and 14 November 2012, Griffin Coal communicated matters to Perdaman which concerned its intention to enter into the Bluewaters transaction.[17] It is not necessary to determine when that notice became effective because it is common ground that (i) at the latest, it was effective by 14 November 2012 and (ii) Griffin Coal did not enter into the Bluewaters transaction for 10 business days after that date. On 7 and 13 November 2012, Griffin Coal told Perdaman that before it granted security to ICICI Bank (on behalf of the Syndicate) which ICICI Bank sought as a condition to its consent to the Bluewaters transaction, Griffin Coal would seek to obtain agreement from ICICI Bank as to the following:

(i) ICICI Bank (on behalf of the Syndicate) agree to a limit of $150 million on the amount recoverable on the enforcement of the proposed security;

(iii) ICICI Bank agree a moratorium on enforcement of the securities for a period of 12 months unless Griffin Power exercises the stepin rights to Griffin Coal (which the amendments to the CSA will provide) during that period.

90 On 13 November 2012, Griffin Coal said to Perdaman that Griffin Coal 'would only give security to ICICI Bank' if (ii) and (iii) were agreed but that if Griffin Coal failed to obtain consent to the $150 million limit then a fresh notice would be issued.

91 On 5 December 2012 a fresh notice was provided to Perdaman concerning a change in the conditions to the consent of ICICI Bank on behalf of the Syndicate in relation to the Bluewaters transaction.[18] The Syndicate would not agree to the moratorium in (iii) above.

92 The 5 December 2012 notice was provided by Griffin Coal although Griffin Coal asserted that it was not a requirement of the undertaking given to the Court of Appeal that 'further notice' (by which I take to mean notice of subsequent amendments to the transaction) would be given to Perdaman. I do not need to decide, and do not decide, whether the additional notice was required. On the assumption that it was required, the postnotice period expired on 18 December 2012. As I have explained, the longstop date for the Bluewaters transaction has been extended to 21 December 2012.

93 The Bluewaters transaction involves various confidential documents which are annexed to the 46th affidavit of Mr Banda.[19] It does not merely involve the sale of shares in the Griffin Power Entities. One reason for this is that requirements of the potential buyers of the Griffin Power Entities, Kansai and Sumitomo, include strong certainty of coal supply and an alignment of the terms on which coal is supplied and the terms on which electricity is sold. The need for certainty of coal supply led them to seek secured stepin rights from Griffin Coal.

94 In broad terms, the Bluewaters transaction, as outlined in the various notices, involves the following elements.

(i) Griffin Coal will give secured stepin rights to the Griffin Power Entities. The stepin rights arise if there is a default in supply under the CSAs, if an insolvency event occurs in relation to Griffin Coal, or if the delivered coal does not meet certain key specifications. The grant of these secured stepin rights is not an event which requires notification under the terms of the undertaking.

(ii) In order to grant security to the Griffin Power Entities, the Negative Pledge Deed requires that Griffin Coal obtain the consent of its financiers, including ICICI Bank as agent for the Syndicate.

(iii) ICICI Bank and the Syndicate will not consent to the grant of security by Griffin Coal unless they also obtain security.

(iv) The structure of the provision of security involves a grant of security by Griffin Coal over its undertakings and assets and mining mortgages in favour of a security trustee. The security trustee will hold any security (cl 2.1(b)) for beneficiaries. The parties to the Security Trust Deed are Griffin Coal, the Griffin Power Entities, ICICI Bank and the Security Trustee.

An Intercreditor Deed is executed, to which the same persons are some of the parties. The provisions of the Intercreditor Deed prevail over the Security Trust Deed in the event of conflict: see Security Trust Deed cl 1.5(b). The beneficiaries are defined as the Senior Beneficiaries (the Security Trustee, any ICICI Finance Party), the Griffin Power Entities and any new beneficiary.

Clause 13 of the Intercreditor Deed permits Griffin Coal to give notice to the Security Trustee naming a new Beneficiary or Senior Beneficiary. By allowing for new lenders to become beneficiaries Griffin Coal is able to give new financiers (such as project finance banks) security over its assets to support Griffin Coal's plans for expansion. As explained above, the CSA was enacted against an intention that Griffin Coal would undertake significant expansion and that expansion would be financed by security which would rank in preference to the security provided to Perdaman under the CSA.

(v) Since the Griffin Power Entities are Beneficiaries, but not Senior Beneficiaries, no money owed to the Griffin Power Entities under the CSAs will be secured by the Bluewaters transaction other than certain enforcement costs funded by the Griffin Power Entities.

(vi) The Bluewaters CSAs will be amended by Deeds of Amendment and Restatement, Stockpile Plans and Side Letters. I discuss the benefits to Griffin Coal by the amendments to the Bluewaters CSAs below in considering the balance of convenience in relation to the grant of an injunction.

The protection of any Perdaman security by the Bluewaters transaction

95 There was some oral argument during the hearing concerning the construction of provisions of the proposed Intercreditor Deed, in particular: (i) the definition of 'Permitted Security Interest' (which includes 'the Perdaman Security'); (ii) cl 5.5 in which the Griffin Power Entities agreed and acknowledged particular rights of Perdaman in relation to the Perdaman Security; and (iii) cl 2.4 (Ranking) of the Security Trust Deed (read with cl 1.7). The parties found themselves in the position, perhaps unique in this litigation, where Griffin Coal was arguing in favour of a broad interpretation which protected any purported rights of Perdaman and Perdaman argued that the narrow interpretation might be adopted.

96 Ultimately it is not necessary to resolve this point. The terms of an injunction proposed by Griffin Coal adequately address the protection of any security right which Perdaman has as a mortgagee or chargee. They are considered below.

The applications brought by Perdaman and Griffin Coal The two applications

97 There are two, and only two, applications before me.

98 The first application is in CIV 1925 of 2011 in which Perdaman seeks an interlocutory injunction restraining Griffin Coal until an unspecified date in December 2012 from entering into the Bluewaters transaction.[20]

99 The second application is an interlocutory process which is part of the originating process in COR 190 of 2012. The originating process seeks orders including orders under s 459P of the Corporations Act 2001 (Cth) that Griffin Coal be wound up in insolvency, and orders under s 461(1)(k) of the Corporations Act that it is just and equitable that Griffin Coal be wound up. The second application is within that originating process. It is principally for an order under s 472(2) of the Corporations Act that Mr Francis of Taylor Woodings be appointed as the provisional liquidator in respect of Griffin Coal.

The application by third persons to be heard as amici curiae

100 At the start of the hearing of the applications for an interlocutory injunction and appointment of a provisional liquidator I received applications from Summit Southern Cross Power Holdings Pty Ltd (Summit), KPIC Netherlands BV (KPIC) and the Griffin Energy Group Pty Ltd (Griffin Energy) to appear as amici curiae (friends of the Court). The applications were opposed by Perdaman in so far as evidence was sought to be filed by them.[21]

101 Summit and KPIC are wholly owned subsidiaries of Sumitomo and Kansai, the potential buyers of the Griffin Power Entities.

102 Griffin Energy also seeks leave to be heard as amicus curiae in this proceeding, and to rely on an affidavit filed in this action, without becoming a party. Griffin Energy is in administration. As I have explained, the shares in the Griffin Power Entities which are the subject of the proposed sale are held by Griffin Energy. Griffin Energy seeks leave to be heard limited to the question of the risk of injustice to Griffin Energy and to certain creditors (including creditors of Griffin Coal whose claims were assumed by Griffin Energy in February 2011) if injunctive relief is granted restraining Griffin Coal from entering into the transaction.

103 On 30 November 2012, I heard some of the submissions in relation to the applications for injunctive relief and appointment of a provisional liquidator. The remainder of the submissions, and proposed evidence, was adjourned until 13 December 2012. At the start of the hearing on 30 November 2012, I told counsel for each of Summit, KPIC and Griffin Energy that I had doubts concerning whether they should be given leave to appear as amici curiae, especially in circumstances in which they wished to adduce affidavit evidence. I gave Summit, KPIC and Griffin Energy the opportunity to consider their position and, in particular, whether they wished to be joined as interveners in the proceedings on a limited basis.

104 In contrast with the position of Summit, KPIC and Griffin Energy, the State of Western Australia sought leave to appear as an intervener. It was given leave on that basis. The State made submissions and filed affidavit evidence in these proceedings. One concern of the State is that the grant of an injunction or appointment of a provisional liquidator might (depending upon a number of contingencies) result in the cessation of the operations of the Bluewaters Power Stations. The evidence filed by the State includes evidence that a cessation of the operation of the Bluewaters Power Stations could potentially affect the reliability of supply and cost of electricity services to customers of these services located in areas of the South West of Western Australia that receive electricity through the South West Interconnected System.

105 Although I indicated to Summit, KPIC and Griffin Energy that I had doubt about their power to be heard as amici curie, in contrast with the position of the State none of those entities sought leave to be joined as interveners. They wish only to be heard as amici curiae.

106 The Latin, amicus curiae, emphasises the nature of the appearance only as a friend of the Court. No party has a right to be heard as amicus curiae. The amicus curie appears to assist the Court. The common circumstance in which a Court will grant leave to a person to address as amicus curiae is where one of the parties is unable or unwilling to arrange for legal representation, or where they may be no contradictor to bring a particular argument to the attention of the Court.[22] An amicus curiae does not become a party to the proceedings and may not appeal.[23]

107 For the three reasons below, I reached the conclusion that none of the parties seeking leave to appear as amicus curiae should be granted that leave, and leave was refused. This conclusion was unfortunate. Each of Summit, KPIC and Griffin Energy has significant interests in the outcome of these proceedings. Each would have useful evidence to present to the Court about why their interests should be protected. But each is denied a direct voice without leave to appear. But, as I indicated at the hearing, the appropriate manner for them to be heard was as an intervener, even in the very limited capacity akin to that in which the State of Western Australia intervened.

108 First, one reason why leave should not be given to Summit, KPIC and Griffin Energy to intervene as amici curiae is because their circumstances are not consistent with the nature of the role of amicus. The traditional conception of an amicus curiae was a disinterested observer who has an interest in assisting the Court to reach a complete understanding of the issues. Even accepting that an amicus curiae will often have interests of their own to advance which motivates their assistance to the Court, the essence of an amicus curiae is that he or she is a stranger to litigation. It is this nature of an amicus curiae as a stranger to litigation which is the source of the Court's reluctance to allow a person to appear in this capacity as an interloper in the resolution of disputes between individuals. Sir Owen Dixon was a proponent of this view, although, at the level of an ultimate appellate Court, Sir Anthony Mason considered that Sir Owen Dixon's approach was fashioned to meet the High Court's adjudicative function, not its lawmaking function.[24]

109 In Re Medical Assessment Panel; Ex Parte Symons,[25] EM Heenan J compared the position of a person who appears as an intervener, with the role of an amicus curiae which his Honour described as 'markedly different':[26]

The amicus curiae does not have any rights or interests affected by the litigation which would be sufficient for the amicus to be joined as a party or, if the AttorneyGeneral, which would justify intervention. The role of the amicus, as his name suggests, is to assist the court by ensuring that the court is properly informed of matters which should be taken into account in reaching its decision and this may well be of assistance to the court where the litigation involves an important question of law affecting persons other than the parties, especially disadvantaged persons. (emphasis added)

110 As I have explained, each of Summit, KPIC and Griffin Energy is a private party, with private interests directly affected by the applications. Each wishes to protect its private interests. They should not be amici curiae. They are all persons who should be interveners.

111 Secondly, if leave were granted the effect of the position taken by Summit, KPIC and Griffin Energy would have been to permit each party to arrogate to itself the choice of the capacity in which it appears. The assumption by Summit, KPIC and Griffin Energy may have been that as amici curiae each would not be liable for any costs order. Whether or not this assumption is correct, and it can be seriously doubted, matters concerning costs should not dictate the exercise of discretion concerning the appropriate status of a person in litigation. It is the status of a person in litigation which can affect a costs discretion, not the other way around.

112 Thirdly, the essence of each person's application to appear was in order to rely upon evidence which each wished to file. In relation to Griffin Energy, the application for leave to appear as amicus curiae was inextricably connected with making submissions on substantial affidavit evidence, in relation to which confidentiality orders were sought. Summit and KPIC also sought to adduce evidence which they described as 'noncomplex matters of fact'. Although the factual matters may not have been complex, their assertions in submissions that, for example, there is a risk that the buyers will terminate the sale transaction if it is not completed very soon may be controversial.

113 One of the leading discussions and comparisons of the roles of an intervener with that of amicus curiae is the decision of the Full Court of the Federal Court of Australia in United States Tobacco Company v Minister for Consumer Affairs.[27] The Full Court (Davies, Wilcox and Gummow JJ) thoroughly examined the cases and writing in relation to intervention on each basis before concluding that the party concerned had an interest which justified it being joined in the proceedings as a party. The Court quoted[28] from Hutley JA in Corporate Affairs Commission v Bradley (Commonwealth Intervener)[29] in which his Honour referred to the position in some United States jurisdictions where 'an amicus curiae may, on leave, file briefs, argue the case, and introduce evidence'. His Honour rejected that position as not consistent with the law of New South Wales where 'there is no provision for an amicus curiae making any contribution to the record'.[30]

114 Even if this absolute position is no longer maintained, it will be very rare for an amicus curiae to lead evidence particularly in circumstances where that evidence may be controversial. In Re Robert Bropho v Robert Tickner and Bluegate Nominees Pty Ltd,[31] Wilcox J accepted that 'it may sometimes be appropriate to allow an amicus curiae to complete the evidentiary mosaic by tendering an item of non-controversial evidence', although his Honour reserved his opinion on whether this should be permitted to be done over the objection of one or more of the parties. However, his Honour emphasised that the tender of proposed evidence which is complex and controversial may be 'to allow the amicus curiae effectively to hijack the parties' case, taking it off into new factual issues which may greatly extend its length and thereby impose significant additional costs and disadvantages upon the parties. Rarely, if ever, should this course be permitted'.

115 For these reasons I declined leave to each of each of Summit, KPIC and Griffin Energy to appear as amici curiae. As I indicated to them, I would have granted leave for them to intervene. But each of them specifically declined to seek leave to intervene.

There is no application for an asset preservation order

116 The written submissions from Griffin Coal initially addressed the issue of an asset preservation order on the basis that it was 'unclear whether [Perdaman] seeks to invoke the jurisdiction of the Court to grant an asset preservation order pursuant to O 52A [of the Rules of the Supreme Court]'.[32]

117 Griffin Coal submitted that no claim for an asset preservation order could succeed because the purpose of an asset preservation order is not to protect the interests of Perdaman, nor is it given as a form of security for any judgment which may ultimately be awarded. Rather, it is given to prevent an abuse of the Court's processes in relation to the enforcement of its orders.[33]

118 There would have been further obstacles to a claim for an asset preservation order which Perdaman would need to have addressed. In a passage from Mason P, Sheller JA and Sheppard AJA in Frigo v Culhaci,[34] quoted with approval by Gaudron, McHugh, Gummow and Callinan JJ in Cardile v Led Builders Pty Ltd[35] their Honours said

A [Mareva order] is a drastic remedy which should not be granted lightly ... A [Mareva order] is an interlocutory order which, if granted, imposes a severe restriction upon a defendant's right to deal with his or her assets. It is granted at the suit of a plaintiff whose status as a creditor is in dispute and who need not be a secured creditor. Its purpose is to preserve the status quo, not to change it in favour of the plaintiff. The function of the order is not to ... 'provide a plaintiff with security in advance for a judgment that he hopes to obtain and that he fears might not be satisfied; nor is it to improve the position of the plaintiff in the event of the defendant's insolvency'. ... Many authorities attest to the care with which courts are required to scrutinise applications for [Mareva orders]. (footnotes omitted)

119 In Cardile, Gaudron, McHugh, Gummow and Callinan JJ added that another reason for care in exercising the power to grant a Mareva order is that there may be difficulties associated with the quantification and recovery of damages pursuant to the undertaking if it should turn out that the order should not have been granted.[36]

120 At no stage did Perdaman expressly advance any claim for an asset preservation order. At no stage did it address any of these matters. It did not mention O 52A, Rules of the Supreme Court 1971 (WA).

121 Perdaman also did not address whether it had a good arguable case that it has an accrued or prospective cause of action: O 52 r 5(1)(b)(i). Nor were any submissions made about the manner in which the Court should weigh the strength of Perdaman's case, the danger of frustration of a prospective judgment, the balance of convenience and any other relevant discretionary factors.[37] Towards the conclusion of the hearing I confirmed with all counsel that there was no issue before the Court concerning the strength of Perdaman's case for damages in the main litigation.[38]

The significance of the lack of an application for an asset preservation order

122 The significance of the absence of any claim by Perdaman for an asset preservation order is that, unlike an asset preservation order, an interlocutory injunction requires Perdaman to demonstrate 'sufficient colour' of a particular legal or equitable right upon which it relies. The interlocutory injunction issues to protect that right (or disputed right). As Gummow and Hayne JJ said in Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd:[39]

The basic proposition remains that where interlocutory injunctive relief is sought in a Judicature system court, it is necessary to identify the legal (which may be statutory) or equitable rights which are to be determined at trial and in respect of which there is sought final relief which may or may not be injunctive in nature. (emphasis added) (footnotes omitted)

123 Similarly, Gleeson CJ spoke of the need to show 'sufficient colour of right to the final relief, in aid of which interlocutory relief is sought'.[40]

124 In its written submissions, Perdaman's position was initially that it brought the application for an interlocutory injunction 'as a litigant in circumstances where its ability to execute on any judgment for damages or for costs will be imperilled by the steps taken by Griffin [Coal] (and in this regard [Griffin Coal's] submissions as to asset preservation order are relevant)'.[41] Perdaman never fully abandoned this position. However, it presents numerous problems.

