Queensland Nickel (in liq), Re [2017] QSC 258 (9 November 2017)

Re Queensland Nickel (in liq) [2017] QSC 258

JOHN RICHARD PARK, STEFAN DOPKING, KELLY-ANNE ANNE LAVINA TRENFIELD & QUENTIN JAMES OLDE AS LIQUIDATORS OF QUEENSLAND NICKEL PTY LTD (IN LIQ)

JOHN PARK, STEFAN DOPKING, KELLY-ANNE ANNE TRENFIELD & QUENTIN OLDE IN THEIR CAPACITY AS JOINT AND SEVERAL LIQUIDATORS OF QUEENSLAND NICKEL PTY LTD (IN LIQ)

JOHN RICHARD PARK, STEFAN DOPKING, KELLY-ANNE ANNE LAVINA TRENFIELD & QUENTIN JAMES OLDE AS LIQUIDATORS OF QUEENSLAND NICKEL PTY LTD (IN LIQ)

JOHN RICHARD PARK, STEFAN DOPKING, KELLY-ANNE ANNE LAVINA TRENFIELD & QUENTIN JAMES OLDE AS LIQUIDATORS OF QUEENSLAND NICKEL PTY LTD (IN LIQ)

STEPHEN JAMES PARBERY AND MICHAEL ANDREW OWEN IN THEIR CAPACITIES AS LIQUIDATORS OF QUEENSLAND NICKEL PTY LTD (IN LIQ)

STEPHEN PARBERY IN HIS PERSONAL CAPACITY AND AS A LIQUIDATOR OF QUEENSLAND NICKEL PTY LTD (IN LIQ)

MARCUS WILLIAM AYRES IN HIS PERSONAL CAPACITY AND AS A LIQUIDATOR OF QUEENSLAND NICKEL PTY LTD (IN LIQ)

MICHAEL ANDREW OWEN IN HIS PERSONAL CAPACITY AND AS A LIQUIDATOR OF QUEENSLAND NICKEL PTY LTD (IN LIQ)

JOHN PARK IN HIS PERSONAL CAPACITY AND AS A LIQUIDATOR OF QUEENSLAND NICKEL PTY LTD (IN LIQ)

STEFAN DOPKING IN HIS PERSONAL CAPACITY AND AS A LIQUIDATOR OF QUEENSLAND NICKEL PTY LTD (IN LIQ)

KELLY ANNE TRENFIELD IN HER PERSONAL CAPACITY AND AS A LIQUIDATOR OF QUEENSLAND NICKEL PTY LTD (IN LIQ)

QUENTIN OLDE IN HIS PERSONAL CAPACITY AND AS A LIQUIDATOR OF QUEENSLAND NICKEL PTY LTD (IN LIQ)

I direct the parties to bring in minutes of order giving effect to these reasons for judgment.

PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - SEPARATE DECISION OR DETERMINATION OF QUESTIONS AND CONSOLIDATION OF PROCEEDINGS - CONSOLIDATION OF PROCEEDINGS - where 10 proceedings related to the liquidation of Queensland Nickel Pty Ltd are being managed concurrently on the commercial list - whether four of the proceedings should be consolidated - whether an alternative course may be adopted

Corporations Act 2001 (Cth)

Uniform Civil Procedure Rules 1999 (Qld)

