Queensland Nickel Pty Ltd (in liq) v QNI Metals Ltd & Ors

Counsel for the Fifth Interested Person: Mr M Hodge QC

Solicitor for the Fifth Interested Person: Corrs Chambers Westgarth

Counsel for the Proposed Sixth Interested Person: Mr C Curtis

Solicitor for the Proposed Sixth Interested Person: HWL Ebsworth Lawyers

ORDERS QUD 235 of 2021 IN THE MATTER OF QUEENSLAND NICKEL PTY LTD (IN LIQUIDATION) BETWEEN: JOHN PARK AND KELLY-ANNE TRENFIELD IN THEIR CAPACITY AS JOINT AND SEVERAL LIQUIDATORS OF QUEENSLAND NICKEL PTY LTD (IN LIQUIDATION) ACN 009 842 068 First Plaintiff

QUEENSLAND NICKEL PTY LTD (IN LIQUIDATION) ACN 009 842 068 Second Plaintiff

AND: MINERALOGY PTY LTD First Interested Person

QNI METALS PTY LTD Second Interested Person

QNI RESOURCES PTY LTD Third Interested Person

QUEENSLAND NICKEL SALES PTY LTD Fourth Interested Person

VANNIN CAPITAL OPERATIONS LIMITED Fifth Interested Person

order made by: DOWNES J DATE OF ORDER: 7 JUNE 2022

THE COURT NOTES THAT: In this Order: Palmer Parties has the meaning given in the Order dated 11 May 2022, that is, it means QNI Metals Pty Ltd, QNI Resources Pty Ltd and Queensland Nickel Sales Pty Ltd.

THE COURT ORDERS THAT:

1. The Palmer Parties have leave to file and serve an amended statement of claim in the form exhibited as TLR-06 to the affidavit of Tracey Lyn Robinson, sworn 6 June 2020, but with paragraphs 62 - 67 omitted, and paragraph 3A of the prayer for relief omitted.
2. The amended statement of claim referred to in Order 1 be treated as a concise statement of the grounds of opposition by the Palmer Parties to the orders sought in the originating process filed in this proceeding, as well as an application for the relief claimed on page 19 of the statement of claim.
3. By 15 June 2022, the plaintiffs shall file and serve a concise statement in response which identifies their response to the amended statement of claim referred to in Order 1, as well as the basis of any opposition to the relief sought on page 19 of the amended statement of claim.
4. The interlocutory application accepted for filing on 7 June 2022 be set down for hearing at 2.00 pm on Monday, 13 June 2022.
5. By 5.00 pm on 17 June 2022, the fifth interested person shall file and serve any concise statement in response to the amended statement of claim referred to in Order 1.
6. The Palmer Parties pay the plaintiffs' costs of and incidental to the application.
7. Costs are otherwise reserved. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