125 First, although it is now recognised that an injunction can be awarded in the absence of a proprietary right, is Perdaman's claim for damages, and its asserted position as a contingent creditor based upon a decision at trial, a sufficient existing right which could support an injunction? If it were, would it displace the need for asset preservation orders in many cases?

126 Secondly, even if it were to be assumed that the Bluewaters transaction would dissipate the assets of Griffin Coal in a manner which would reduce Perdaman's prospects of recovery as a contingent unsecured creditor, would that amount to an interference with Perdaman's contingent right such as could support an injunction?

127 Thirdly, how can the Court balance Perdaman's 'rights' as a contingent creditor against the balance of convenience in granting an injunction in circumstances in which no submissions at all were made concerning the strength of Perdaman's case (and, hence, the likelihood of the contingency upon which its 'rights' depend)? At the very highest, all that could be assumed by the Court is that Perdaman's case is barely arguable. Although, in earlier proceedings, Beech J held that Perdaman had established a good arguable case, and although these findings were upheld on appeal,[42] no submissions were made concerning whether the many developments in the facts and in the pleadings since that decision affected the arguability or strength of Perdaman's case.

128 Fourthly, even if it were to be assumed that Perdaman's contingent 'right' to damages is sufficient to support an injunction, and even if the effect of the Bluewaters transaction were to reduce the assets available for satisfaction of Perdaman's judgment, how could the extent of that interference be measured and weighed against the balance of convenience without an assessment of the likely quantum of any recovery? This is particularly the case since the amendments to Perdaman's pleadings have introduced a plea based upon loss of opportunity.

129 It is not ultimately necessary to attempt to address any of these questions. Indeed, in the complete absence of submissions about the strength of Perdaman's case it would be inappropriate to engage upon that exercise. For the reasons I explain below, even if it is assumed that Perdaman's contingent 'right' to damages is sufficient to support a claim for an injunction, and even if it is assumed, without submissions, that Perdaman has an arguable case, the balance of convenience is sufficiently strongly in favour of the transaction that an injunction must be refused.

130 The first application brought by Perdaman is for an interlocutory injunction restraining Griffin Coal 'from entering into the finance transaction the subject of the first defendant's notice to the plaintiff dated 7 November 2012'. The minute of proposed orders seeks restraint until an unspecified date in December 2012.

The applicable principles concerning the grant of an interlocutory injunction

131 The submissions of the parties proceeded on the basis that the relevant approach to the grant of an interlocutory injunction was to ask (i) whether there is a serious question to be tried, and (ii) whether the balance of convenience favours the grant of the interlocutory injunction.

132 Some authorities treat, as an independent question to be considered in relation to the grant of an interlocutory injunction, the issue of whether damages would be adequate.[43] However, the requirement for damages to be an inadequate remedy was not mentioned as a separate requirement in Beecham Group Ltd v Bristol Laboratories Pty Ltd[44] or by Gummow and Hayne JJ in Australian Broadcasting Corporation v O'Neill.[45]

133 As I explained in Emeco International Pty Ltd v O'Shea,[46] there is a line of authority which attempts to reconcile the various authorities on this point by treating the question of adequacy of damages as a matter which is relevant to the broader question of the balance of convenience.[47] Consistently with the approach of counsel in this case, it is appropriate to treat the question of adequacy of damages as part of the balance of convenience.

134 Perhaps due to the difficulties in Perdaman's submission that an injunction should be awarded to support its 'right' as a contingent creditor, in oral submissions Perdaman changed its primary focus. Perdaman asserted that it had extant rights as a mortgagee and chargee under the CSA and that the Bluewaters transaction would interfere with those rights. Perdaman accepted that if the CSA has been terminated then the deed of charge and deed of mortgage will 'fall away'.[48]

135 For its part, Griffin Coal did not dispute that rights arose under the mortgage and charge. There was no submission concerning the nature of those rights and whether they are properly treated as legal rights or equitable rights. I have referred to the alleged rights of Perdaman in these reasons simply as rights held as mortgagee or chargee without the need for consideration of their likely nature as rights enforceable in equity.

136 Griffin Coal made no submissions concerning the strength of its claim in the primary proceedings that it had lawfully terminated the CSA on 30 August 2011 under cl 24.3 of the CSA.[49] If Griffin Coal had lawfully terminated then the CSA would be at an end and Perdaman could have no extant rights as a mortgagee or chargee.

Does Perdaman have extant rights as a mortgagee and chargee?

137 Griffin Coal's submissions were based on the assumption that Perdaman had an arguable case that Griffin Coal's purported termination on 30 August 2011 was invalid. However, Griffin Coal initially submitted that the application could be determined on the basis that Perdaman had elected to treat the CSA as being at an end. Perdaman denied that it had treated the CSA as being at an end by its conduct.

138 In Sargent v ASL Developments Ltd,[50] Stephen J explained that

[t]he words or conduct ordinarily required to constitute an election must be unequivocal in the sense that it is consistent only with the exercise of one of the two sets of rights and inconsistent with the exercise of the other; thus for a lessor to continue to receive rent under a lease will be consistent only with his rights as lessor and inconsistent with the exercise of a right to determine the lease ... However, less unequivocal conduct, only providing some evidence of an election, may suffice if coupled with actual knowledge of the right of election ...

139 An election is judged objectively, by Perdaman's words and conduct.[51] The election is 'complete' or 'final', at the latest, when made and communicated to the other party.[52]

140 In Janos v Chama Motors Pty Ltd,[53] Handley AJA said that it is well established that the service of an appropriate pleading can be an unequivocal act amounting to termination or rescission of a contract.

141 Griffin Coal relied upon the decision in Kangaroo Island Trading Co Pty Ltd v Kangaroo Island Dairies Pty Ltd.[54] In that case, Boehm J considered an application to enforce a negative covenant in a contract. The plaintiff's claim for an interlocutory injunction was refused because there was no serious question to be tried. The lack of a serious question to be tried arose because the commencement of the proceedings for damages by the plaintiff was 'an overt act which can in no way be said to be equivocal'. His Honour emphasised that the claim for damages was only 'consistent with an acceptance of the repudiation of the agreement by the defendant and an unmistakeable communication of that acceptance to the defendant'. The context in which the claim for damages was brought was explained as follows:

If one looks at the context in which the plaintiff makes its claim in the substantive proceedings one sees immediately acclaim for damages that embraces not only past expenses but also, and much more significantly, a claim for future expenses and losses that can only be consistent with an acceptance of the defendant's repudiation of the agreement. There is the claim for 'Director's time' covering a period that extends beyond the date on which the proceedings were commenced and, of course, there is the claim for 'Anticipated losses' over the whole of the initial five year period provided for in the agreement. There is also the claim for punitive and exemplary damages.

142 An election could potentially have legal effect to terminate a contract if it amounts to (i) clear acceptance of a renunciation by the other party, (ii) an unequivocal exercise of a power otherwise to terminate at law or under the agreement, or (iii) part of a mutual treatment by the parties of the contract being at an end.

143 However, no submission was made by Griffin Coal concerning the manner in which the conduct of Perdaman might have brought the CSA to an end. Supplementary submissions on this point were invited by the Court. In supplementary submissions from Griffin Coal, filed on 17 December 2012 and clarified on 18 December 2012, Griffin Coal submitted that the Court need not finally determine whether Perdaman had elected by the filing of its pleadings to terminate the CSA.

144 Griffin Coal's abandonment of its argument that there was no serious question to be tried because of Perdaman's alleged election was apparently based upon comments of Gummow, Hayne and Kiefel JJ in Agricultural and Rural Finance Pty Limited v Gardiner,[55] that in many cases about election, 'the central issue is whether an election has been made or only foreshadowed. So, for example, an election between alternative remedies in contract and in tort is not made merely by bringing one claim rather than the other. An election is not made at least until entry of judgment' (emphasis added).

145 This decision is not inconsistent with Kangaroo Island Trading Co Pty Ltd, nor with the established position that a pleading can amount to an election.

146 First, in the quotation from Agricultural and Rural Finance Pty Limited their Honours said that merely by bringing one claim rather than another will not amount to an election to terminate a contract.

147 Secondly, their Honours spoke of alternative remedies. Their Honours cited two cases, including United Australia Ltd v Barclays Bank Ltd.[56] The decision in United Australia Ltd causes some difficulty in relation to the law relating to waiver of tort, partly due to the different senses in which their Lordships use the terms 'right' and 'remedy'. Perhaps the clearest expression of the principles in relation to election is the submission in that case of A T Denning KC, reflected in the speech of Lord Atkin, that[57]

[e]lection at common law may be either between inconsistent rights or between alternative remedies. In the former case any unequivocal act done with full knowledge is final against everyone; in the latter case nothing short of judgment or satisfaction is final as against third parties ... Instances of election between inconsistent rights are: to avoid a lease under a proviso for reentry or to affirm it ... Instances of election between alternative remedies are: in the old law when a chattel was wrongfully taken and converted there were alternative remedies in trover or trespass.

148 But, it is not necessary conclusively to determine this point and, in any event, in the absence of submissions concerning the manner in which any election could be said to have caused termination of the CSA it would not be appropriate to do so.

149 Griffin Coal relied only upon the conduct and pleadings of Griffin Coal in relation to the question of the balance of convenience and, in particular, whether the Court would grant specific performance of any rights Perdaman has in relation to the Deed of Charge and Mortgage of Mining Licence. I consider this issue below. It is not necessary to determine conclusively whether Perdaman's conduct in relation to its pleadings effected termination of the CSA by one of the means of termination described above.

150 I have annexed to these reasons a chronology of the proceedings helpfully provided by Perdaman. As that chronology shows, Perdaman's writ of summons was filed on 31 May 2011. In broad summary, the indorsement to the writ explained that Perdaman's claim arises in respect of:

1.2 Griffin Coal's obligation under cl 24.2 (the cooperation clause set out above in the section of these reasons dealing with the CSA);

1.3 the conduct of Griffin Coal by its officers Conley and others in May 2011 in breach of cl 24.2;

1.4 loss and damage thereby suffered by Perdaman being direct and foreseeable loss for the purposes of cl 18.1 of the CSA of not less than AU$180 million.

1.5 the conduct of the third, fourth and fifth defendants interfering in and disrupting due diligence of financiers to Perdaman whilst Perdaman was seeking to achieve Financial Close pursuant to the CSA, which conduct was contrary to:

(i) s 21 and s 22 of the Australian Consumer Law as applied by the Competition and Consumer Act 2010 (Cth) s 131;

(ii) the Australian Consumer Law as applied by the Fair Trading Act (WA) s 24; and

(iii) tortious interference with Perdaman's CSA, which conduct has caused Perdaman loss and damage pursuant to s 236 of the Australian Consumer Law of not less than US$3.5 billion.

151 On 19 July 2011, Perdaman's statement of claim was filed. Perdaman's claim for loss or damage was that by reason of matters including alleged breaches by Griffin Coal of the CSA loss or damage was suffered including: (i) the Perdaman Project Costs of $195 million; (ii) the loss of value of the Perdaman Project with a present value of around $3.4 billion based on a 40 year life of the Perdaman Project; (iii) aggravated or exemplary damages based on savings to Griffin Coal from not supplying coal to Perdaman for the life of the CSA of $2.4 billion.

152 Perdaman's claim for damages in its writ on 31 May 2011 (as amended), and its statement of claim on 19 July 2011, was premised upon the loss of the Perdaman Project and the premise that the CSA had come to an end. Perdaman pleaded that the loss and damage was suffered 'by reason of' the CSA breaches and other breaches.[58] Perdaman never explained, nor could it explain, how a claim for $3.4 billion loss and $2.4 billion exemplary damages, premised upon the loss of the benefit of the CSA could be reconciled with a claim that the CSA continued in force.

153 For relevant purposes, the next significant step in the chronology was the commencement of an application by Perdaman in the Federal Court of Australia on 7 October 2011 seeking the same damages, and alleging the same breaches, but seeking also a declaration that the Purported Notice of Termination by Griffin Coal on 30 August 2011 was invalid and of no force or effect.

154 The conduct of Perdaman, being the statement of claim it filed in the Federal Court of Australia on 7 October 2011 must be understood against the background of the writ and pleadings filed in the Supreme Court of Western Australia, and served on Griffin Coal. In the Federal Court statement of claim, Perdaman's declaration that the 30 August 2011 purported termination was of no force and effect was expressed as its first prayer for relief, followed immediately by the words 'And Further Claims from the Respondents and each of them' and then its claim for damages.

155 On 13 September 2011, Griffin Coal and six other defendants filed a defence and counterclaim. In the counterclaim they sought a declaration that the CSA was terminated on 30 August 2011. Griffin Coal relies upon the failure by Perdaman to achieve Financial Close and thereby satisfy the condition precedent in cl 24.1(a)(i) of the CSA and says that on 30 August 2011, Griffin Coal (as it was entitled to do) terminated the CSA pursuant to cl 24.3 of the CSA by written notice to Perdaman.

156 On 6 August 2012, in Perdaman's reply and defence to Griffin Coal's counterclaim, Perdaman admits that it did not achieve Financial Close by the Condition Precedent date but pleads that its inability to do so was caused by Griffin Coal's wrongful conduct and that Griffin Coal was not entitled to issue a notice of termination.

157 After the transfer of the Federal Court action to the Supreme Court of Western Australia, and consolidation, in the fourth Amended Statement of Claim on 28 September 2012, the damages claim remained as a 'further' claim to the claim for a declaration that the purported termination by Griffin Coal was of no force and effect.

158 No claim is, or has ever been, brought by Perdaman for final relief in the form of specific performance of the CSA or an injunction to protect the rights which it now asserts arising from the Deed of Charge and Mortgage of Mining Licence.

159 This background illustrates the following. Prior to 30 August 2011, Perdaman was asserting that it had lost the whole of the Perdaman Project. Its damages were claimed on the basis that it would not obtain the benefit of the performance of the CSA. After Griffin Coal purported to terminate the CSA, the declaration sought by Perdaman in the Federal Court can reasonably be understood as an assertion that Griffin Coal's termination had no force or effect to bring the CSA to an end. The reason why this declaration was important for Perdaman's case is because if Griffin Coal's termination on 30 August 2011 were lawful then Perdaman could not have claimed damages based on the loss of the Perdaman Project after that date.

160 Although Perdaman's pleading, by itself, might not amount to an election, the only reasonable construction of Perdaman's pleadings is that they involved a persistent and consistent plea that the benefit of the CSA has been lost to it. It is difficult to see Perdaman's pleadings as reasonably consistent with any assertion that some terms of the CSA (unspecified in the pleading and about which no specific performance is sought) remain on foot. Nor did Perdaman explain how a claim might be possible that some rights might survive under the CSA when the benefit of the other substantive rights (including coal delivery obligations) is lost.

161 This background is relevant to an assessment of the strength of Perdaman's claim if it subsequently, and belatedly, seeks specific performance to enforce its alleged extant rights as a mortgagee or chargee. Griffin Coal specifically, and understandably, declined to make a procedural submission that there was no serious question to be tried because Perdaman had not specifically pleaded these matters.[59] But, assuming that specific performance is sought, in relation to final relief these are matters which will inform any discretion to grant specific performance if the CSA has not been terminated.

162 There are other matters which also relate to the strength of a claim to enforce these alleged extant rights. As I have explained, if Griffin Coal's termination on 30 August 2011 were lawful then Perdaman could have no extant rights under the CSA. But no submissions were made on this issue and I do not place any weight upon it.

163 On the other hand, if Griffin Coal's termination were not lawful then it may be that, as an unaccepted renunciation,[60] the termination is 'a thing writ in water'.[61] Perdaman made submissions concerning the nature of the alleged breaches of the CSA by Griffin Coal. Perdaman submitted that the breaches by Griffin Coal pleaded in its initial statement of claim were of Nonfinancial Defaults which do not permit termination.[62] But no submission was made by either of the parties concerning the exemption from Nonfinancial Defaults of coal delivery obligations, or the extent to which the loss of the benefit of those obligations were part of Perdaman's pleading concerning the loss of the Perdaman Project. Nor was any submission made concerning whether, if Perdaman were correct that the CSA remains on foot, Perdaman remains ready and willing to perform its obligations under the CSA. I have not taken these matters into account either.

164 It suffices to say that although it is arguable that the CSA is still on foot, and although this point reaches the threshold of a serious issue to be tried, the matters of background to which I have referred above concerning Perdaman's claim that it has rights as a mortgagee and chargee which are enforceable by an order for specific performance are significant matters concerning the balance of convenience which weigh against the grant of an interlocutory injunction.

Does the Bluewaters transaction interfere with Perdaman's rights?

165 I have already explained the myriad of difficulties facing Perdaman's claim for an injunction based upon its position as a contingent creditor although in the absence of substantial submissions on this point I proceed on the basis that it is possible for Perdaman to bring a claim for an injunction in this capacity. I have also concluded, only on the basis of the evidence and submissions in this application, that Perdaman has an arguable claim to extant rights as a mortgagee and chargee. The question then is whether the Bluewaters transaction interferes with those rights.