Alford v Ebbage [2002] QCA 194; [2003] 1 Qd R 343, cited

Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175, cited

Cart Provider Pty Ltd v Park [2016] QSC 277, cited

Parbery v QNI Metals Pty Ltd [2017] QSC 231, cited

QNI Resources Pty Ltd v Park [2016] QSC 222, cited

QNI Resources Pty Ltd v Queensland Nickel Pty Ltd (in liq) [2017] QCA 167, cited

Queensland Nickel Pty Ltd (in liq) v Martino [2017] QSC 95, cited

Queensland Nickel Pty Ltd (in liq) v Mineralogy Pty Ltd [2017] QSC 90, cited

Queensland Nickel Pty Ltd v Glencore International AG [2017] QSC 57, cited

Re Ambient Advertising Pty Ltd (in liq) [2015] NSWSC 1079, cited

Re Queensland Nickel Pty Ltd (in liq) [2017] QSC 56, cited

Re Queensland Nickel Pty Ltd (in liq) [2017] QSC 89, cited

D B O'Sullivan QC for QNI Resources, QNI Metals and Queensland Nickel Sales

C G C Curtis for the general purpose liquidators and Queensland Nickel

C G C Curtis for the general purpose liquidators and Queensland Nickel

D B O'Sullivan QC for QNI Resources, QNI Metals, China First and Waratah Coal

C G C Curtis for the general purpose liquidators and Queensland Nickel

C G C Curtis for the general purpose liquidators and Queensland Nickel

J Peden for the general purpose liquidators and Queensland Nickel

C G C Curtis for the general purpose liquidators and Queensland Nickel

T P Sullivan QC for the special purpose liquidators and Queensland Nickel

T Robinson (sol) for Mr Palmer, Mr Sokolov and Mr Ferguson

D B O'Sullivan QC for the first to third defendants and seventh to seventeenth defendants

T P Sullivan QC for the special purpose liquidators and Queensland Nickel

C G C Curtis for the general purpose liquidators and Queensland Nickel

Alexander Law for QNI Resources, QNI Metals and Queensland Nickel Sales

HWL Ebsworth for the general purpose liquidators and Queensland Nickel

HWL Ebsworth for the general purpose liquidators and Queensland Nickel

Alexander Law for QNI Resources, QNI Metals, China First and Waratah Coal

HWL Ebsworth for the general purpose liquidators and Queensland Nickel

HWL Ebsworth for the general purpose liquidators and Queensland Nickel

HWL Ebsworth for the general purpose liquidators and Queensland Nickel

HWL Ebsworth for the general purpose liquidators and Queensland Nickel

King & Wood Mallesons for the special purpose liquidators and Queensland Nickel

Robinson Nielsen for Mr Palmer, Mr Sokolov and Mr Ferguson

Alexander Law for the first to third defendants and seventh to seventeenth defendants

King & Wood Mallesons for the special purpose liquidators and Queensland Nickel

HWL Ebsworth for the general purpose liquidators and Queensland Nickel

[1] I am managing 10 proceedings on the commercial list, each of which is related in some way to the liquidation of Queensland Nickel Pty Ltd (Queensland Nickel) and to claims of recovery by it and its liquidators.

[2] Queensland Nickel managed a nickel mining and refining project on behalf of QNI Resources Pty Ltd (QNI Resources) and QNI Metals Pty Ltd (QNI Metals). The relationship between the three companies was regulated by two important instruments, namely a joint venture agreement and an administration agreement. The terms of those instruments and further factual background to the relationship between those three companies appears in my judgment in QNI Resources Pty Ltd v Park [2016] QSC 222, and I will not repeat that background here.

[3] The project forms part of the business empire of Mr Clive Palmer. He is the ultimate beneficial owner of Queensland Nickel, QNI Resources and QNI Metals. Indeed, he is the ultimate beneficial owner of all of the corporations who are defendants in the proceedings before me. He is alleged to have been a shadow director of Queensland Nickel at all material times.

[4] Thus far, although I have managed the related proceedings together, each proceeding has been managed as though it was appropriate for it to proceed down its own separate track towards its own separate trial. At commercial list review hearings over a number of months, I raised concerns as to the appropriateness of this course. I recently caused that issue to come to a head.

[5] A group comprising most of the defendants to the various proceedings (which it is convenient for the purposes of this judgment to refer to as the "Palmer interests") has proposed that I should make a series of orders consolidating some of the proceedings and discontinuing others. I will describe that proposal in further detail later. Queensland Nickel and its liquidators oppose that course, contending in various ways for a continuation of the status quo, and postponing the question of consolidation to another date.

[6] The question is what course should be taken in managing the multiplicity of proceedings before me.

[7] Before I address the competing arguments it is necessary to set out some background concerning Queensland Nickel and its liquidators.

[8] Queensland Nickel was placed into voluntary administration on 18 January 2016. On 22 April 2016, it became subject to a creditors' voluntary winding up and its four administrators were appointed as its liquidators. It is convenient to refer to them as the "general purpose liquidators".

[9] By consent order made on 18 May 2016 in Federal Court proceeding QUD283/2016, Dowsett J appointed three additional liquidators to Queensland Nickel as special purpose liquidators to pursue particular claims specified in the order. Only two of the original three special purpose liquidators still remain, as one of them has resigned.