DOWNES J: 1 This is an application by the second, third and fourth interested persons for leave to file and serve an amended statement of claim in the form exhibited as TLR-06 to the affidavit of Tracey Lyn Robinson affirmed 6 June 2022. 2 In these reasons, I will refer to the second, third and fourth interested persons as the Palmer Parties, which are Queensland Nickel Sales Pty Ltd, QNI Resources Pty Ltd and QNI Metals Pty Ltd. 3 QNI Resources Pty Ltd and QNI Metals Pty Ltd were the beneficiaries of a trust of which Queensland Nickel Pty Ltd (in liquidation) (QNI) was the trustee. 4 After the application was filed, various proposed amendments were consented to by the other parties, or alternatively, where objection was taken, some of the objections were taken into account by the applicants, and so further amendments were made to the pleading resulting in the version which is exhibit TLR-06. 5 Following oral argument, the only remaining amendments which were in dispute were those contained in paragraphs 62, 63, 64, 65 and 67 of the proposed statement of claim. The applicants did not press paragraph 66 of the statement of claim or paragraph 3A of the prayer for relief. 6 The proposed statement of claim is not a pleading in the true sense, because it was filed in this proceeding pursuant to an order whereby it became, in effect, a statement of objections by the Palmer Parties to the relief sought by the plaintiffs: see Annexure A to Queensland Nickel Sales Pty Ltd v Queensland Nickel Pty Ltd (in liq) (No 3) [2022] FCA 564. Notwithstanding this, it is essential that the plaintiffs in this case understand what is being alleged by way of objection, especially as paragraph 2 of the prayer for relief, as amended, claims a breach of trust. 7 Paragraph 62 of the proposed new pleading pleads that: 62. Further and in the alternative, in making the Mineralogy Loan, QNI breached the Bank Account Trust. Particulars Reasons for judgment of the Court of Appeal published in Queensland Nickel Pty Ltd (in liq) v QNI Metals Ltd & Ors [2021] QCA 138, [104], [108]. (emphasis original) 8 It can be seen, then, that the allegation is particularised by reference to two paragraphs of a decision of the Queensland Court of Appeal, which I will refer to in these reasons as the Court of Appeal decision. 9 The reference to "Mineralogy Loan" in paragraph 62 is defined earlier in the statement of claim at paragraph 18. That paragraph pleads that: On 29 March 2017, QNI commenced proceedings against Mineralogy Pty Ltd (Mineralogy Claim) to recover the net sum of $102,884,346.26 owed pursuant to a loan agreement between QNI and Mineralogy Pty Ltd (Mineralogy Loan); (emphasis original) and some particulars are provided. 10 In paragraph 19 of the statement of claim, it is pleaded that: On 25 June 2021, the Queensland Court of Appeal awarded judgment in the Mineralogy Claim in favour of QNI and ordered Mineralogy Pty Ltd to repay the sum of $102,884,346.26 to QNI (Judgment Sum). (emphasis original) 11 Critically, in paragraph 20, it is pleaded that, pursuant to the Court of Appeal decision, QNI was awarded the Judgment Sum on the basis that, amongst other things, the loans under the loan agreement with Mineralogy Pty Ltd were made by QNI as trustee of the trust property, and the loans were paid from trust property held in the joint venture bank accounts. 12 In other words, what is presently pleaded in the statement of claim is that QNI made the payments to Mineralogy Pty Ltd by way of a loan, and not by way of payment of expenses associated with the joint venture. 13 One of the paragraphs of the Court of Appeal decision referred to in the particulars to paragraph 62 is paragraph 104, which states: Consistently with the duty to hold the funds to meet properly incurred joint venture expenses, QNI was obliged to resist any effort of the JVCs - which were, in this case, QNI Resources Pty Ltd and QNI Metals Pty Ltd - to direct payment of the funds to meet expenses which were not that. 14 One would therefore take from the reference to paragraph 104 in the particulars that the alleged breach of trust was based on an allegation that QNI had made payments out of the fund to meet expenses which were not joint venture expenses at the direction of the beneficiaries of the trust. 15 However, on its own case and having regard to the paragraphs of the pleading referred to above, QNI did not pay the money out of the trust account for the purposes of paying joint venture expenses. Rather, the payments were made pursuant to a loan agreement. 16 It follows that the reference to paragraph 104 of the Court of Appeal decision does not assist in giving the plaintiffs fair notice of the facts which underlie the breach of trust claim that is sought to be pleaded in paragraph 62, and that is so even if the rules of pleading do not apply to this document. 17 A further problem with the allegation in paragraph 62 is that, if it is intended to plead that the payments from the bank trust account were in payment of joint venture expenses, and that this was done in breach of trust, then that allegation is inconsistent with earlier paragraphs of the pleading which are already in the statement of claim and which plead that the payments were made as a loan. 18 Paragraph 108 of the Court of Appeal decision is also referred to in the particulars to paragraph 62, but it does not provide any assistance, because that paragraph of the Court of Appeal decision addressed an issue in the appeal as to whether the trust was "collapsed" or defeated by the beneficiaries when they directed payments to be made to someone else, such as Mineralogy Pty Ltd. 19 In summary, the reference to the two paragraphs of the Court of Appeal decision in the particulars to paragraph 62 do not provide assistance in understanding what the case is said to be in relation to the alleged breach of trust by QNI. The proposed addition of paragraph 62 to the pleading therefore cannot be allowed. 20 Paragraphs 63, 64, 65 and 67 flow from paragraph 62, and so, for the same reasons, cannot be allowed. 