166 Griffin Coal had three submissions that the Bluewaters transaction would not interfere with any extant secured rights of Perdaman under the CSA. The second and third of those submissions are significant reasons why Perdaman's case is weak for its claim that there will be an interference with its rights as a mortgagee or chargee by the Bluewaters transaction.

167 First, one submission by Griffin Coal was that the Deed of Charge and Mortgage of Mining Licence secured stepin rights which were subject to the right of Griffin Coal to provide security for working capital. It was submitted that the Lanco parents had advanced $132 million of funds to Griffin Coal. Hence, it was submitted, the provision of $150 million of security to ICICI Bank in the Bluewaters transaction is 'appropriate'.[63]

168 It is unclear whether this submission was pressed. But it must be rejected. First, the evidence does not establish that the $132 million was used for working capital. Secondly, although, as the provisions set out above show, the secured stepin rights of Perdaman were subject to a Finance Security under the Intercreditor Deed, Griffin Coal had no financiers with security which was to be held under the proposed Intercreditor Deed. And the Intercreditor Deed was never executed. Thirdly, ICICI Bank and the Syndicate have never been financiers of Griffin Coal. They lent money for Lanco Australia's acquisition of shares in Griffin Coal and provided a facility for the borrowers to draw down funds for the working capital requirements of Griffin Coal by way of equity infusion.

169 Secondly, Griffin Coal submitted that the Bluewaters transaction would not interfere with any secured rights of Perdaman under the CSA because of protection in the transaction documents for any alleged security rights held by Perdaman. As I have explained, it is not necessary to decide this issue because of the terms of an injunction proposed by Griffin Coal. The terms of that injunction are set out below in consideration of the effect of the Bluewaters transaction on Perdaman for the assessment of the balance of convenience. It suffices to say that this is also a matter which weighs heavily against the strength of the serious issue to be tried that the Bluewaters transaction will interfere with Perdaman's alleged extant security rights and the extent of any possible interference.

170 In broad summary, the terms of the proposed injunction include restraining Griffin Coal from giving security over all of the assets of Griffin Coal unless that security is subject to permitted securities which broadly include any security interest which Griffin Coal may be required to provide to Perdaman in relation to the primary consolidated proceedings and any security interest which Perdaman has as at the date of this order as equitable mortgagee or chargee (if any).

171 Thirdly, Perdaman has a degree of protection for any security rights by registration in the Personal Property Security Register.

172 On 23 November 2012, Perdaman gave notice to Griffin Coal that it intended to register a financing statement on the Personal Property Security Register with respect to the security interests it said that it had under the Deed of Charge in the CSA.[64] The same day, Perdaman registered a financing statement in respect of that purported interest.[65] The registration remains in force although Griffin Coal provided an amendment demand under s 178 of the Personal Property Securities Act 2009 (Cth),[66] and Griffin Coal seeks relief in an originating summons in CIV 2975 of 2012 including the removal of the registration of the financing statement.

173 Assuming that there is a serious question to be tried concerning an interference with Perdaman's rights, either its 'rights' as a contingent creditor or its rights as mortgagee and chargee, the question is whether the balance of convenience favours the grant of an injunction.

174 I have proceeded on the basis that the Bluewaters transaction will proceed. As I have explained, it remains subject to a number of conditions precedent but it is reasonable to expect that those conditions may be satisfied or waived.[67]

The strength of Perdaman's claim for interference with its rights

175 The question of the balance of convenience is not wholly independent from the examination of the strength of the serious issue to be tried. How strong the probability of success needs to be in order for an interlocutory injunction to issue depends upon the nature of the rights the plaintiff asserts and the practical consequences likely to flow from the order sought.[68]

176 The extent to which a Court can embark in a detailed consideration of the strength of a plaintiff's case depends on each particular case. It is commonly said that:[69] (i) normally the Court does not undertake a preliminary trial, and give or withhold interlocutory relief upon a forecast as to the ultimate result of the case; (ii) but, there are some kinds of case in which, for the purpose of seeing where lies the balance of convenience, it is desirable for the Court to evaluate the strength of the plaintiff's case for final relief.

177 In considering whether there is a serious issue to be tried, I have explained above the obstacles in the path of Perdaman's assertion that it has rights, the interference with which by the Bluewaters transaction, would support an injunction. Those obstacles are significant. They are matters which weigh against the grant of an interlocutory injunction.

178 However, it is ultimately unnecessary to place any reliance upon the strength of Perdaman's case concerning the extant rights upon which it relies whether as a contingent creditor (to the extent to which those 'rights' can support an interlocutory injunction) or its security rights. This is because, as I explained, the submissions on this point, in the short time available, were necessarily abbreviated. And it is sufficient to treat this case, as Perdaman urged, as one[70]

[w]here a plaintiff's entitlement to ultimate relief is uncertain, the court, in deciding to grant or refuse an interlocutory injunction, must consider what course is best calculated to achieve justice between the parties in the circumstances of the particular case, pending the resolution of the uncertainty, bearing in mind the consequences to the defendant of the grant of an injunction in support of relief to which the plaintiff may ultimately be held not to be entitled, and the consequences to the plaintiff of the refusal of an injunction in support of relief to which the plaintiff may ultimately be held to be entitled.

179 However, the strength of Perdaman's case that the Bluewaters transaction would interfere with its extant security rights, and the extent of that interference, is a different matter. For two reasons, put at its highest, the best that can be said about the strength of Perdaman's case on this point is that it is weak. Those reasons are (i) the protection of Perdaman's alleged security rights by the Bluewaters transaction; and (ii) the protection of Perdaman's alleged security rights by its registration of a financing statement. Those matters are dealt with above in considering Perdaman's case that the Bluewaters transaction interferes with Perdaman's rights.

180 As I have explained, the parties essentially treated the question of adequacy of damages as part of the assessment of the balance of convenience. The issue of the adequacy of damages for Perdaman is essentially the same question as that which is considered below: the effect of the Bluewaters transaction on Perdaman.

The benefits of the Bluewaters transaction for Griffin Coal

181 Griffin Coal pointed to a number of benefits to it from the Bluewaters transaction.[71] I consider each below.

182 As Mr Prasad explains,[72] the Bluewaters transaction will result in an upfront cash payment to Griffin Coal of $51 million. This is comprised of (i) an upfront amount of $32.5 million, (ii) a 'catchup' payment of $11.5 million related to the altered price under the revised CSA, and (iii) a 'Tier 2' payment of $7 million. The use of this cash payment will assist Griffin Coal with its working capital, including the payment of trade creditors.

183 The Bluewaters CSAs will also be revised to increase the coal price at which Griffin Coal sells to the Griffin Power Entities. The subsequent escalations of the coal price will also be greater than the increase in the previous CSAs.

(3) The security transaction will assist in obtaining project finance

184 A matter of less weight, but also relied upon by Griffin Coal and based on the evidence of Mr Prasad,[73] is the submission that the structure of the Bluewaters transaction will permit Griffin Coal to fund the expansion of the Griffin Coal Mine. This is particularly in relation to $1 billion which Griffin Coal is seeking to raise to increase production of coal and construct infrastructure for export.

185 This submission may not be entirely accurate. Clause 2.3.2 of the Negative Pledge Deed, as set out and explained above, restricts the amount outstanding under any Proposed Financing to US$300 million until three years after the first Utilisation under the Facility Agreement (28 February 2011) or US$800,000,000 from that date until the Final Maturity Date (as defined in the Facility Agreement: 28 February 2016). Griffin Coal made no submissions about the effect of these provisions on project finance or whether they might be waived by ICICI Bank and the Syndicate. However, Mr Prasad acknowledged that the proposed $1 billion project financing 'will require consents from the Syndicate and from the State'.[74]

(4) Griffin Coal's ability to operate without Lanco India's support

186 Mr Riordan, the Company Secretary and Chief Financial Controller of Griffin Coal, who also has experience and qualifications as an accountant, gave evidence based upon an Ernst and Young report. The Ernst and Young Report is dated 10 December 2012. The authors acknowledge its limitations based on preparation of the 50 page report in a very short timeframe of two days and finalised in five days with the contents reviewed, and accuracy confirmed, by Mr Riordan and Mr Prasad.[75]

187 Mr Riordan says that Griffin Coal forecasts that for the year ended 30 November 2013 it will be cash positive by around AUS$80 million on a stand alone basis. This is based on the assumption that the QUBE transaction, which I discuss below, will proceed as well as the Bluewaters transaction. There is a reasonable basis for expecting that the QUBE transaction will proceed and be implemented some time in 2013, likely to be shortly after April 2013. But even assuming that the QUBE export program does not proceed, the Bluewaters transaction means that the net operating cash gap will be around AUS$1.5 million per month (including the cash outflows from CMM). Even if neither the Bluewaters transaction nor the QUBE export program proceeds, the net operating cash gap will be AUS$6.5 million per month (including the cash outflows from CMM).

188 Mr Riordan therefore concludes that the Bluewaters transaction is important for Griffin Coal's ability to operate without Lanco's continuing financial support.

189 In a KPMG report provided by Perdaman, the Ernst and Young reasoning and conclusions relied upon by Mr Riordan are examined.[76] KPMG conclude from their analysis of the Ernst and Young report that the incremental effect of failing to complete the Bluewaters transaction, on the assumption that the QUBE transaction does not proceed, is a negative impact on operating cash flow for the year ended 30 November 2013 of $60 million.[77]

190 Mr Prasad reaches the same conclusion. He says that the QUBE transaction, together with the additional cash flow generated by the improved terms of the Bluewaters transaction, will result in Griffin Coal no longer requiring ongoing financial assistance from Lanco India.[78]

191 There are limitations to this conclusion. For instance, there are significant limitations to the Ernst and Young report which are discussed below in relation to the application for a provisional liquidator. However, on an interlocutory application there is sufficient basis to drawn from the conclusions of Mr Riordan and Mr Prasad that there is a real prospect that the Bluewaters transaction will have the effect that Griffin Coal will no longer need to rely upon Lanco India for financial support.

192 Although the evidence supports a reasonable basis for the conclusion advanced that that the Bluewaters transaction will enable Griffin Coal to proceed without the support of its parent companies, the evidence stops short of suggesting that Griffin Coal will move to profitability. There are many additional factors which would need to be considered. For instance, as KPMG observe in a file note, 'due consideration should ... be given to whether recent historical cash flows and losses are a result of costs incurred to better position the asset for future mining (ie writing off development costs etc)'.[79] Another matter on which profitability will depend will be the success of the proposed $1 billion project fund raising and the effect of the investment of those funds. The issue is speculative but on the evidence before me in these applications there is a possibility that Griffin Coal will become profitable some time after the Bluewaters transaction.

The effect of the Bluewaters transaction on Perdaman

193 I have already explained the obstacles for Perdaman's claim for injunctive relief based on its position as a contingent creditor. I have also explained above the obstacles confronted by Perdaman in its submission that the Bluewaters transaction would interfere with security rights which it said remain extant under the CSA.

194 As for Perdaman's position as a contingent creditor, Griffin Coal says that Perdaman will not be prejudiced because the value of the security to be granted to ICICI Bank and the Sydnicate ($150 million) approximates the added capital value to Griffin Coal of the improved terms in the Bluewaters CSAs.[80]

195 Apart from the $51 million upfront payment, the evidence falls short of precise quantification of the benefit to Griffin Coal from the improved terms of the CSAs. However, it is plain that the better terms of the revised Bluewaters CSAs will be a significant benefit to Griffin Coal. It is not possible on this interlocutory application conclusively to resolve the factual dispute between the parties concerning whether the improved terms of the revised Bluewaters CSAs will lead to profit for Griffin Coal on the transactions or, perhaps more accurately, the extent to which the improved terms will arrest losses so that, combined with other measures, Griffin Coal will become a viable stand alone business.[81]

196 Apart from the bald assertion that Perdaman's position as a contingent creditor is prejudiced by the Bluewaters transaction, Mr Walewski's evidence in his fifteenth affidavit[82] asserts that if the transaction proceeds in the manner contemplated by the confidential documents annexed to Mr Banda's affidavit, the extent of the first ranking security and the magnitude of the underlying debt can vary without notice to Perdaman.

197 Griffin Coal submitted a Minute of Proposed Orders. The Minute addresses this concern in part. It provides for an injunction to be granted as follows:

1. Until determination of the plaintiff's claims in CIV 1925 of 2011 (consolidated with CIV 2422 of 2011, CIV 2423 of 2011 and CIV 3201 of 2011) or further order, The Griffin Coal Mining Company Pty Ltd (Griffin Coal) whether by its directors, officers, servants and agents be and is hereby restrained from:

(a) entering into any agreement or arrangement with ICICI or any of the members of the Syndicate which it represents in which the maximum amount payable to the Syndicate under the Facility Agreement between ICICI Bank Limited, Singapore Branch (as agent on behalf of the Syndicate) and Lanco Resources International Pte Ltd and others dated 9 February 2011 and in relation to the Negative Pledge Deed dated 21 June 2011 between the Syndicate and The Griffin Coal Mining Company Pty Ltd and others, from all proceeds recovered from the enforcement of all securities given over the assets and undertakings of Griffin Coal and in priority to the unsecured creditors of Griffin Coal, exceeds A$150,000,000.

(b) giving security over all of the assets of Griffin Coal unless that security is subject to permitted securities which include:

(i) any security interest which Griffin Coal may be required to provide to Perdaman pursuant to any order of any government agency or court in respect of Supreme Court Action CIV 1925 of 2011 (consolidated with CIV 2422 of 2011, CIV 2423 of 2011 and CIV 3201 of 2011) or other litigation commenced by Perdaman in respect of the coal supply agreement between Griffin Coal and Perdaman dated 21 December 2010 (Perdaman CSA) to give effect to the proposed security arrangements contemplated by the Perdaman CSA; and

(ii) any security interest which Perdaman has as at the date of this order as equitable mortgagee or chargee (if any).

1. There be liberty to the defendants to apply on 10 business days' notice.

198 As counsel for Perdaman correctly pointed out, the terms of this proposed injunction have a potential conflict with the terms of a (nonbinding) letter from ICICI Bank dated 11 December 2012.[83] However, in that letter ICICI Bank reserves 'the right to vary the Consent Conditions or stipulate any additional conditions' to those in the 11 December 2012 letter.

199 The potential inconsistency to which Perdaman referred is that in the letter ICICI Bank provides consent to Griffin Coal to provide the 'Bluewaters Security' subject to and conditional on various conditions, including a 'Limit' on the amount recoverable which could exceed $150 million, and also condition 4.2 below:

The Agent [ICICI Bank] may by notice to Griffin Coal amend the Limit (including by removing the Limit and creation of security over all assets of Griffin Coal in accordance with the Negative Pledge Deed) (Amended Limit) from the date specified in the notice (Amended Limit Date), which notice must be given not less than 30 days prior to the Amended Limit Date and (unless otherwise agreed) may only be given -

(a) after resolution (in the Agent's opinion) of the Perdaman Proceedings; or

(b) after any restriction impose by the court in connection with the Perdaman application ceases to apply; or

(c) in connection with any additional financial accommodation to be provided by third parties to Griffin Coal; or

(d) after the date which is 8 months from the date of this Amendment Letter,

Griffin Coal must, no later than the Amended Limit Date, subject to any court orders or (to the extent required, as evidenced to the satisfaction of the Agent) government approvals, enter into such documents requested by the Agent to give effect to the Amended Limit.

200 As explained above at [36], the 'security ... in accordance with the Negative Pledge Deed' cl 2.3.1 would be at least $490 million. Condition 4.2(d), for example, could therefore create a power for ICICI Bank to increase the limit of the amount recoverable under the Syndicate Security to at least $490 million in 8 months' time.

201 The effect of the injunction is to provide significant protection for Perdaman from this consequence. Even if, as Perdaman seemed to assume but which might seriously be doubted, the ICICI letter of 11 December 2012 formed part of the 'notice' required by the undertaking (as described above at [88]) the injunction does not affect that notice. The injunction merely constrains the transaction and does so in a manner designed to provide some protection for the interests of Perdaman.

202 Nor could it be said that the proposed Minute has unintentionally altered the terms of the transaction. The minute was revised twice following matters raised by the Court and by counsel for Perdaman concerning the consistency of its terms with the ICICI letter. It was provided on instructions after revisions. It has the effect of constraining the proposed transaction and providing additional protection for the asserted interests of Perdaman. It provides (at least) the minimum terms necessary for the protection of the interests of Perdaman. The orders are appropriate.

203 Perdaman also objected to the terms of the proposed injunction which provide protection for any security rights it has as mortgagee and chargee. Perdaman submitted that the words 'subject to permitted securities' in paragraph 1(b) were 'imprecise as a matter of legal content'.[84] It is true that there is imprecision in these words. It may be that the intention is to pick up the definition of 'permitted security interest' from the proposed Intercreditor deed. If so, then the terms of the proposed injunction may exacerbate the very difficulty of construction which they are intended to avoid. It is unclear whether there is any need at all for the words 'permitted securities which include'. But I will hear from the parties as to (i) whether these words are necessary, and (ii) if so, how they might be better formulated to avoid imprecision.