[10] The order was a consent order in a proceeding in which:

• (a) the Commonwealth of Australia, the Commissioner of Taxation of the Commonwealth of Australia, and the three persons who became the special purpose liquidators, were the plaintiffs; and
• (b) Queensland Nickel and the general purpose liquidators were the defendants.

[11] The consent order created a regime in which the special purpose liquidators were given specific authority, the general purpose liquidators' authority was confined pro tanto, the general purpose liquidators were required to assist the special purpose liquidators, and the regime was capable of being adjusted by further order, as set out in orders 4 and 5, as follows:

4. Pursuant to sections 511 and 473(8) of the Corporations Act, that:

(a) the appointment of the Special Purpose Liquidator is limited to the matters set out in paragraphs 4(b) to (d) below;

(b) the following things may be done by the Special Purpose Liquidators on behalf of the company:

(i) conducting investigations into any of the matters set out in the Schedule to these orders (the Special Purpose Liquidator's Tasks), including by:

(A) inspecting the books and records of the Company;

(B) conducting examinations pursuant to sections 596A or 596B of the Corporations Act or obtaining orders for production pursuant to section 597(9) of the Corporations Act; and

(C) requiring statements to be provided pursuant to section 475(2) of the Corporations Act;

(ii) pursuing any claim, including by commencing legal proceedings, that may be available to the company or the Special Purpose Liquidators in relation to any of the matters identified in the Special Purpose Liquidators' Tasks, including considering and obtaining legal advice in respect of pursuing any such claim;

(c) in relation to only those matters set out in the Special Purpose Liquidator's Tasks, the Special Purpose Liquidators may take steps, including by commencing legal proceedings, to preserve or protect the assets of the Company, whether or not in the possession of the Company;

(d) in relation to only those matters set out in the Special Purpose Liquidator's Tasks, the Special Purpose Liquidators, as additional liquidators of the Company, are entitled to exercise all powers conferred on a liquidator by section 506 of the Corporations Act, except for the powers contained in section 477(1)(a);

(e) the [general purpose liquidators] must not do any of the things specified in paragraphs 4(b) to (d) above in relation to the matters set out in the Special Purpose Liquidator's Tasks, other than with the prior written consent of the Special Purpose Liquidator or further order of the Court;

(f) the [general purpose liquidators] use their reasonable endeavours to assist the Special Purpose Liquidators by:

(i) no later than 4:00pm on 25 May 2016 or such later date as agreed in writing by the Special Purpose Liquidators:

(A) providing any documents or information previously prepared or obtained by them in investigating or pursuing any claim in relation to any of the matters set out in the Special Purpose Liquidator's Tasks; and

(B) providing an image of the server, including an extract of the email and drive data, which stores and hosts the soft copy of the Company's books and records;

(ii) allowing the Special Purpose Liquidators to access and copy of the books and records of the Company not provided to the Special Purpose Liquidator in accordance with (i) above; and

(g) the Special Purpose Liquidators shall in accordance with the requirements of the Corporations Act report to creditors of the Company initially on the terms of their appointment and subsequently during the course of their appointment; and

(h) the [general purpose liquidators] otherwise do all things required or authorised by the Corporations Act as liquidators of the Company.

1. Leave be granted to apply in these proceedings to extend or limit the purposes for which the Special Purpose Liquidators are appointed and generally.

[12] The schedule to which those orders referred, which set out the tasks which were to be performed by the special purpose liquidators, included:

1 All dealings or transactions between [Queensland Nickel], its directors and officers and any of:

(a) QNI Metals Pty Ltd ACN 066 656 175 (QNI Metals);

(b) QNI Resources Pty Ltd ACN 054 117 921 (QNI Resources); and/or

(c) the directors or officers of QNI Metals and QNI Resources,

including but not limited to dealings or transactions arising under the Joint Venture Agreement dated 17 September 1992 (Joint Venture Agreement).

(c) the directors or officers of QNI Metals and QNI Resources,

including but not limited to potential claims or claims arising under the Joint Venture Agreement.

1. Any potential claims or claims for insolvent trading under sections 588G and 588M of the Corporations Act 2001 (Cth).

[13] It is appropriate to make some brief observations about the nature of the jurisdiction to appoint special purpose liquidators.