21 An additional strong reason for refusing leave in relation to these paragraphs of the statement of claim is the likely impact which permitting these amendments would have on the plaintiffs' preparation for the hearing. 22 One of the liquidators, Ms Trenfield, deposed to the extra work which would need to be undertaken to prepare further evidence if the amendments were allowed. This further evidence would be directed at demonstrating that the beneficiaries gave their fully informed consent to the making of the Mineralogy loan. Ms Trenfield expressed a concern that the plaintiffs' evidence would not be able to be prepared in accordance with the timetable set by the Court, which requires that the plaintiffs' evidence be filed and served by 22 June 2022. 23 While it is the case that some concessions were made during oral submissions by counsel appearing for the Palmer Parties, it was not clear that the concessions made went so far as saying that the beneficiaries had given their fully informed consent for the Mineralogy loan to be made by QNI. 24 If such a concession was made, then there is no utility in allowing the pleading of the allegation in paragraph 62, because QNI cannot have acted in breach of trust. 25 If the concession did not go as far as admitting fully informed consent, then it follows that there will be a need for the liquidators to put on evidence. 26 Either way, the concessions which were made did not assist the Palmer Parties on this application. 27 While there is no present suggestion yet that the trial dates are in jeopardy, it is a real cause of concern that a liquidator has deposed that there may be a difficulty in achieving the timetable set by the Court if these amendments are allowed. The date of 22 June is just outside a month from the hearing of this matter, and if there is slippage in that timetable, then that could lead to an application for an adjournment by another party in the case, or indeed by the liquidators themselves. Any adjournment would have a flow-on effect to the Court's resources and to other parties who would have liked to have had a trial on the dates that are set down for this matter. 28 On that basis, I consider that there is a real risk that allowing the amendments proposed in these paragraphs could see the trial adjourned, which is not acceptable. 29 That is especially the case having regard to the history of this and related litigation, which I will summarise. 30 This proceeding was commenced on 14 July 2021, that is, nearly a year ago. The hearing of this proceeding will now take place more than a year after its commencement, in circumstances where it involves the liquidation of a company. There is a public interest in liquidations being finalised as quickly as possible. 31 An originating application filed on 9 August 2021 commenced proceedings QUD257/2021. That was a proceeding brought by the Palmer Parties against QNI, the liquidators and other respondents, including the fifth interested person in this proceeding. A statement of claim was filed at that time. That was the first version of the statement of claim filed by the Palmer Parties. 32 At a hearing before Lee J on 13 August 2021, there were submissions made by senior counsel for QNI and the liquidators that the statement of claim was deficient. Lee J made orders in that proceeding and observed that the timing of those orders would give an opportunity to the applicants' senior counsel to give consideration to the pleading. However, by the next case management hearing before Lee J, which was held on 19 November 2021, no amendments had been made to the statement of claim. 33 On 10 December 2021, proceeding QUD257/2021 came on before me for case management. Just prior to the hearing, an application was filed seeking leave to proceed against the first respondent in that case and a replacement statement of claim was produced. That proposed statement of claim only sought relief against the first respondent. 34 A notice of discontinuance was filed against other respondents in QUD257/2021, but then, on 20 January 2022, a further version of a statement of claim was filed, and that was in yet another proceeding, being QUD15/2022. That was now the third version of the statement of claim that has been put on raising matters relating to alleged breaches of trust by QNI. 35 A further version of the statement of claim was filed in QUD15/2022 on 18 March 2022. That was statement of claim number 4. 36 In QUD257/2021, on 9 March 2022, a fifth version of the statement of claim was produced, and the previous version was abandoned. That statement of claim was then ordered to be filed in this proceeding as being grounds of opposition to the relief sought by the plaintiffs. 37 Recently, a proposed amended statement of claim in this proceeding was provided to the other parties for comment, and further changes have been made to that, resulting in the version that is now before me, being the sixth or seventh version, for the purposes of deciding whether or not further amendments should be allowed. 38 What is absent from the applicants' evidence is any explanation as to why, in all of the various iterations of statement of claim that have been filed by the Palmer Parties in what are now three different proceedings, the allegations that are sought to be made in paragraphs 62 to 65 and 67 of the proposed amended statement of claim have not been made before. 39 Taking into account that this case involves relief sought by liquidators; that there is a need to finalise the liquidation and that there is a public interest in doing so; that this proceeding was commenced on 14 July 2021, nearly a year ago; and that the Palmer Parties have had several opportunities to articulate their case, including following observations made by another judge of this Court about their pleading; the absence of explanation for failing to make these allegations at an earlier time provides another strong reason to refuse the application to amend. I certify that the preceding thirty-nine (39) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Downes.