204 Mr Walewski also asserts, as a matter of his belief, that 'in order to enter into transactions (unspecified) with [the Griffin Power Entities] securitised stepin rights can be granted (by means of a tripartite agreement with Perdaman) that are consistent with and do not attempt to displace Perdaman's existing rights pursuant to the CSA securities'.[85] The detail of these 'transactions' is not specified. The manner in which those transactions might be structured is not explained. Nor is it apparent how the transaction could now be possible by Perdaman acting in good faith and negotiating with the Griffin Power Entities as it suggests, when the Bluewaters transaction has been negotiated for more than a year.

205 In Patrick Stevedores v Maritime Union of Australia (No 3),[86] Brennan CJ, McHugh, Gummow, Kirby and Hayne JJ explained the relevance of third person interests to the issue of the balance of convenience in considering the grant of an interlocutory injunction. Their Honours approved remarks by Dr Spry as follows:

[T]he interests of the public and of third persons are relevant and have more or less weight according to the other material circumstances. So it has been said that courts of equity 'upon principle, will not ordinarily and without special necessity interfere by injunction, where the injunction will have the effect of very materially injuring the rights of third persons not before the courts'. Regard must be had 'not only to the dry strict rights of the plaintiff and the defendant, but also the surrounding circumstances, to the rights or interests of other persons which may be more or less involved'. So it is that where the plaintiff has prima facie a right to specific relief, the court will, in accordance with these principles, weigh the disadvantage or hardship that he would suffer if relief were refused against any hardship or disadvantage that might be caused to third persons or to the public generally if relief were granted, even though these latter considerations are only rarely found to be decisive. (Conversely, detriment that might be caused to third persons or to the public generally if an injunction were refused is taken into account.) (emphasis added)

206 This joint judgment also reiterated, quoting from CummingBruce LJ, that where an injunction will materially injure the rights and interests of a third party, the Court should not grant an injunction unless the applicant can show some special reason why the injunction is necessary.[87]

207 Similarly, Gaudron J emphasised that ordinarily, an interlocutory injunction will not issue if its effect would be to interfere with the rights of innocent third parties.[88]

208 As I have explained above, it is unfortunate that some of the third parties whose rights are affected declined to participate in these proceedings other than to seek leave, which was refused, to appear as amici curiae. Nevertheless, based on the evidence before the Court, including that filed by the State of Western Australia, there is little doubt that an order for an interlocutory injunction would very materially injure the rights of third persons.

209 The submissions of the State of Western Australia were significantly based on evidence from Mr Challen.[89] Mr Challen is the Deputy Director General in the Department of Finance of the Western Australian Government, with responsibility for the Public Utilities Office. The role of the Public Utilities Office is to provide advice to Government on essential utility services with a current focus on electricity and gas services.[90]

210 The State of Western Australia submitted, in submissions which were not controverted or disputed, that in the absence of the Bluewaters transaction, there was a risk to its energy security and to customers that receive electricity services in the South West of Western Australia (through the South West Interconnected System). The risk concerns the reliability of supply of electricity and the cost of electricity to those customers.

211 The reason for the risk concerning reliability and cost of supply is because the Bluewaters Power Stations are supplied with coal from the Griffin Mine. There are only two actively mined coal deposits capable of supplying the Bluewaters Power Stations: the Griffin Mine and the Premier coal mine. The output of the Premier coal mine is almost exclusively supplied to the Electricity Generation Corporation (Verve Energy). Cessation of operation of the Bluewaters Power Stations would remove 431.8 megawatts of generation capacity from the South West Interconnected System in Western Australia.

212 If an injunction is granted the Bluewaters transaction will not proceed. There is a serious likelihood that the consequence of this will be that Griffin Coal will become unable to continue coal supply to the Bluewaters Power Stations, or the administrators of the Griffin Power Entities will be unable to continue to operate those power stations.

213 Mr Challen's evidence is that in the absence of any material generation or network outages, the cessation of operation of the Bluewaters Power Stations will not reduce the reliability of electricity services delivered by the South West Interconnected System. This is because the reduction in total available capacity would remain above the reserve capacity target. But, the cessation of operation of the Bluewaters Power Stations will present risks to the reliability of electricity services as a result of a greater susceptibility of the South West Interconnected System to disruptions in supplies of natural gas resulting from interruptions to gas producer operations in the North West of Western Australia or of the Dampier to Bunbury Natural Gas Pipeline.[91]

214 The State of Western Australia would also be prejudiced in financial terms by a cessation in the coal supply which might occur if the Bluewaters transaction did not proceed. The cessation would result in Synergy paying higher wholesale electricity prices which would most likely result, at least in the short term, in lower profits for Synergy and lower revenues to the State through reduced returns of taxation and dividend payments.[92]

215 Apart from the prejudice to the State of Western Australia, the risk of electricity supply disruptions is a matter which also adversely affects the general public in their capacity as customers of electricity services.[93]

216 In Bridgetown/Greenbushes Friends of the Forrest Inc v Executive Director of Conservation and Land Management,[94] Wheeler J said that '[t]he potential loss to a third party, and in particular the potential loss of employment of innocent third parties are very serious considerations. Were the evidence clear on this point, the balance of convenience would appear to point inevitably against the grant of any injunction'.

217 In this case, even apart from the effect on Griffin Coal the considerations of the effect of an interlocutory injunction on the interests of (i) the State of Western Australia and (ii) the general public (or a significant section of it) in their capacity as customers of electricity services, are weighty matters which tell powerfully against the grant of an injunction. They are so significant that even aside from the weaknesses in Perdaman's case described above and the importance of the transaction to Griffin Coal, these matters alone might have been sufficient to refuse the interlocutory injunction.

218 As explained in the reasons in this section, even assuming that Perdaman has a serious issue to be tried that the Bluewaters transaction would interfere with its rights, in the assessment of the balance of convenience an interlocutory injunction must be refused.

(2) The application for appointment of a provisional liquidator

219 Perdaman's application for the appointment of a provisional liquidator is made under s 472(2) of the Corporations Act. Perdaman's application explained that it relied on the facts stated in the affidavit of Mr Walewski sworn on 23 November 2012. By the time of the hearing, Perdaman relied on numerous other affidavits.

220 It appears that some evidence was filed even if it might only be of peripheral relevance. For instance, an affidavit of Mr Walewski, sworn on 6 December 2012 annexed nearly 100 pages of reports. In oral and written submissions there was little reference to those reports. One 'report' was a discussion paper from KPMG dated 6 December 2012. The discussion paper refers to a request to provide 'summary observations as a matter of urgency, focussing on matters which have the potential to impact the ongoing viability/solvency of [Griffin Coal]'. It explained that it was based solely on material from Griffin Coal's Annual Report for the year ended 31 March 2012 and acknowledged that '[a]t the time of writing, this information is circa 8 months old and the financial performance and the position of the Company may have materially changed in the intervening period'.[95]

221 Other evidence was filed with little reference to it in submissions. Perhaps this was due to the short time frame in which it was provided or the limited time available for the hearing. But this underscores the difficulty in drawing assessments about insolvency and company operations in this case for the purposes of the 'drastic step' of appointment of a provisional liquidator. One example is a 46page report annexed to Mr Walewski's affidavit and prepared by KPMG India Private Ltd into the affairs of Lanco India.[96] It is dated 6 December 2012. It says that KPMG Australia 'shall not provide our report to Perdaman'. The report says that work 'commenced on 4 December 2012 and our fieldwork was completed on 6 December 2012'. It is heavily qualified and refers to 'the significant limitations in the information that would be available to us'. It says that 'projection related information' is needed for an assessment of solvency but that this information was not available to it. There were few submissions made about this lengthy report by Perdaman. It is of little to no assistance.

222 Perdaman took assignments of a number of Griffin Coal's debts and brought its application for appointment of a provisional liquidator as a purported creditor.[97] The debt upon which Perdaman initially relied was a debt owed by Griffin Coal to Chubb Fire and Security Pty Ltd (Chubb) for $52,648.72. Griffin Coal deposited that amount in Chubb's account by electronic funds transfer on 23 November 2012. Griffin Coal subsequently also delivered a personal cheque to Perdaman.[98] Anticipating arguments about standing, Perdaman refused the tender of a personal cheque from Griffin Coal as discharge of the debt. Perdaman has rejected the electronic funds transfer on the basis that it was not tendered to Perdaman, that it does not constitute a tender, and that acceptance of the payment may constitute a voidable preference.[99] And it rejects the personal cheque for the latter two reasons.[100]

223 Perdaman submitted that the Court ought not to follow the usual course of dismissing its application due to the (purported) subsequent payment of its debt. In Australian Beverage Distributors v The Redrock Co,[101] Austin J said:

As long as the applicant for winding up is a creditor at the time of the filing of the application, s 459P(1) gives the court jurisdiction to hear and determine the application, even if the applicant has ceased to be a creditor after the filing but before the hearing.[102] The court may permit another creditor to be substituted as applicant.[103] But if the original applicant wishes to proceed, though no longer a creditor, the court may[104] and probably will[105] refuse to make a winding up order in the exercise of its discretion.

224 Perdaman submitted that it was justified in refusing to accept the proffered payment on the basis of 'cases in which it has been held that a creditor was justified in refusing to accept proffered payment because the moneys paid would be liable to be disgorged if a winding-up order were made on the application of a substituted creditor'.[106]

225 Ultimately, Griffin Coal did not contest Perdaman's standing to bring the application. Nor was it submitted by Griffin Coal that any weight should be placed on the context in which this provisional winding up application is made by Perdaman - that is, at least initially, as a creditor of a $52,648 debt which Griffin Coal has attempted to repay both to the assignor and to Perdaman. I do not need to consider these matters further.

The legal test for when a provisional liquidator should be appointed

226 The power to appoint a provisional liquidator to a company is a judicial remedy 'of a wholly extraordinary nature'.[107] The power derives from s 472(2) of the Corporations Act which provides that:

The Court may appoint an official liquidator provisionally at any time after the filing of a winding up application and before the making of a winding up order or, if there is an appeal against a winding up order, before a decision in the appeal is made.

227 In Australian Securities and Investments Commission v Weerappah (No 2),[108] Goldberg J explained that 'the Court has a wide and unfettered discretion whether to appoint a provisional liquidator, the only jurisdictional precondition being that a winding-up application in relation to the company has been filed'.

228 However, in the exercise of this wide discretion various principles have emerged by which a Court will decide whether to appoint a provisional liquidator. Although the discretion is not limited in any way by statute, two of those key principles are generally expressed as follows:

(i) the applicant for the appointment must satisfy the Court that there is a 'reasonable prospect',[109] or that it is 'likely',[110] or that there is a 'prima facie case'[111] that a winding up order will be made at the final hearing; and

(ii) an applicant must establish that there is good reason for the Court intervening prior to the final hearing of the winding up application.[112]

229 Although these are expressed as mandatory requirements, s 472(2) does not require either or both. They are not jurisdictional facts. I have assumed, consistently with the wide statutory discretion and in favour of the applicant (Perdaman), that these matters are important considerations in the exercise of discretion but that they are not mandatory. It may be that they are useful tests for the exercise of the proper discretion. But no submissions were made on this point and it is not necessary to consider the precise manner in which discretion is governed because, as I explain below, neither matter is satisfied and there are strong reasons not to exercise the discretion to appoint a provisional liquidator.

230 The authorities also emphasise that a 'good reason' reason for the appointment of a provisional liquidator must be 'compelling'[113] because the appointment pending the determination of a winding-up application is a 'drastic intrusion into the affairs of a company'[114] and should not be made if other measures are adequate to preserve the status quo.[115]

231 The reasons to consider in deciding whether there is a 'good reason' for the appointment of a provisional liquidator include:

(i) whether there is a real risk that the assets of the company will be dissipated prior to the time at which a winding up order is to be made;[116]

(ii) whether the company's affairs have been conducted in a manner without regard to legal requirements or accepted principles of corporate management;[117]

(iii) whether in the public interest there is a need for an independent examination of the accounts and financial transactions of the company which are in disarray;[118]

(iv) whether there are any other means of protecting the status quo other than the appointment of a provisional liquidator;

(iv) whether, and the extent to which, the appointment of a provisional liquidator will interfere with the rights of third parties.

232 The last two mentioned factors derive from the consideration that a purpose for the appointment of a provisional liquidator is to preserve the status quo in relation to the company's affairs[119] and a primary duty of a provisional liquidator is to preserve the status quo so as to ensure the least possible harm to all concerned and to enable the Court to decide, after a proper final hearing, whether the company should be wound up.[120]

The likelihood of a winding up order being made in relation to Griffin Coal

233 In considering the factor of solvency in the assessment of whether to appoint a provisional liquidator, the Court 'will not look in a narrow and particular way only at the position of identified debts or specified creditors', and will consider 'the debtor's financial position in its entirety'.[121] Further, evidence of temporary lack of liquidity does not establish insolvency. As Barwick CJ (with whom McTiernan and Windeyer JJ agreed) said in Sandell v Porter[122]

the debtor's own moneys are not limited to his cash resources immediately available. They extend to moneys which he can procure by realization by sale or by mortgage or pledge of his assets within a relatively short time - relative to the nature and amount of the debts and to the circumstances, including the nature of the business, of the debtor. The conclusion of insolvency ought to be clear from a consideration of the debtor's financial position in its entirety and generally speaking ought not to be drawn simply from evidence of a temporary lack of liquidity. It is the debtor's inability, utilizing such cash resources as he has or can command through the use of his assets, to meet his debts as they fall due which indicates insolvency.

234 The directors of Griffin Coal made a declaration on 30 November 2012 in the audited annual accounts of Griffin Coal for the year ended 31 March 2012. The declaration was that there 'are reasonable grounds to believe that [Griffin Coal] will be able to pay its debts as and when they become due and payable'.[123] In Note 2, it was acknowledged that the ability of Griffin Coal to continue as a going concern is dependent upon the financial support of Lanco India to enable the company to pay its debts as and when they fall due.[124]

235 The accounts of Griffin Coal were signed on 30 November 2012 by its auditors, Ernst and Young.[125]

236 In contrast with the directors' declaration, Perdaman's submission was that Griffin Coal 'is an insolvent entity. Without support of Lanco [India] it is hopelessly gone and its support from Lanco [India] has been minimal for three months, $2 million'.[126] The evidence does not establish that Griffin Coal is insolvent. Nor does the evidence currently establish that there is a reasonable prospect, or prima facie case, that a winding up order will be made.

237 Griffin Coal has a net asset base of just over $700 million. But it trades at a loss. For the year ended 31 March 2012, it suffered a loss of more than $43 million.[127] At 31 March 2012, Griffin Coal did not hold any bank facilities in its own right.[128] Its financial position at that date discloses more than $101 million in borrowings from its immediate parent, Lanco Australia.[129] Those borrowings are payable at call.[130] Current liabilities exceed current assets by more than $222 million.[131]

238 The cash flow position of Griffin Coal for the year ended 31 March 2012 involved receipts from customers of almost $134 million but payments to suppliers and employees of more than $225 million. The net cash flow deficit from operating activities was almost $95 million. This was funded by the related party loans which were $101 million at 31 March 2012. At the same year end, the cash and cash equivalents held by Griffin Coal were just over $2 million.[132]

239 Mr Riordan is the Company Secretary and Chief Financial Controller of Griffin Coal. In an affidavit sworn on 20 September 2012, Mr Riordan sets out the negative cash flows from the operations of Griffin Coal from the quarter ended June 2011 until the quarter ended June 2012.[133] For each ending quarter those negative flows were, respectively, June 2011 ($18.30 million), September 2011 ($29.79 million), December 2011 ($40.27 million), March 2012 ($34.65 million), June 2012 ($34.69 million). Griffin Coal currently has aged creditors of over $23 million.[134]

240 It is clear that the solvency position of Griffin Coal currently depends upon the support of Lanco India whether directly or indirectly through Lanco India's subsidiaries. However, there are some reasons for greater optimism about the future operations of Griffin Coal independent of the Bluewaters transaction. One particular reason is a matter referred to in an affidavit of Mr Prasad affirmed on 11 December 2012. It concerns a potential contract with QUBE Logistics.[135]

241 Griffin Coal has not recently had any requirement to increase production of coal due to the absence of new domestic customers and the inability to raise the funds for capital expenditure to export more than 750,000 tonnes per annum. But, later this month, Griffin Coal expects to enter a formal contract with QUBE Logistics to transport up to 1.25 million tonnes per annum of coal to the Port of Bunbury for sale on a FOB basis. Although there are not yet formal arrangements, and although statutory consents may be required,[136] I accept the expectation by Mr Prasad of a formal contract, with implementation in early 2013 is reasonable.[137] Eighty per cent of the volume to be exported has been contracted and Mr Prasad considers it likely that the remainder will be contracted in 2013. The letter of intent from Griffin Coal to QUBE Logistics advises of the intent of Griffin Coal to expedite contracts with care and speed on the basis the notice is issued to facilitate closure of required items necessary to commence operation on 1 January 2013.[138]

242 As for the date of implementation of exports, Mr Prasad expects that it will occur in April 2013.[139] Mr Walewski says that, based on technical information provided to him by the technical director at Perdaman, the construction and engineering requirements for export by container require work to be done at the Bunbury Port which would mean that export is unlikely to commence until late May or early June 2013.[140] The difference between commencement in April 2013 or late May 2013 has some effect on cash flow. But, at this level of interlocutory decision, to descend into this level of detail in order to ascertain the precise difference in cash flow would not be appropriate. This is particularly in the absence of detailed submissions or evidence on the difference caused by the difference in dates.