[14] McPherson's Law of Company Liquidation notes (footnotes omitted):

The court has the power to appoint an additional liquidator to a company under s 472(6), where "it is demonstrated that such an order would be for the better conduct of the liquidation" or "for the general advantage of the persons interested in the winding up" by the creditor or contributory applying for the appointment.[1]

[15] The jurisdiction to appoint special purpose liquidators is sometimes exercised when a creditor in a liquidation is prepared to provide funding to enable investigations to be carried out and, if appropriate, to pursue recovery actions, but is not prepared to provide the funding if the investigations and proceedings are carried out by the existing liquidators: cf Re Ambient Advertising Pty Ltd (in liq) [2015] NSWSC 1079.

[16] Sometimes the jurisdiction is exercised to avoid the potential for conflict which might arise if it becomes necessary to investigate a transaction that occurred prior to the liquidation and the liquidators have an actual or potential conflict of interest in connection with the subject of the investigation: Ford, Austin & Ramsay's Principles of Corporations Law (online service, LexisNexis) at [27.610.9].

[17] Whether (and, if so, to what extent) either of those considerations formed part of the justification for the appointment in this case is a little unclear at present. I do not have information which explains why the consent order appointing special purpose liquidators was made. As far as I have been able to establish, there are no relevant reasons for judgment, the material on which the order was made was made the subject of a confidentiality order and no person before me has sought an order which would permit the material to be accessed. I can make these observations:

• (a) I have been informed that the Commonwealth is a substantial creditor of Queensland Nickel and that the Commonwealth is funding the special purpose liquidators. In this regard, I note that the order of Dowsett J also directed the special purpose liquidators that they were justified in entering into a funding agreement in a form annexed to a confidential affidavit.
• (b) In connection with an application for Mareva orders (see [104]-[108] below) which the special purpose liquidators have made in connection with proceeding BS6593/17 (referred to as the "SPL proceeding": see [82]-[108] below) commenced by them, the Commonwealth has filed in Court an undertaking dated 22 August 2017 in these terms:

The Commonwealth of Australia (Commonwealth) hereby undertakes to the Supreme Court of Queensland ("the Court") and to the Defendants in Proceedings BS6593/17 that:

1. the Commonwealth will pay any order of costs (as assessed or agreed with the Commonwealth's consent or taxed) which the Court makes in Proceedings BS6593/17, against the First Plaintiffs, in favour of the Defendants; and
2. it will submit to such order (if any) as the Court may consider just for the payment of damages (to be assessed by the Court or as it may direct) to any person (whether or not a party) affected by the operation of the freezing orders made by the Court at the request of the First Plaintiffs by way of interlocutory application dated 2 August 2017 and amended on 11 August 2017.

(c) In light of the fact that the proceeding was commenced against the background of a number of extant proceedings commenced at the instance of the general purpose liquidators, and the terms of the undertaking, it seems possible that the Commonwealth may only be interested in funding the proceeding which the special purpose liquidators have commenced and may not be interested in funding the proceedings commenced by the general purpose liquidators.

[18] On 27 February 2017, pursuant to s 459A of the Corporations Act 2001 (Cth), I made an order the effect of which was to convert the creditors' voluntary winding up of Queensland Nickel into a winding up in insolvency: see my judgment in Re Queensland Nickel Pty Ltd (in liq) [2017] QSC 89. The effect of that order was to enable the liquidators to contend that certain charges were void as against the liquidators. That order also confirmed the continuation in the winding up in insolvency of the existing regime and division of responsibility between the general purpose liquidators and special purpose liquidators originally put in place by the order of Dowsett J. No issue arose at that time as to the continued appropriateness of that division.

The proceedings being managed by me on the commercial list

[19] The principal protagonists in the 10 proceedings before me are, on the one hand, Queensland Nickel and its liquidators, and, on the other, the persons whose conduct they impugn in various ways, and against whom they advance various claims, namely:

• (a) Mr Palmer, who is the ultimate beneficial owner of Queensland Nickel and its alleged shadow director, and who is also the ultimate beneficial owner of the other companies mentioned below;
• (b) the two joint venturers, QNI Metals and QNI Resources;
• (c) the company which they appointed to replace Queensland Nickel as manager of the joint venture, namely Queensland Nickel Sales Pty Ltd;
• (d) China First Pty Ltd (China First) and Waratah Coal Pty Ltd (Waratah Coal), which were the companies which entered into a suite of security transactions shortly before the administration, which security transactions are impugned by Queensland Nickel and both sets of its liquidators (as to which see [42]-[44] and [126] below);
• (e) Mineralogy Pty Ltd (Mineralogy), a company against which two significant recovery proceedings have been advanced (as to which see the "Mineralogy proceeding" and the "SPL proceeding" referred to at [60]-[67] and [82]-[108] below) and which, with China First, was party to a deed of release entered into in circumstances impugned by Queensland Nickel and both sets of liquidators (as to which see [68]-[73] and [126] below);
• (f) other "Palmer" companies and also natural persons the subject of recovery proceeding by Queensland Nickel and the special purpose liquidators in the SPL proceeding.

[20] I set out below a brief identification of the salient details of each of the proceedings presently being managed together by me, in order of their commencement.

Proceeding BS3849/16 - the "Queensland Nickel declarations proceeding"

[21] The proceeding was commenced on 15 April 2016.

[22] The applicants were QNI Metals, QNI Resources, and Queensland Nickel Sales.

[23] The respondents were Queensland Nickel and the general purpose liquidators.

[24] QNI Metals, QNI Resources, and Queensland Nickel Sales failed to obtain leave to proceed in respect of the various claims asserted against Queensland Nickel identified in a statement of claim filed on 13 June 2016: see my judgment in QNI Resources Pty Ltd v Park [2016] QSC 222.

[25] Amongst other things, they had sought the unconditional return of all of the joint venture property held by Queensland Nickel, despite the fact that Queensland Nickel had, apparently, and to the knowledge of the joint venturers, properly incurred very significant liabilities and no provision had been made for their discharge.

[26] An essential aspect of their claims was the negation of the propositions that Queensland Nickel had any beneficial interest in the joint venture property, or a right of indemnity out of that property in respect of the liabilities incurred by it. Although their pleaded case had asserted that negation, I concluded that they had not persuaded me that there was a solid foundation for the assertion.

[27] Although:

• (a) a statement of claim had been delivered on 10 February 2017 in which the plaintiffs articulated claims against the general purpose liquidators personally; and
• (b) the general purpose liquidators had flagged an intention to challenge the adequacy of that pleading, at least in part on the grounds that it was inconsistent with the reasoning which had informed by my judgment in QNI Resources Pty Ltd v Park,

no further step was taken because the consensus of the parties was that it was appropriate to await the outcome of the plaintiffs' appeal from my judgment before the consideration was given.

[28] My judgment was affirmed on appeal on 8 August 2017: see QNI Resources Pty Ltd v Queensland Nickel Pty Ltd (in liq) [2017] QCA 167.

[29] No further step of significance has yet been taken.

[30] It is significant to note that the statement of claim which was filed on 10 February 2017 still revealed that the intention of QNI Resources and QNI Metals was to advance their own claim to recover compensation, the broad logic of which was as follows:

• (a) When they were the administrators, the general purpose liquidators made decisions and took steps which in fact resulted in the cessation of operations of the joint venture.
• (b) They should have caused Queensland Nickel to take steps which permitted the joint venturers to continue to operate the joint venture.
• (c) Their conduct in not doing so led to a diminution in value of the assets owned by the joint venturers of in excess of $1 billion and an ability of QNI Resources and QNI Metals to claim compensation for that loss.

[31] Whether any such claim against the general purpose liquidators can survive scrutiny is a question which has yet to be explored. I had in my reasons for judgment said of the June 2016 pleading:

A consequence of my reasoning is that such claims against the Administrators personally will not be able to proceed as they are currently framed because they depend upon pleaded conclusions in respect of which no adequate foundation of pleaded material fact has been laid[3]

and the general purpose liquidators' position was that those flaws at least still existed within the statement of claim filed on 10 February 2017. It is evident that a critical part of the claims, if they can legitimately be advanced at all, would turn on various propositions concerning the proper construction of the joint venture agreement and the administration agreement.

Proceeding BS6216/16 - the "Glencore interpleader proceeding"

[32] On 23 June 2016, Glencore International AG (Glencore) commenced the proceeding by originating application. Glencore was conscious that it owed US$3,759,246.71 to one or other of the old joint venture manager, Queensland Nickel, or its replacement, Queensland Nickel Sales, and that those two parties were in dispute as to which of them was entitled to that sum.