243 The arrangements with QUBE are also made to avoid any capital costs to Griffin Coal. This means that Griffin Coal will be able to gain the benefit of earning additional income from the export of 1.25 million tonnes per annum without the required capital expenditure.[141] Of course, on this interlocutory application it is impossible to assess the precise impact of the anticipated QUBE transaction: no analysis can be conducted of the potential additional costs of expansion; whether there will be significant economies of scale; the likelihood of required approvals. It suffices to note that there is a reasonable basis for Mr Prasad's conclusion that the additional income from the QUBE transaction will assist Griffin Coal to achieve cash break even.[142]

244 However, considerably more significant than the QUBE transaction, especially in the very short term, is the support of Lanco India and its subsidiaries. To reiterate, Mr Riordan explained that due to difficulties experienced by Griffin Coal in raising desperately needed funds Griffin Coal has been forced to rely on funding from its ultimate parent company, Lanco India, in order to sustain its operations.[143] This reliance is not new. As I have explained above, this matter was acknowledged in the annual report for Griffin Coal in March 2012.

245 On 22 May 2012, Lanco India gave a commitment to fund Griffin Coal for the period 1 April 2012 to 31 March 2013. The commitment is as follows:[144]

• [Lanco Australia, Griffin Coal and CMM - 'the Companies'] to be in a position to meet the requirements of the Corporations Act 2001, specifically subsection 295(4)(c) which requires them to state whether or not '... there are reasonable grounds to believe the company will be able to pay its debts as and when they become due and payable ...' and
• To give assurance to the Directors and Officers of these Companies of the intention of [Lanco India], being the parent entity, to arrange financial support to 'the companies'.

I [the Managing Director of Lanco India] hereby acknowledge to the Directors of [the companies] that:

[Lanco India] undertakes to arrange sufficient financial assistance to these Companies as and when it is needed, to enable these Companies to continue their current operations and to enable them to pay their post acquisition debts as and when they become due and payable, for a period of at least one year from the date the Directors of these Companies sign the 31st March 2012 financial statements.

246 Consistently with this letter of support, Lanco India made $132 million of funds available to Griffin Coal from 14 July 2011 until 23 October 2012; approximately $10 million per month.[145]

247 The Managing Director of Lanco India has also undertaken that Lanco India will fund Griffin Coal's cash flow requirements for the 12 months following the Bluewaters transaction and the QUBE transaction.[146]

248 Since Griffin Coal has the financial support of Lanco India, the focus of Perdaman's attack turned to the solvency of Lanco India and to the substance of its ongoing financial support. Perdaman's submissions in relation to the financial position of Lanco India had a number of strands. Each is considered in turn below.

249 Although the evidence before the Court concerning Lanco India does not permit a comprehensive examination of its accounts, the evidence goes far beyond that which would usually be encountered on an interlocutory application of this nature.

250 The starting point is that Lanco India is, broadly described, a company which at 30 September 2012 had a consolidated net worth (adding intra group eliminated profit) of US$1.21 billion. Its consolidated revenue (adding intra group eliminated revenue) for the six months from April 2012 until September 2012 was US$1.4 billion.[147]

251 Since its 2009 annual general meeting, the joint auditor of Lanco India has been Brahmayya & Co. And since the 2012 annual general meeting Brahmayya & Co has been the sole auditor of Lanco India, a situation which is common practice.[148] Brahmayya & Co is the oldest auditing firm in India and the largest in South India.[149] There is no evidence that there has been any finding or suggestion of insolvency in any of the audits of Lanco India.

252 Perdaman provided a CD recording of a news interview described as an interview 'in respect of the Lanco's auditors, Ernst and Young'.[150] In the affidavit which exhibited this interview, Mr Walewski does not say that he believes that the contents of the 'interview' are true and correct. He does not even say whether he has watched the 'interview'. The 'interview' is from an Indian news channel apparently called 'ET now'. The 'interview' lasts for fewer than two minutes. The speaker refers to 'rumours' and 'speculation' surrounding the Ernst and Young disengaging as auditors of Lanco India. The speaker has no apparent position at Lanco India. Nor does she have any direct knowledge of Lanco India. She acknowledges that 'officially Lanco [India] has denied these rumours'. No oral submission was made about this evidence. It has no weight at all.

253 Perdaman's attack on the substance of Lanco India's financial support was directed towards Perdaman's claim that there is a real prospect of a winding up order being made against Griffin Coal. Although some of these matters raise issues of potential concern, the only conclusion is that at this point in time, and on the evidence currently before the Court, these matters, either individually or collectively, are not sufficient to establish a reasonable prospect or prima facie case of a winding up order being made.

254 First, in some affidavit evidence filed by Perdaman there were assertions of a legal conclusion that Lanco India is insolvent based upon press reports which do not support this conclusion.[151] The assertion is not, in any event, admissible evidence.

255 Secondly, and more substantively, Perdaman pointed to the event of 22 October 2012 when the rating agency CRISIL downgraded the rating on bank facilities of Lanco India from BBB - to D (default).[152] The rating concerned bank loan facilities of 90.24 billion rupee. The downgrade occurred because of a delay in Lanco India repaying 2.5 billion rupee due on 23 October 2012.[153] Counsel for Perdaman submitted that, in today's currency in Australian dollars, this was approximately $143 million.[154]

256 It also appears that the first of three payments totalling 7 billion rupee (700 crores) was due on 30 November 2012.[155] CRISIL expressed concern that Lanco India's liquidity will remain under pressure over the medium term because in addition to the three repayments, Lanco India needs around 5 7 billion rupee (500 700 crores) over the next term for meeting the equity investments in its three power projects. Additional investments in these special purpose vehicles are said to be critical for generating cash flow.

257 However, Mr Prasad is a director of Griffin Coal and the CEO of the Business Development business segment of Lanco India.[156] His evidence is that Griffin Coal's ultimate parent, Lanco India, considers the rating should not be downgraded and that Lanco India has requested CRISIL to reexamine the downgrade.[157]

258 On 2 November 2012, Lanco Australia wrote to ICICI, seeking waiver of defaults under the Facility Agreement, the Negative Pledge Deed, and the Corporate Guarantee from Lanco India.[158] The default under the Facility Agreement arose as a result of the rating downgrade. In its letter, Lanco Australia set out the central concerns of CRISIL:

(a) the ability of Lanco India to meet debt repayments of Rs 700 crores;

(b) the need to infuse Rs 700 crores into power plants under construction; and

259 Lanco Australia then summarised six reasons why management had given for reexamination of CRISIL's rating downgrade. In very broad summary, those reasons include:

(i) the resolution of non-payment or lowerpayment issues with state electric utilities;

(ii) the expected payment of dues from the Government of Uttar Pradesh;

(iii) the stabilisation of companies to which Lanco India had previously been providing financial support;

(iv) the expectation of some private equity infusion into part of the restructured group, as part of a mandate provided to Macquarie Bank to raise US$750 million;

(v) the sale of noncore assets for which Ernst and Young have been tasked with identifying buyers and for which expected cash accrual is Rs 1500 crores; and

(vi) the expectation of Lanco Australia that Griffin Coal will turnaround its operating loss in the financial year 2013 'from the actions which are being taken by the Management to bring down the operating cost and improve realization of sale proceeds'.

260 In a letter from the managing director of Lanco India to Mr Prasad,[159] the managing director also describes (i) the steps being taken by the Government of India to address the liquidity position of the state power distribution companies and (ii) the rescheduling of Lanco India's debt in a manner facilitated by a circular from the Reserve Bank of India.

261 Although it appears that Lanco India still has a default rating, these reasons demonstrate the basis of a reasonable belief that the default rating will not prevent Lanco India's continued financial support of Griffin Coal. Significantly, as a matter of fact, that continued financial support has neither ceased nor abated recently. As I explain below, the financial support continued during the hearing of this matter with a further $10 million of funding provided between the first day of hearing of this matter on 30 November 2012 and the second day on 13 December 2012.

262 Thirdly, and related to the second point, Perdaman suggested that as a matter of fact Lanco India's support for Griffin Coal had waned and that funds were no longer being provided or were being provided in much more limited amounts.[160]

263 Perdaman submitted that in the quarter ended 30 November 2012 when Griffin Coal 'had lost 30 million, it has got 2 million in from [Lanco India]'.[161] It said that Lanco India 'has not made any contribution towards Griffin Coal's working capital since 23 October 2011 (then a contribution of only $1 million)'.[162] Counsel referred to an outstanding account from a café and submitted, pejoratively, that '[t]hey can't pay for sandwiches and coffee ... and they can't pay $1.7 million to the Fremantle Port Authority, to the state government for export dues and 1.3 million is disputed'.[163]

264 These submissions were either inaccurate or turned out to be inaccurate.

265 As to the debt to the café, if Perdaman had not taken an assignment of that debt, invoices to the café would have been paid within Griffin Coal's ordinary 30 day payment terms.[164] Due to Perdaman's refusal to accept payment by cheque for one of Griffin Coal's debts which it acquired, and in anticipation that the payment by cheque of the café's debt might be refused by Perdaman, Griffin Coal paid the amount of the café debt in to Court.[165]

266 As to the Fremantle Port Authority debt, although there remains a dispute about some of the debt to the Fremantle Port Authority[166] Griffin Coal and the Fremantle Port Authority agreed to the repayment of the undisputed debt to the Fremantle Port Authority with approximate payments of principal to be made as follows: on 11 December 2012 ($1.792 million), 21 December 2012 ($0.6 million), and 28 December 2012 ($0.55 million) and a payment of interest on 28 December 2012 ($31,119). The 11 December 2012 payment has been made.[167]

267 As for the extent of support from Lanco India, on 21 November 2012 Lanco India made US$1 million of funds available to Griffin Coal.[168] In the week leading up to 12 December 2012 Lanco India advanced a further US$10 million to Griffin Coal.[169]

268 Fourthly, Perdaman disputed[170] the evidence filed by Griffin Coal which suggested that Lanco India 'has access to a US$40 million loan facility provided by a subsidiary, Lanco Tanjore Power Ltd, to meet any requests for financial assistance from Griffin Coal in 2013'.[171] In that letter, the managing director of Lanco India wrote that Lanco India 'is having a specified line of loan facilitation available from its subsidiary [Lanco Tanjore for US$40 million] ... to be available during the period from January 2013 to December 2013. This facility will act as an additional source to [Lanco India] to fund [Griffin Coal] up to December 2013'. Perdaman correctly observed that it is not yet January 2013. That date is 11 days away. But the letter does provide significant evidence that there will be significant funds available for Griffin Coal for the payment of debts which fall due in 11 days or later or which are incurred after 11 days' time.

269 Perdaman also disputed the reliance placed by Griffin Coal on a memorandum of understanding signed with the China Development Bank for raising US$2 billion for upcoming thermal power projects.[172] Senior counsel for Griffin Coal referred to this evidence, essentially inviting the rhetorical question 'Why would a major bank lend $2 billion to an entity which was insolvent or nearly insolvent?'[173] The press report of the memorandum of understanding said that '[o]ut of the total amount of USD2 Billion required to be raised, USD600 million will be contributed by CDB, and CDB will syndicate the balance from Chinese banks and FIs'.[174] The press release continued: 'China Development Bank has already sanctioned USD200 million Buyers' Credit for Amarkantak 3 & 4, Babandh and Vidardbha power projects being developed by Lanco Group. CDB is the largest Chinese development banking institution and one of the leading international bank[s] with total assets exceeding USD1.1 trillion (Sept 2012)'.

270 Perdaman submitted that there was no evidence that the memorandum of understanding was a binding commitment. Perdaman also submitted that if Griffin Coal were solvent then it need not rely upon inferences in this manner. The details of the memorandum of understanding are not part of the evidence before me. Nor would it be appropriate to consider these details in any more than a cursory fashion in an interlocutory application of this nature where their importance is only peripheral. It suffices to say that the interest and involvement of the China Development Bank is another indicia of the substance of Lanco India, albeit far from conclusive. It is not to the point that this evidence is indirect. Nor does it matter that this evidence relies upon inference. The onus of proof that a provisional liquidator should be appointed is borne by Perdaman.

271 Fifthly, and again related to the extent of support which Lanco India is providing and is capable of providing, Perdaman pointed to the delays in payment of numerous debts of Griffin Coal. For instance, Perdaman pointed to email correspondence from the auditors of Griffin Coal on 17 September 2012 complaining of outstanding invoices, the oldest of which was six months old.[175] Those accounts were paid, but paid late.

272 Perdaman also pointed to Griffin Coal's aged creditors' report as at 11 December 2012.[176] Those aged creditors are as follows:

273 On Friday 14 December 2012, after the conclusion of the hearing, Mr Riordan provided a further affidavit with the leave of the Court. I describe the circumstances in which that affidavit was filed, and I rule on the objections to it in annexure 2 to these reasons.

274 Mr Riordan explains that since 11 December 2012 five of the twenty aged creditors whose accounts are more than 90 days overdue have been paid and are no longer creditors. Those creditors were owed amounts of $754, 227.

275 The single largest creditor of the 15 aged creditors owed money for more than 90 days is the Australian Tax Office. The amount owed to the Australian Tax Office is $7,069,727.89. The Australian Tax Office is prepared to accommodate the delay in payment by establishing an arrangement for payment of that sum.

276 Of the remaining creditors, Mr Riordan explains that ten other creditors referred to (i) have been prepared to accommodate delays in payment, and (ii) will not press for payments of their accounts until after the Bluewaters transaction is completed and Griffin Coal receives the approximately $51 million cash payment from the Griffin Power Entities as part of that transaction.[177]

277 The remaining creditor of the aged creditors who are owed money for more than 90 days, creditor (l), is owed $123,132.90. It is unclear whether that creditor, who Mr Riordan says in inadmissible evidence is 'supportive' of Griffin Coal, was an accidental omission from the list of the other ten creditors (by letter) who are prepared to accommodate delays. Nor is it clear whether that creditor is a person whose debt has been assigned to Perdaman. There is no evidence that creditor (l) has made any statutory demand for payment of its debt.

278 The evidence of aged creditors falls well short of establishing insolvency as Perdaman claimed. Nor does it establish that there is a real prospect of a winding up order being made because Griffin Coal, with the support of Lanco India, will be found to be unable to pay its debts when they fall due and payable. It is also noteworthy that in the mining industry the average number of days for payment of trade debts (56.78) is more than Australian industries generally (53.12). The payment of trade debts in the mining industry is generally 26.2 days later than the mining industry payment terms.[178] As senior counsel for Griffin Coal colourfully submitted, perhaps in a quiet plea for his profession: '[c]ounsel's fees are due within an identified period of time. The fact that they're late in being paid doesn't mean that one's instructors are insolvent'.[179]

279 Sixthly, Perdaman pointed to an issue relating to equipment held at Mumbai Port. Mr Prasad referred to power plant equipment held at Mumbai Port by the Port Authorities which belongs to the special purpose vehicle Lanco Vidarbha Thermal Power Ltd (Lanco Vidarbha).[180] The Port Authorities propose an auction of the equipment. The equipment which is held was purchased by Lanco Vidarbha for the equivalent of US$25 million. The supplier has presented a letter of credit for payment. The dispute concerns the equivalent of US$6 million of customs duty arising from a change in customs policy. This has necessitated approvals from lenders for the payment.

280 Lanco India holds 26% of the shares in Lanco Vidarbha.[181] Perdaman submits that the failure to resolve this matter 'significantly reflects Lanco [India's] financial state'.[182] I do not accept this submission.

281 Mr Prasad's evidence is that he believes that this matter has no material effect on the ability of Lanco India to provide financial assistance to Griffin Coal if required and he points to (i) continuing discussions between Lanco India and the Mumbai Port Trust, and (ii) the recent provision of US$10 million by Lanco India to Griffin Coal.[183] Further, Lanco Vidarbha is involved in a coal based thermal power plant development with a project cost of US$1.28 billion. It is funded by a consortium of 16 banks and financial institutions with an estimated completion date of August 2014. Approximately US$454 million has been spent on it so far.[184] I do not accept that the dispute over US$6 million in customs duty would have any material effect on the ability of Lanco India to provide support for Griffin Coal when needed.

The effect of the Bluewaters transaction on the financial position of Griffin Coal

282 As I have explained, the support of Lanco India is sufficient in this interlocutory proceeding to prevent a conclusion at this point in time that a winding up order is likely or that there are reasonable prospects or a prima facie case of such an order being made to justify the drastic intervention into the affairs of Griffin Coal by appointment of a provisional liquidator.

283 In these circumstances, it is not necessary to engage upon any detailed examination of any accounting and cashflow evidence concerning the effect of the transaction upon Griffin Coal's ongoing cash flow. It suffices to say that, as I have concluded in considering the balance of convenience in relation to the interlocutory injunction application, there are reasonable grounds to expect that the effect of the Bluewaters transaction may be to enable Griffin Coal subsequently to operate without the support of Lanco India. The conclusion cannot be put any higher than that, nor would it be appropriate to do so. The reason why it would not be appropriate to consider the matter further is because any further consideration of the substantial, partly conflicting, and voluminous accounting evidence and reports, about which submissions were limited, would be to descend into a minitrial.

284 However, on the understandably, and appropriately, limited submissions I received on this point Perdaman pointed to a number of unexplained matters in the accounts of Griffin Coal for the year ended 31 March 2012 and in the Ernst and Young report. I mention some of these below.

285 Mr Walewski noted that the Ernst and Young report did not take account of the role of CMM in the conduct of the Griffin Mine. Mr Walewski[185] also pointed to note 25 of Griffin Coal's Annual Financial Statements which says that '[d]uring the year the company paid actual mining expenses of $193,194,075 (2011: $144,158.880) to a director related entity [CMM]'.[186] Mr Riordan's evidence was as follows:

Of the costs incurred in operating the Griffin Mines, certain services are provided by Griffin Coal's sister company. Carpenter Mine Management Pty Ltd (CMM). These services include the provision of fuel and some mobile equipment. During the previous 12 months, Lanco has provided CMM approximately A$47 million in financial assistance (this amount is in addition to the amount of A$84 million in financial assistance provided to Griffin Coal).

286 Griffin Coal's recorded payment in note 25 of $193 million to CMM in 2012 and $144 million in 2011 is difficult to reconcile with the absence of any reference to such an amount, or even a note to it, in the cash flow statement. The same note also records that a related party loan from Griffin Coal to CMM remained unchanged between 2011 and 2012 at $121 million and that trade and other payables to CMM increased only by $6 million to $114 million. In any event, no submissions were made concerning whether this possible expense to CMM was a recurring expense or whether it could affect the solvency of Griffin Coal in any way. The short and only point is that this matter is not wholly explained by the Ernst and Young report which merely asserts that payments to CMM are raised through an intercompany loan rather than a cash outflow.[187]

287 Other anomalies in the Ernst and Young report identified by Mr Walewski are (i) the lack of reference in forecast cash flow to interest payments, business development costs, service fees and financing costs; and (ii) the comparison between the forecast cash outflow for the year ended November 2013 of $190 million with the payments to suppliers and employees for the year ended 31 March 2012 of $225 million.[188] These reasons would cast doubt upon the veracity of the Ernst and Young report in a final hearing of the matter. But in the context of an interlocutory application and the urgency with which the report was prepared (ie in five days) these concerns do not undermine the whole of the report nor the possible conclusions that Mr Riordan draws from the report. It also must be reiterated that it is Perdaman who bears the onus of proof to show that a provisional liquidator should be appointed.

Other reasons relevant to whether there is a 'good reason' for appointment of a provisional liquidator

288 Even apart from my conclusion that the evidence, at this point in time, does not establish a reasonable prospect of a winding up order being made sufficient for the 'drastic step' of appointment of a provisional liquidator. But there are further matters which must also be considered in the exercise of discretion. One of those factors, the potential prejudice to Perdaman's position as a contingent creditor, arguably weighs in favour of the appointment of a provisional liquidator (although, on the evidence, only weakly). The other factor, third person interests, weighs significantly against it.

Perdaman's claims of prejudice to its position as a contingent creditor

289 In Mr Walewski's affidavit of 23 November 2012,[189] the basis for the claim for appointment of a provisional liquidator was that Perdaman's position as an unsecured contingent creditor would be prejudiced for three reasons. No submission was made concerning whether prejudice to a person's position as an unsecured contingent creditor was a relevant matter to consider in the exercise of a discretion to appoint a provisional liquidator. I proceed on the common, although untested, assumption that it is. The three reasons described by Mr Walewski were as follows:

(i) ICICI Bank will be given security of at least $150 million;

(ii) the assets and undertakings of Griffin Coal will be secured in favour of a security trustee; and

(iii) Griffin Coal may nominate beneficiaries pursuant to the security trust arrangement, which beneficiaries will take priority over Perdaman's position as an unsecured creditor and contingent unsecured creditor without notice to Perdaman.

290 As to (ii) and (iii), it is true that Griffin Coal may use the mechanism of the security trust arrangements as part of its $1 billion project financing for expansion. But, as I have explained above, significant secured fundraising for project finance was always contemplated by the CSA. Simply because Perdaman subsequently brought substantial litigation against Griffin Coal is not a sufficient basis to appoint a provisional liquidator based upon the fulfilment of a contemplated event.

291 In any event, there is no evidence to dispute that a fundraising of $1 billion by Griffin Coal would secure a benefit of at least $1 billion and the interest cost to the company. One might ask rhetorically why a company would seek to raise $1 billion in debt finance if the utilisation of that finance was expected to yield less return than the cost of the debt?

292 As to (i), the additional protection of the terms of the proposed injunction significantly ameliorates the extent of possible prejudice to Perdaman. As discussed above, the terms of the proposed injunction is subject to a minor need for amendment as to which I invite submissions from the parties on its precise terms.

293 Further, any prejudice to Perdaman as an unsecured creditor by the security given to ICICI Bank and the Syndicate must also be weighed against the significant benefit to Perdaman from the transaction, including the value received by Griffin Coal from the Bluewaters transaction and the potential of the Bluewaters transaction to permit Griffin Coal to become a viable stand alone entity.

294 The significance of third party interests is discussed above in relation to Perdaman's application for an interlocutory injunction. This is a very weighty factor which weighs heavily against both the grant of an interlocutory injunction and the appointment of a provisional liquidator.

295 It is also noteworthy that the undertaking as to damages provided by Perdaman is in the usual form. It refers to an undertaking to pay compensation considered by the Court in the circumstances to be just to be paid to 'any party restrained or affected by the restraints imposed by any interlocutory order'. The undertaking does not extend to the interests of third parties who are not parties to the proceedings.[190]

296 At the end of the supplementary written submissions from Perdaman,[191] almost as an afterthought, there is a suggestion by Perdaman that the Court should consider issues of corporate mismanagement. There is no basis for this submission, particularly in light of the conclusions I have reached above concerning solvency. No evidence was cited in support of it. No evidence before me justifies such a conclusion. The submission must be rejected.

Conclusion on the application for appointment of a provisional liquidator

297 Insufficient basis has been established for an order requiring the appointment of a provisional liquidator. There is currently no prima facie case that Griffin Coal will be wound up in insolvency. There is no good reason for the appointment of a provisional liquidator. To the contrary, there are strong reasons why one should not be appointed. The application must be rejected.

298 In the application for an interlocutory injunction in CIV 1925 of 2011, orders should be made as proposed in the defendants' minute of proposed orders as set out below subject to, as discussed in these reasons, any necessary submissions about the words which I have italicised, including whether those words are necessary. Prior to submissions on this point the parties should confer on the appropriate amendment. Other than this matter, the application is dismissed.

1. Until determination of the plaintiff's claims in CIV 1925 of 2011 (consolidated with CIV 2422 of 2011, CIV 2423 of 2011 and CIV 3201 of 2011) or further order, The Griffin Coal Mining Company Pty Ltd (Griffin Coal) whether by its directors, officers, servants and agents be and is hereby restrained from:

(a) entering into any agreement or arrangement with ICICI or any of the members of the Syndicate which it represents in which the maximum amount payable to the Syndicate under the Facility Agreement between ICICI Bank Limited, Singapore Branch (as agent on behalf of the Syndicate) and Lanco Resources International Pte Ltd and others dated 9 February 2011 and in relation to the Negative Pledge Deed dated 21 June 2011 between the Syndicate and The Griffin Coal Mining Company Pty Ltd and others, from all proceeds recovered from the enforcement of all securities given over the assets and undertakings of Griffin Coal and in priority to the unsecured creditors of Griffin Coal, exceeds A$150,000,000.

(b) giving security over all of the assets of Griffin Coal unless that security is subject to permitted securities which include:

(i) any security interest which Griffin Coal may be required to provide to Perdaman pursuant to any order of any government agency or court in respect of Supreme Court Action CIV 1925 of 2011 (consolidated with CIV 2422 of 2011, CIV 2423 of 2011 and CIV 3201 of 2011) or other litigation commenced by Perdaman in respect of the coal supply agreement between Griffin Coal and Perdaman dated 21 December 2010 (Perdaman CSA) to give effect to the proposed security arrangements contemplated by the Perdaman CSA; and

(ii) any security interest which Perdaman has as at the date of this order as equitable mortgagee or chargee (if any).

1. There be liberty to the defendants to apply on 10 business days' notice.

299 In COR 190 of 2012 the application for appointment of a provisional liquidator is dismissed.

300 I will hear from the parties as to the form of any consequential orders. I note that in circumstances in which the interlocutory relief cannot conclusively determine the very matters in issue in the final hearing a 'very common order on the grant or dismissal of an interlocutory injunction is that the costs of the application be in the cause'[192] or be reserved.

Orders made by His Honour the Chief Justice consolidating CIV 2422 of 2011 and CIV 2423 of 2011 with these proceedings.

Minute of Consent Orders signed by the parties in WAD 401 of 2011 by His Honour Justice Siopis transferring the Federal Court proceedings to the Supreme Court of Western Australia.

Orders made by His Honour the Chief Justice consolidating CIV 3201 of 2011 with these proceedings (referred to in orders as WAD 401 of 2011: Supreme Court no. not allocated at the time orders were made).

Perdaman Chemicals and Fertilisers Pty Ltd (Plaintiff) files Writ of Summons against Mr Kandimalla K.V. Naga Prasad (Defendant) seeking:

1. damages;
2. damages pursuant to section 236 of the Australian Consumer Law;
3. aggravated and exemplary damages;
4. interest on damages pursuant to section 32 of the Supreme Court Act (WA) from the date such damage was incurred until judgment or payment at the rate of 6% per annum;
5. such further or other relief as this Honourable Court considers just; and
6. costs.

1. Action no. CIV 2422 of 2011 between Perdaman Chemicals and Fertilisers Pty Ltd as plaintiff and Kandimalla K.V. Naga Prasad as defendant be consolidated with action no. CIV 1925 of 2011 between Perdaman Chemicals and Fertilisers Pty Ltd as plaintiff and Griffin Coal Mining Pty Ltd and others as defendants and action no. CIV 2423 of 2011 between Perdaman Chemicals and Fertilisers Pty Ltd as plaintiff and Lagadapati Madhusudhan Rao as defendant and be carried on as one action.
2. Action no. CIV 1925 of 2011 be the leading action.
3. The plaintiff in action no. CIV 2422 of 2011 and action no. 2423 of 2011 be the plaintiff in the consolidated action.
4. The defendant in action no. 2423 of 2011 be the sixth defendant in the consolidated action.
5. The defendant in action no. 2422 of 2011 be the seventh defendant in the consolidated action.

Perdaman Chemicals and Fertilisers Pty Ltd (Plaintiff) files Writ of Summons against Mr Lagadapati Madhusudhan Rao (Defendant) seeking:

1. damages;
2. damages pursuant to section 236 of the Australian Consumer Law;
3. aggravated and exemplary damages;
4. interest on damages pursuant to section 32 of the Supreme Court Act (WA) from the date such damage was incurred until judgment or payment at the rate of 6% per annum;
5. such further or other relief as this Honourable Court considers just; and
6. costs.

1. Action no. CIV 2423 of 2011 between Perdaman Chemicals and Fertilisers Pty Ltd as plaintiff and Lagadapati Madhusudhan Rao as defendant be consolidated with action no. CIV 1925 of 2011 between Perdaman Chemicals and Fertilisers Pty Ltd as plaintiff and Griffin Coal Mining Pty Ltd and others as defendants and action no. CIV 2422 of 2011 between Perdaman Chemicals and Fertilisers Pty Ltd as plaintiff and Kandimalla K.V. Naga Prasad as defendant and be carried on as one action.
2. Action no. CIV 1925 of 2011 be the leading action.
3. The plaintiff in action no. CIV 2423 of 2011 and action no. 2422 of 2011 be the plaintiff in the consolidated action.
4. The defendant in action no. 2423 of 2011 be the sixth defendant in the consolidated action.
5. The defendant in action no. 2422 of 2011 be the seventh defendant in the consolidated action.

Originating Application filed by Perdaman Chemicals and Fertilisers Pty Ltd (Applicant) against the First - Sixth Respondents seeking:

1. a declaration that the Purported Notice of Termination referred to at [119G] of the statement of claim filed herein is invalid and of no force or effect;
2. damages;
3. damages pursuant to section 236 of the Australian Consumer Law;
4. aggravated and exemplary damages;
5. interest on damages pursuant to section 51A of the Federal Court Act 1976 (Cth) from the date such damage was incurred until judgment or payment;
6. such further or other relief as this Honourable Court considers just; and
7. costs.

Statement of Claim filed by the Applicant seeking a declaration that the Purported Notice of Termination is invalid and of no force or effect.

Interlocutory Application filed by the Applicant to serve the Second, Fourth, Fifth and Sixth Respondents outside the jurisdiction.

Affidavit of Dalitso Banda sworn on 8 October 2011 in support of the application for leave to serve the Second, Fourth, Fifth and Sixth Respondents outside the jurisdiction.

Applicant's Outline of Submissions filed in support of the application for leave to serve the Second, Fourth, Fifth and Sixth Respondents outside the jurisdiction.

Hearing in the Federal Court of Australia before His Honour Justice Siopis at 11.06 am on 20 October 2011.

Affidavit of Dalitso Banda in support of the application for leave to serve the Second, Fourth, Fifth and Sixth Respondents outside the jurisdiction on 24October 2011.

Applicant's Outline of Submissions filed concerning whether the Federal Court are liable to be stayed on lis alibi pendens as other proceedings have already been commenced in the Supreme Court of Western Australia.

Notice of Address for Service filed for the Second, Third, Fifth and Sixth Respondents.

Orders of Justice Siopis that leave be granted to serve the Fourth Respondent (Lanco Resources International Pty Ltd) outside of the jurisdiction.

Minute of Consent Orders between the Applicant and Respondents consenting to a transfer of the proceedings from the Federal Court of Australia to the Supreme Court of Western Australia.

Orders made by His Honour the Chief Justice consolidating the action WAD 401 of 2011 (which was transferred form the Federal Court of Australia and allocated the Supreme Court no. CIV 3201 of 2011) with CIV 1925 of 2011.

ANNEXURE 2: RULINGS ON OBJECTIONS TO THE FOURTH AFFIDAVIT OF MR RIORDAN

301 At the hearing on 13 December 2012, Griffin Coal relied upon a paragraph in the affidavit evidence of Mr Riordan concerning the support provided to Griffin Coal from these creditors.[193] The affidavit had been sworn on 11 December 2012. An objection was made to the affidavit at the hearing. There was no conferral about the objection. I ruled that this paragraph was inadmissible.[194] It was ambiguous and failed to depose to the sources of the information. Perdaman conceded that there was no prejudice to it in allowing Griffin Coal to file an affidavit setting out these matters in admissible form.

302 Griffin Coal filed a further affidavit of Mr Riordan on 14 December 2012. Griffin Coal confined its attention to the objections which were raised. But the objections were repeated and new objections were raised by Perdaman to the whole of that affidavit. This course of proceeding, without any conferral between the parties, is unsatisfactory. It has happened several times in these proceedings now. In future, it will only be in exceptional circumstances in which a ruling will be given on a matter which has not been the subject of conferral between the parties, and usually in person conferral. In the circumstances of this case including the filing of the initial affidavit shortly before the hearing, and the leave given to Griffin Coal to file further material after the hearing I will consider these further objections. I deal with each relevant paragraph in turn below.

303 In paragraph 1, Mr Riordan deposes to his position as Company Secretary and Chief Financial Controller of Griffin Coal and his authority to swear the affidavit. This paragraph is admissible.

304 In paragraph 2, Mr Riordan deposes to the facts in the affidavit being true to his own knowledge except where otherwise stated (setting out the source of the information and his belief that it is true). Paragraph 2 is admissible.

305 Paragraph 3 concerns matters within Mr Riordan's own knowledge given his position at Griffin Coal. It is admissible.

306 Paragraph 4 concerns a discussion Mr Riordan had with an officer from the Australian Tax Office, whose name he provides, and to what Mr Riordan was told by that officer. The source of the conversation relied upon by Mr Riordan, and the name of the officer from the Australian Tax Office, is provided. The paragraph is admissible.

307 Paragraph 5 concerns Mr Riordan's discussions with 11 of the remaining 14 aged creditors in this group (excluding the Australian Tax Office). Perdaman objects to this paragraph in circumstances in which Mr Riordan has not provided the names of each person to whom he spoke. Mr Riordan's previous evidence raised concerns based upon the disclosure of the identity of those creditors to Perdaman.[195] Those concerns are disputed and have been the subject of evidence from Perdaman. However, in all the circumstances of this case including the urgency of the application, the nature of the disclosure concerns of Griffin Coal, and the lack of any substantive prejudice to Perdaman, I consider that it is reasonable for Griffin Coal to be permitted to adduce this evidence without disclosure of the names of the creditors. Order 37 r 2(c) of the Rules of the Supreme Court provides that an affidavit may contain statements of information or belief if the affidavit is made for the purposes of interlocutory proceedings. Subrule 3A(b) provides that an affidavit containing statements of information or belief must set out the sources or grounds of that information or belief unless (relevantly) the Court has made an order permitting the affidavit to omit the sources or grounds. I make that order nunc pro tunc (now for then) permitting the omission of creditors' names in the whole affidavit.

308 Perdaman also objects to the statements in paragraph 5 that the creditors remain supportive of Griffin Coal and that they have accepted the arrangements proposed by Griffin Coal. Perdaman says that these statements are conclusionary. The statement that the creditors remain supportive of Griffin Coal is conclusory; Mr Riordan ought to have deposed to what was said to him which led him to the conclusion that the creditors remain supportive and what is meant by 'supportive'. But his statement that the creditors have accepted the arrangements proposed by Griffin Coal, in the context of the whole of Mr Riordan's affidavit, can reasonably be understood as an expression of the discussion that Mr Riordan had with those creditors concerning deferred payment terms. Paragraph 5 is admissible save for the words that the creditors remain supportive.

309 As to paragraph 6, an additional objection to this paragraph is that it is hearsay upon hearsay. But there is nothing to prohibit such hearsay upon hearsay provided the requirements of O 37 are met. The second hand hearsay nature of the evidence is just a question of weight. An additional objection is made on the basis that Mr Riordan's statement that a payment proposal has been made by Griffin which is likely to be accepted is speculation. I do not accept this submission. Mr Riordan is giving evidence of what he believes based upon what he has been told by another officer of Griffin Coal concerning a payment proposal. However, as a matter of weight, the unilateral assessment of the other officer concerning its likelihood of acceptance adds little to the payment proposal other than perhaps to indicate that the proposal is considered to be reasonable.

310 As to paragraph 7, the final sentence ('supportive of Griffin ...') is inadmissible for the same reasons expressed above.

311 As to paragraph 8, the objections have all been considered above. The paragraph is admissible save the sentences concerning the expression of the (vague) conclusion that the creditor remains supportive of Griffin Coal.

312 As to paragraph 9, Perdaman submitted that nothing in paragraphs 1 8 provided a basis for the conclusion in paragraph 9. I reject this submission. The conclusion in paragraph 9 that the ten creditors referred to (i) have been prepared to accommodate delays in payment, and (ii) will not press for payments of their accounts until after the Bluewaters transaction is completed and Griffin Coal receives the approximately $51 million cash payment from the Griffin Power Entities as part of that transaction, is supported (as Mr Riordan explains) by Mr Riordan's personal conversations with eight of those creditors and by what he has been told by Mr Prasad and Mr Edwards in relation to the other two creditors. The remainder of the objections to paragraph 9 have all been considered above. The paragraph is admissible save for the words 'remain supportive of Griffin Coal'.

CITATION : PERDAMAN CHEMICALS AND FERTILISERS PTY LTD -v- THE GRIFFIN COAL MINING COMPANY PTY LTD [No 7] [2012] WASC 502 (S)

Consolidated by orders dated 18 August 2011 & 14 November 2011

BETWEEN : PERDAMAN CHEMICALS AND FERTILISERS PTY LTD

BETWEEN : PERDAMAN CHEMICALS AND FERTILISERS PTY LTD

Practice and procedure - Costs - Whether successful defendant to an application for provisional winding up should be entitled to order that the plaintiff pay its costs

Consolidated by orders dated 18 August 2011 & 14 November 2011

Second Defendant : Mr C G Colvin SC & Mr N J Landis

Fourth Defendant : Mr C G Colvin SC & Mr N J Landis

Seventh Defendant : Mr C G Colvin SC & Mr N J Landis

(This judgment was delivered orally immediately after the hearing on 21 December 2012 and has been edited from the transcript.)

1 The only issue which arises in relation to the appropriate orders following my reasons for decision this afternoon is whether an order should be made in COR 190 of 2012, in the terms sought by Griffin Coal, that Perdaman pay Griffin Coal's costs of the application to be taxed if not agreed. Griffin Coal also says that the order should provide that costs shall include 50% of the costs of the hearings on 30 November 2012 and 13 December 2012.

2 Both parts of the proposed order are opposed by Perdaman. Perdaman says that the costs should be reserved. It may be that if the order for costs were to be made then a 50% division according to the two days of hearing for the costs of those two days would be appropriate on the basis that it may be extremely difficult, if not impossible, to divide accurately the time spent during the hearing days on the interlocutory injunction application and the time spent on the application for appointment of a provisional liquidator. However at this stage it is not necessary to reach any concluded view as to that point, for reasons which I will explain.

3 The primary question is whether it is appropriate that an order for costs for the application for a provisional liquidator should now be made or whether that costs order should be reserved.

4 It is common ground that in relation to an interlocutory injunction the usual position is that an order on an interlocutory injunction application is that costs be in the cause (or be reserved): Topseal Concrete Services Pty Ltd v Sika Australia Pty Ltd [2008] WASC 57 (S) [5] (Beech J). As I explained in Johnson v Cetin [2011] WASC 344 [52], one reason for this usual approach is that an applicant's alleged rights upon which an interlocutory injunction is based might not be established at trial. Alternatively, if the interlocutory injunction is refused it may be established at trial that the rights which the applicant sought to protect by an interlocutory injunction are, in fact, established.

5 It may be that the usual approach in a situation in which an application is made for the appointment of a provisional liquidator is the reverse. In the case of an application for a provisional liquidator, it may be more likely that the 'outcome of the proceedings will not cast light on what the appropriate costs order concerning the interlocutory application should be': see Kamper v Applied Soil Technology Pty Ltd [2003] NSWSC 1017 [37] (Campbell J, as his Honour was then). See also Jingellic Minerals NL v Beach Petroleum NL (No 3) (Unreported, SASC, 2 September 1991) (Zelling AJ).

6 The reason why the approach to provisional liquidation applications may generally be different is that the assessment of whether a provisional liquidator should be appointed will often depend heavily on facts as they are assessed at the date of the hearing. This is the essence of one part of a significant factor in the exercise of the Court's discretion, namely asking whether, on the facts presently before the Court, there is a 'reasonable prospect' or it is 'likely' or there is a 'prima facie case' that the company will be wound up in insolvency. In my principal reasons I emphasised that the facts upon which I was relying were those which were currently before the Court: see Perdaman Chemicals and Fertilisers Pty Ltd v The Griffin Coal Mining Company Pty Ltd [No 7] [2012] WASC 502 [236], [253], [297]. For this reason it is arguable, and was argued by Griffin Coal, that an immediate costs order should be made in favour of Griffin Coal.

7 If I were satisfied that the only matters which were likely to affect any order in favour of Perdaman on the final winding up application (assuming one proceeds) are facts which would arise from events subsequent to this hearing then it would be appropriate to make an immediate costs order for this application in favour of Griffin Coal. However, I accept, as should be apparent from my reasons, that there is a prospect that the final winding up application could be decided upon facts which currently exist but which might lead to a different conclusion in light of further evidence. A number of examples were given by counsel for Perdaman. Those examples concern (i) the strength of the claim concerning the existence of a potential contract with QUBE Logistics; (ii) the detail of a cash flow analysis, which in this interlocutory application was necessarily only a preliminary analysis, and (iii) other matters which relate to the reasonableness of factual assessments by various officers which were only considered in a preliminary way on the interlocutory application.

8 If it were the case that based upon the same information, although considered in more detail, the result of a final hearing were to be different and a winding up order were to be made in Perdaman's favour, then it may be that an appropriate order could be that costs of the interlocutory application for an appointment of a provisional liquidator would be ordered in favour of Perdaman. For that reason, I consider that the appropriate order as to costs of the application for appointment of a provisional liquidator in COR 190 of 2012 is that they be reserved. It is also convenient to reserve those costs to be dealt with at the same time as the costs of the interlocutory application in CIV 1925 of 2011 in circumstances in which (i) the interlocutory applications were heard concurrently and concerned overlapping matters, and (ii) it is common ground that the appropriate course in CIV 1925 of 2011 is that costs be reserved.

9 For these reasons, the orders that I make, as set out below, are as proposed by Griffin Coal with the exception that order two in COR 190 of 2012 be that costs of the application be reserved.

1. Until determination of the plaintiff's claims in CIV 1925 of 2011 (consolidated with CIV 2422 of 2011, CIV 2423 of 2011 and CIV 3201 of 2011) or further order, The Griffin Coal Mining Company Pty Ltd (Griffin Coal) whether by its directors, officers, servants and agents be and is hereby restrained from:

(a) entering into any agreement or arrangement with ICICI or any of the members of the Syndicate which it represents in which the maximum amount payable to the Syndicate under the Facility Agreement between ICICI Bank Limited, Singapore Branch (as agent on behalf of the Syndicate) and Lanco Resources International Pte Ltd and others dated 9 February 2011 and in relation to the Negative Pledge Deed dated 21 June 2011 between the Syndicate and Griffin Coal and others, from all proceeds recovered from the enforcement of all securities given over the assets and undertakings of Griffin Coal and in priority to the unsecured creditors of Griffin Coal, exceeds AUS$150,000,000; and

(b) giving security over all of the assets of Griffin Coal unless that security is subject to:

(i) any security interest which Griffin Coal may be required to provide to Perdaman pursuant to any order of any government agency or court in respect of Supreme Court Action CIV 1925 of 2011 (consolidated with CIV 2422 of 2011, CIV 2423 of 2011 and CIV 3201 of 2011) or other litigation commenced by Perdaman in respect of the coal supply agreement between Griffin Coal and Perdaman dated 21 December 2010 (Perdaman CSA) to give effect to the proposed security arrangements contemplated by the Perdaman CSA; and

(ii) any security interest which Perdaman has as at the date of this order as equitable mortgagee or charge (if any).

1. The plaintiff's application for an interlocutory injunction be otherwise dismissed.
2. There be liberty to the defendants to apply to vary the terms of restraint imposed by paragraph 1 on 10 business days' notice.
3. Costs reserved with liberty to apply.

1. The plaintiff's application for the appointment of a provisional liquidator be dismissed.
2. The costs of the application be reserved.

[2] Perdaman's written submissions, 29 November 2012 [65] [67].

[3] Fourth amended statement of claim [3.2].

[4] The CSA is tab 1 of Exhibit 1 of the forty-sixth affidavit of Mr Banda in CIV 1925 of 2011, sworn 15 November 2012.

[5] 'Plant' is defined in cl 25 as 'the plant and related infrastructure owned and operated by [Perdaman] on [Perdaman's site] for the production of urea'.

[6] Fourth amended statement of claim [119C]; Amended substituted defence and counterclaim [135].

[7] Fifteenth affidavit of Mr Walewski in CIV 1925 of 2011, sworn 23 November 2012, AW73.

[9] Fourth amended statement of claim [68]; Amended substituted defence and counterclaim [74.1].

[10] Affidavit of Mr Prasad in CIV 1925 of 2011 affirmed 28 November 2012, Exhibit KNP1, tab 25.

[11] Affidavit of Mr Prasad in CIV 1925 of 2011 affirmed 28 November 2012 [80].

[12] Affidavit of Mr Prasad in CIV 1925 of 2011 affirmed 28 November 2012, Exhibit KNP1, tab 26.

[13] Affidavit of Mr Prasad in CIV 1925 of 2011 affirmed 28 November 2012, Exhibit KNP1, tab 28.

[14] Affidavit of Mr Prasad in CIV 1925 of 2011 dated 28 November 2012 [30].

[15] Perdaman Chemicals and Fertilisers Pty Ltd v The Griffin Coal Mining Company Pty Ltd (No 3) [2011] WASCA 203.

[16] Affidavit of Mr Prasad in CIV 1925 of 2011 affirmed 28 November 2012, Exhibit KNP1, tab 1.

[17] Affidavit of Mr Prasad in CIV 1925 of 2011 affirmed 28 November 2012, Exhibit KNP1, tabs 2, 4 and 5.

[18] Eighth affidavit of Ms Onofaro in CIV 1925 of 2011 sworn 6 December 2012 [4] and annexure TRO 64.

[19] Forty-sixth affidavit of Mr Banda in CIV 1925 of 2011 sworn 15 November 2012.

[20] See Plaintiff's Minute of Proposed Orders dated 23 November 2012.

[22] Dobree v Hoffman (1996) 18 WAR 36; Re Medical Assessment Panel; Ex Parte Symons [2003] WASC 154; (2003) 27 WAR 242, 249 250 [18] (EM Heenan J).

[23] Day v Day [1957] P 202; Corporate Affairs Commission v Bradley [1974] 1 NSWLR 391, 396, 399 (Hutley JA); Levy v The State of Victoria [1997] HCA 31; (1997) 189 CLR 579, 604 605 (Dawson J); Re Medical Assessment Panel; Ex Parte Symons [2003] WASC 154; (2003) 27 WAR 242, 249 250 [18] (EM Heenan J).

[24] A Mason 'Interveners and Amici Curiae in the High Court: A Comment' [1998] AdelLawRw 15; (1998) 20 Adelaide Law Review 173, 173.

[25] Re Medical Assessment Panel; Ex Parte Symons [2003] WASC 154; (2003) 27 WAR 242.

[26] Re Medical Assessment Panel; Ex Parte Symons [2003] WASC 154; (2003) 27 WAR 242, 249 250 [18] [20].

[27] United States Tobacco Company v Minister for Consumer Affairs [1988] FCA 213; (1988) 20 FCR 520.

[28] United States Tobacco Company v Minister for Consumer Affairs [1988] FCA 213; (1988) 20 FCR 520, 535.

[29] Corporate Affairs Commission v Bradley [1974] 1 NSWLR 391, 397 399.

[30] United States Tobacco Company v Minister for Consumer Affairs (1988) 20 FCR 500, 535.

[31] Re Robert Bropho v Robert Tickner and Bluegate Nominees Pty Ltd [1993] FCA 25; (1993) 40 FCR 165, 172.

[32] Griffin Coal's written submissions 29 November 2012 [48].

[33] Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia (No 3) [1998] HCA 30; (1998) 195 CLR 1, 44 45 [73] (Brennan CJ, McHugh, Gummow, Kirby and Hayne JJ); Jackson v Sterling Industries Ltd [1987] HCA 23; (1987) 162 CLR 612, 619 (Wilson and Dawson JJ).

[34] Frigo v Culhaci (Unreported, NSWCA, 17 July 1998), 10 11.

[35] Cardile v LED Builders Pty Ltd [1999] HCA 18; (1999) 198 CLR 380, 403 404 [51].

[36] Cardile v LED Builders Pty Ltd [1999] HCA 18; (1999) 198 CLR 380, 404 [52].

[37] Perdaman Chemicals and Fertilisers Pty Ltd v The Griffin Coal Mining Company Pty Ltd [2011] WASC 188 [142] (Beech J); Perth Mint v Mickelberg (No 2) [1985] WAR 117, 119 (Burt CJ).

[39] Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd [2001] HCA 63; (2001) 208 CLR 199, 241 [91].

[40] Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd [2001] HCA 63; (2001) 208 CLR 199, 217 [11].

[41] Perdaman's written submissions, 29 November 2012 [20.1].

[42] Perdaman Chemicals and Fertilisers Pty Ltd v The Griffin Coal Mining Company Pty Ltd (No 3) [2011] WASCA 203 [12], [17] (Martin CJ, Newnes and Murphy JJA agreeing).

[43] In particular Australian Broadcasting Corporation v O'Neill [2006] HCA 46; (2006) 227 CLR 57, 68 [19] (Gleeson CJ and Crennan J).

[44] Beecham Group Ltd v Bristol Laboratories Pty Ltd [1968] HCA 1; (1968) 118 CLR 618, 622 623 (Kitto, Taylor, Menzies and Owen JJ).

[45] Australian Broadcasting Corporation v O'Neill [2006] HCA 46; (2006) 227 CLR 57, 81 82 [65].

[46] Emeco International Pty Ltd v O'Shea [2012] WASC 282 [18].

[47] Marley New Zealand Ltd v Icon Plastics Pty Ltd [2007] FCA 851 [3] (Gordon J); Medrad Inc v Alpine Medical Pty Ltd [2009] FCA 949; (2009) 82 IPR 101, 109 [38] (Kenny J); Instyle Contract Textiles Pty Ltd v Good Environmental Choice Services Pty Ltd (No 2) [2010] FCA 38 [55] [64] (Yates J); Samsung Electronics Co Ltd v Apple Inc [2011] FCAFC 156 [61] (the Court); Boyd v Wild Hibiscus Flower Company Pty Ltd (No 2) [2012] FCA 74 [61] [66] (Foster J).

[49] Amended substituted defence and counterclaim [23.3], [37.1], [241].

[50] Sargent v ASL Developments Ltd [1974] HCA 40; (1974) 131 CLR 634, 646.

[51] Tropical Traders Ltd v Goonan [1964] HCA 20; (1964) 111 CLR 41, 55 (Kitto J).

[52] Wiltrading (WA) Pty Ltd v Lumley General Insurance Ltd [2005] WASCA 106; (2005) 30 WAR 290, 304 [36] (Steytler P, McLure JA agreeing).

[53] Janos v Chama Motors Pty Ltd [2011] NSWCA 238 [23] (Handley AJA, Giles and Young JJA agreeing) citing Clough v London & North Western Railway Co (1871) LR Ex 26, 36 (Mellor J for the Court); Banque Belge v Hambrouk [1921] 1 KB 321, 332 (Atkin LJ); Nicholas v Thompson [1924] VicLawRp 89; [1924] VLR 554; Lakshmijit v Sherani [1974] AC 605, 616 (Lord Cross).

[54] Kangaroo Island Trading Co Pty Ltd v Kangaroo Island Dairies Pty Ltd (Unreported, SASC, 6 June 1994).

[55] Agricultural and Rural Finance Pty Limited v Gardiner [2008] HCA 57; (2008) 238 CLR 570, 589 [59].

[56] United Australia Ltd v Barclays Bank Ltd [1941] AC 1; Baxter v Obacelo Pty Ltd [2001] HCA 66; (2001) 205 CLR 635.

[57] United Australia Ltd v Barclays Bank Ltd [1941] AC 1, 3 4, 29 30 (Lord Atkin).

[58] Statement of claim, 19 July 2011 [134].

[59] Griffin Coal's submissions, 17 December 2012 [3].

[60] To use the preferred Australian term for the ambiguous 'repudiation': Koompahtoo Local Aboriginal Land Council v Sanpine Pty Limited [2007] HCA 61; (2007) 233 CLR 115, 135 136 [44] (Gleeson CJ; Gummow, Heydon and Crennan JJ).

[61] Howard v Pickford Tool Co Ltd [1951] 1 KB 417, 421 (Asquith LJ). See also Visscher v The Honourable President Justice Giudice [2009] HCA 34; (2009) 239 CLR 361, 381 382 [58] (Heydon, Crennan, Kiefel and Bell JJ).

[63] Griffin Coal's written submissions dated 29 November 2012 [38] [42].

[64] Affidavit of Mr Prasad in CIV 1925 of 2011 affirmed 28 November 2012 [91] and Exhibit KNP1, tab 32.

[65] Affidavit of Mr Prasad in CIV 1925 of 2011 affirmed 28 November 2012 [92] and Exhibit KNP1, tab 33.

[66] Affidavit of Mr Prasad in CIV 1925 of 2011 affirmed 28 November 2012 [93] and Exhibit KNP1, tab 34.

[67] See especially the affidavit of Mr Prasad in CIV 1925 of 2011 affirmed 28 November 2012.

[68]Australian Broadcasting Corporation v O'Neill [2006] HCA 46; (2006) 227 CLR 57, 82 [65] (Gummow and Hayne JJ; Gleeson CJ and Crennan J agreeing on this point); Beecham Group Ltd v Bristol Laboratories Pty Ltd [1968] HCA 1; (1968) 118 CLR 618, 622 (the Court).

[69] Kolback Securities Limited v Epoch Mining NL (1987) 8 NSWLR 533, 535 536 (McLelland J); Australian Broadcasting Corporation v O'Neill [2006] HCA 46; (2006) 227 CLR 57, 84 [72] (Gummow & Hayne JJ).

[70] Emeco International Pty Ltd v O'Shea [2012] WASC 282 [24] where I rely upon and summarise the relevant authorities.

[71] Griffin Coal's submissions dated 29 November 2012 [44] relying on the affidavit of Mr Prasad in CIV 1925 of 2011 affirmed 28 November 2012.

[72] Affidavit of Mr Prasad in CIV 1925 of 2011 affirmed 28 November 2012 [42].

[73] Affidavit of Mr Prasad in CIV 1925 of 2011 affirmed 28 November 2012 [45].

[74] Affidavit of Mr Prasad in CIV 1925 of 2011 affirmed 28 November 2012 [45].

[75] Third affidavit of Mr Riordan in COR 190 of 2012 sworn 11 December 2012 [23] [24]; Exhibit E, page 13.

[76] Fifth affidavit of Mr Walewski in COR 190 of 2012 sworn 12 December 2012, AW18.

[77] Fifth affidavit of Mr Walewski in COR 190 of 2012 sworn 12 December 2012, AW18, page 8.

[78] Affidavit of Mr Prasad in CIV 1925 of 2011 affirmed 11 December 2012 [10].

[79] Third affidavit of Mr Walewski in COR 190 of 2012 sworn 6 December 2012, AW 11, page 9.

[80] Affidavit of Mr Prasad in CIV 1925 of 2011 affirmed 28 November 2012 [61] and Exhibit KNP1, tab 4 (13 November 2012 notice letter from Griffin Coal).

[81] Compare Perdaman's submissions, 29 November 2012 [61]; Affidavit of Mr Prasad in CIV 1925 of 2011 affirmed 28 November 2012 [48] [50].

[82] Fifteenth affidavit of Mr Walewski in CIV 1925 of 2011 sworn 23 November 2012.

[83] Affidavit of Mr Prasad in CIV 1925 of 2011 affirmed 12 December 2012, Exhibit B.

[84] Perdaman's submissions 19 December 2012 [5].

[85] Fifteenth affidavit of Mr Walewski in CIV 1925 of 2011 sworn 23 November 2012 [7].

[86] Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia (No 3) [1998] HCA 30; (1998) 195 CLR 1, 41 42 [65].

[87] Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia (No 3) [1998] HCA 30; 195 CLR 1, 42 [65]; Miller v Jackson [1977] EWCA Civ 6; [1977] QB 966, 988 (CummingBruce LJ).

[88] Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia (No 3) [1998] HCA 30; 195 CLR 1, 62 63 [131].

[89] Affidavit of Mr Challen in CIV 1925 of 2011 affirmed 30 November 2012.

[90] Affidavit of Mr Challen in CIV 1925 of 2011 affirmed 30 November 2012 [1].

[91] Submissions of the State of Western Australia, dated 29 November 2012 [13]; Affidavit of Mr Challen in CIV 1925 of 2011 affirmed 30 November 2012 [13] [24].

[92]Affidavit of Mr Challen in CIV 1925 of 2011 affirmed 30 November 2012 [25] [37].

[93]Affidavit of Mr Challen in CIV 1925 of 2011 affirmed 30 November 2012 [11] [24].

[94] Bridgetown/Greenbushes Friends of the Forrest Inc v Executive Director of Conservation and Land Management (1997) 18 WAR 102, 122.

[95] Third affidavit of Mr Walewski in COR 190 of 2012 sworn 6 December 2012, Exhibit AW 11.

[96] Third affidavit of Mr Walewski in COR 190 of 2012 sworn 6 December 2012, Exhibit AW 12, page 2.

[97] See the affidavits of Mr Banda in COR 190 of 2012 sworn 29 and 30 November 2012.

[98] Affidavit of Mr Riordan in COR 190 of 2012 sworn 27 November 2012 [3] [6].

[99] Sixteenth affidavit of Mr Walewski in CIV 1925 of 2011 sworn 28 November 2012 [6.4].

[100] Sixteenth affidavit of Mr Walewski in CIV 1925 of 2011sworn 28 November 2012 [6.5].

[101] Australian Beverage Distributors v The Redrock Co Pty Ltd [2008] NSWSC 3; (2008) 26 ACLC 74, 79 [24].

[102] Motor Terms Co Pty Ltd v Liberty Insurance Ltd (in liq) [1967] HCA 9; (1967) 116 CLR 177, 194 195 (Menzies J).

[103] Deputy Commissioner of Taxation v Sun Heating Pty Ltd [1983] 2 NSWLR 78; DMK Building Materials Pty Ltd v CB Baker Timbers Pty Ltd (1985) 2 NSWLR 711.

[104] Motor Terms Co Pty Ltd v Liberty Insurance Ltd (in liq) [1967] HCA 9; (1967) 116 CLR 177, 195 (Menzies J).

[105] Bidald Consulting Pty Ltd v Miles Special Builders Pty Ltd [2005] NSWSC 397; (2005) 54 ACSR 228, 232 [15] (Barrett J).

[106] Australian Beverage Distributors v The Redrock Co Pty Ltd [2007] NSWSC 966; (2007) 213 FLR 450, 458 [32] (White J).

[107] Constantinidis v JGL Trading Pty Ltd ( 1995) 17 ACSR 625, 640 (Meagher JA).

[108] Australian Securities and Investments Commission v Weerappah (No 2) [2009] FCA 249 [7].

[109] Australian Securities Commission v Solomon (1996) 19 ACSR 73, 80 (Tamberlin J).

[110] Constantinidis v JGL Trading Pty Ltd (1995) 17 ACSR 625, 636 (Kirby P).

[111] Australian Securities and Investments Commission v Weerappah (No 2) [2009] FCA 249 [9] (Goldberg J).

[112] Allstate Explorations NL v Batepro Australia Pty Ltd [2004] NSWSC 261 [30] (Austin J).

[113] Allstate Explorations NL v Batepro Australia Pty Ltd [2004] NSWSC 261 [30] (Austin J).

[114] Constantinidis v JGL Trading Pty Ltd ( 1995) 17 ACSR 625, 635 (Kirby P).

[115] Zempilas v JN Taylor Holdings Limited (No 2) (1990) 55 SASR 103, 106 (King CJ; Cox and Olsson JJ agreeing); Lubavitch Mazal Pty Ltd v Yeshiva Properties No 1 Pty Ltd [2003] NSWSC 535; (2003) 47 ACSR 197, 217 [105] (Austin J).

[116] Australian Securities and Investments Commission v Weerappah (No 2) [2009] FCA 249 [9] (Goldberg J).

[117] Montgomery Windsor (NSW) Pty Ltd v Ilopa Pty Ltd (1984) 2 ACLC 224; Australian Securities Commission v Solomon (1996) 19 ACSR 73, 80 (Tamberlin J).

[118] Australian Securities Commission v Solomon (1996) 19 ACSR 73, 80 (Tamberlin J).

[119] Zempilas v JN Taylor Holdings Limited (No 2) (1990) 55 SASR 103, 104 105 (King CJ; Cox and Olsson JJ agreeing).

[120] Re Carapark Industries Pty Ltd (in liq) [1967] 1 NSWR 33; Lubavitch Mazal Pty Ltd v Yeshiva Properties No 1 Pty Ltd [2003] NSWSC 535; (2003) 47 ACSR 197, 217[105] (Austin J).

[121] Constantinidis v JGL Trading Pty Ltd (1995) 17 ACSR 625, 636 (Kirby P); Allstate Explorations NL v Batepro Australia Pty Ltd [2004] NSWSC 261 [17] (Austin J).

[122] Sandell v Porter [1966] HCA 28; (1966) 115 CLR 666, 670.

[123] Second affidavit of Mr Riordan in COR 190 of 2012 sworn 30 November 2012, page 12.

[124] Second affidavit of Mr Riordan in COR 190 of 2012 sworn 30 November 2012, page 17.

[125] Second affidavit of Mr Riordan in COR 190 of 2012 sworn 30 November 2012, page 9.

[127] Second affidavit of Mr Riordan in COR 190 of 2012 sworn 30 November 2012, page 13.

[128] Second affidavit of Mr Riordan in COR 190 of 2012 sworn 30 November 2012, page 34.

[129] Second affidavit of Mr Riordan in COR 190 of 2012 sworn 30 November 2012, page 15, 32, 35.

[130] Second affidavit of Mr Riordan in COR 190 of 2012 sworn 30 November 2012, page 35.

[131] Second affidavit of Mr Riordan in COR 190 of 2012 sworn 30 November 2012, page 14.

[132] Second affidavit of Mr Riordan in COR 190 of 2012 sworn 30 November 2012, page 14.

[133] Fiftieth affidavit of Mr Banda, dated 29 November 2012, page 4 (annexing an affidavit of Mr Riordan in CIV 1925 of 2011 sworn 20 September 2012 [4]).

[134] Third affidavit of Mr Riordan in COR 190 of 2012 sworn 11 December 2012, page 63.

[135] Affidavit of Mr Prasad in CIV 1925 of 2011affirmed 11 December 2012 [3] [10].

[136] For instance under Collie Coal (Griffin) Agreement Act 1979 (WA) schedule, cl 25.

[137] Affidavit of Mr Prasad in CIV 1925 of 2011 affirmed 11 December 2012.

[138] Affidavit of Mr Prasad in CIV 1925 of 2011 affirmed 11 December 2012, Annexure A, page 7.

[139] Affidavit of Mr Prasad in CIV 1925 of 2011 affirmed 11 December 2012.

[140] Sixth affidavit of Mr Walewski in COR 190 of 2012 sworn 12 December 2012 [12] [15].

[141] Affidavit of Mr Prasad in CIV 1925 of 2011 affirmed 11 December 2012 [8] [9].

[142] Affidavit of Mr Prasad in CIV 1925 of 2011 affirmed 28 November 2012 [47].

[143] Fiftieth affidavit of Mr Banda in CIV 1925 of 2011 sworn 29 November 2012, page 11 (annexing an affidavit of Mr Riordan in CIV 1925 of 2011 sworn 20 September 2012, see [15]).

[144] Affidavit of Mr Riordan in COR 190 of 2012 dated 27 November 2012, annexure C, page 7.

[145] Affidavit of Mr Riordan in COR 190 of 2012 sworn 27 November 2012 [10].

[146] Affidavit of Mr Prasad in CIV 1925 of 2011 affirmed 11 December 2012 [15].

[147] Affidavit of Mr Prasad in CIV 1925 of 2011 affirmed 11 December 2012 [16] and tab B, page 105.

[148] Affidavit of Mr Prasad in CIV 1925 of 2011 affirmed 11 December 2012 [24] [27].

[149] Affidavit of Mr Prasad in CIV 1925 of 2011 affirmed 11 December 2012 [24].

[150] Third affidavit of Mr Walewski in COR 190 of 2012 sworn 6 December 2012 [11] and Exhibit A.

[151] Affidavit of Mr Walewski in COR 190 of 2012 sworn 23 November 2012 [12].

[152] Affidavit of Mr Prasad in CIV 1925 of 2011 affirmed 28 November 2012 [82].

[153] Affidavit of Mr Walewski in COR 190 of 2012 sworn 23 November 2012, page 116.

[155] Affidavit of Mr Walewski in COR 190 of 2012 sworn 23 November 2012, page 116.

[156] Affidavit of Mr Prasad in CIV 1925 of 2011 affirmed 28 November 2012 [50].

[157] Affidavit of Mr Prasad in CIV 1925 of 2011 affirmed 28 November 2012 [83].

[158] Affidavit of Mr Prasad in CIV 1925 of 2011 affirmed 28 November 2012, Exhibit KNP1, tab 29.

[159] Affidavit of Mr Prasad in CIV 1925 of 2011 affirmed 11 December 2012 [16] and tab B, page 105.

[162] Perdaman's written submissions, 29 November 2012 [14.3].

[164] Third affidavit of Mr Riordan in COR 190 of 2012 sworn 11 December 2012 [11].

[165] Third affidavit of Mr Riordan in COR 190 of 2012 sworn 11 December 2012 [14] [15].

[166] Third affidavit of Mr Riordan in COR 190 of 2012 sworn 11 December 2012 [7]; Affidavit of Mr LeattHayter in CIV 1925 of 2011 affirmed 29 November 2012 [13].

[167] Affidavit of Ms Van Nellestijn in CIV 1925 of 2011 affirmed 12 December 2012.

[168] Second affidavit of Mr Riordan in COR 190 of 2012 sworn 30 November 2012 [4].

[169] Third affidavit of Mr Riordan in COR 190 of 2012 sworn 11 December 2012 [26].

[171] Affidavit of Mr Prasad in CIV 1925 of 2011 affirmed 11 December 2012 [16] and tab B, page 105.

[172] Affidavit of Mr Prasad in CIV 1925 of 2011 affirmed 11 December 2012 [16] and tab B, page 106.

[174] Affidavit of Mr Prasad in CIV 1925 of 2011 affirmed 28 November 2012, Exhibit KNP1, tab 31.

[175] Second affidavit of Mr Riordan in COR 190 of 2012 sworn 30 November 2012, page 39.

[176] Third affidavit of Mr Riordan in COR 190 of 2012 sworn 11 December 2012, page 63.

[177] Fourth affidavit of Mr Riordan in COR 190 of 2012, sworn 14 December 2012 [9].

[178] Third affidavit of Mr Walewski in COR 190 of 2012 sworn 6 December 2012, page 93, AW 15 (Dunn and Bradstreet report dated 4 December 2012).

[180] Affidavit of Mr Prasad in CIV 1925 of 2011 affirmed 28 November 2012 [86] [90].

[181] Affidavit of Mr Prasad in CIV 1925 of 2011 affirmed 11 December 2012 [18].

[182] Supplementary submissions on behalf of Griffin Coal, 6 December 2012 [32].

[183] Affidavit of Mr Prasad in CIV 1925 of 2011 affirmed 11 December 2012 [20].

[184] Affidavit of Mr Prasad in CIV 1925 of 2011 affirmed 28 November 2012 [87].

[185] Sixth affidavit of Mr Walewski in COR 190 of 2012 sworn 12 December 2012 [6].

[186] Second affidavit of Mr Riordan in COR 190 of 2012 sworn 30 November 2012, Annexure D, page 35.

[187] Third affidavit of Mr Riordan in COR 190 of 2012 sworn 11 December 2012, Exhibit E, page 19.

[188] Sixth affidavit of Mr Walewski in COR 190 of 2012 sworn 12 December 2012 [7] [8].

[189] Second affidavit of Mr Walewski in COR 190 of 2012 sworn 23 November 2012 [5].

[190] Indoor Holdings Pty Ltd v Bennett [2010] WASC 242 [23] [35] (Le Miere J).

[191] Perdaman's written submissions 6 December 2012 [56] [58].

[192] Topseal Concrete Services Pty Ltd v Sika Australia Pty Ltd [2008] WASC 57 (S) [5] (Beech J).

[193] Third affidavit of Mr Riordan in COR 190 of 2012 sworn 11 December 2012 [28].

[195] Third affidavit of Mr Riordan in COR 190 of 2012 sworn 11 December 2012 [27].