[33] The relief which Glencore sought was an order that it pay the disputed sum into court and ancillary orders aimed at ensuring that the disputing claimants could advance no claim against it, but could be left to fight out their entitlement in respect of the monies paid into court. Amongst other things, Glencore applied for "such orders and directions as the Court thinks fit for the determination of all matters in dispute between [Queensland Nickel and Queensland Nickel Sales] in respect of [the amount of US$3,759,246.71 which Glencore proposed to pay into court]".

[34] On 30 June 2016, Queensland Nickel filed an interlocutory application within the Glencore interpleader proceeding, seeking:

• (a) a declaration that Queensland Nickel was entitled to be paid the amount of US$3,759,246.71; and
• (b) an order that Glencore pay that amount to Queensland Nickel or an equivalent amount in Australian currency.

[35] On 8 July 2016, consent orders were made with the result that Glencore paid the subject monies into court and was excused from further appearance.

[36] At that stage, Queensland Nickel and Queensland Nickel Sales were the competing claimants to the monies paid into court by Glencore. The evidence also suggested that Vale Nouvelle Caledonie, a foreign company, may wish to advance a proprietary claim against the monies based on a retention of title clause. Vale entered an appearance on 4 August 2016 and confirmed that it claimed a security interest in the funds now paid into court. It did not seek to be joined as a party at that stage but a direction was made that Vale be provided with all documents filed in the proceeding.

[37] For the reasons set out in Queensland Nickel Pty Ltd v Glencore International AG [2017] QSC 57, I ordered that the following question be stated and tried:

As at the time that Glencore paid the monies into court, which of

(2) QNI Metals Pty Ltd and QNI Resources Pty Ltd; or

had the legal right to recover from Glencore amounts owing by it under the contract referred to in paragraph 1 of Queensland Nickel's amended application?

[38] The trial of that question proceeded before me on 6 November 2017. Queensland Nickel contended that the question should be answered "Queensland Nickel". Counsel appeared on behalf of Queensland Nickel Sales, QNI Metals and QNI Resources and contended that the proper answer to the question was "QNI Metals Pty Ltd and QNI Resources Pty Ltd". No one contended that the question should be answered "Queensland Nickel Sales". I have reserved my decision on the question.

Proceeding BS6847/16 - the "Voidable transactions proceeding"

[39] The proceeding was commenced on 5 July 2016.

[40] The plaintiffs are Queensland Nickel and the general purpose liquidators.

[41] The defendants are China First, Waratah Coal, QNI Metals and QNI Resources.

[42] The proceeding concerned:

• (a) A transaction entered into by Queensland Nickel with Waratah Coal five days before Queensland Nickel was placed into administration (the Waratah Coal transaction), implemented by the following:
  • (i) an agreement titled "Agreement" dated 13 January 2016 and entered into between Queensland Nickel, QNI Metals, QNI Resources and Waratah Coal;
  • (ii) an agreement titled "Security Deed" dated 13 January 2016 and entered into between Queensland Nickel, QNI Metals, QNI Resources and Waratah Coal; and
  • (iii) an undated charge (entered into on about 13 January 2016) executed by Queensland Nickel, granting a fixed and floating charge to Waratah Coal up to an amount of US$100,000,000 together with interest and costs (the Waratah charge).
• (b) a transaction entered into by Queensland Nickel with China First at the same time (the China First transaction), implemented by the following:
  • (i) an agreement titled "Share Subscription Agreement" dated 13 January 2016 and entered into between Queensland Nickel, QNI Metals, QNI Resources and China First whereby Queensland Nickel agreed to obtain shares in China First for a total amount of $135,000,000, payable in two instalments on 31 December 2017 and 31 December 2018; and
  • (ii) an agreement dated 13 January 2016 between Queensland Nickel, QNI Metals, QNI Resources and China First as chargee granting a fixed and floating charge in favour of China First for the amounts due and owing under the Share Subscription Agreement for a total amount of $135,000,000 together with interest and costs (the China First charge).

[43] The plaintiffs sought:

• (a) a declaration that the Waratah Coal transaction and the China First transaction are voidable under s 588FE of the on the grounds that they are:

[46] The proceeding was commenced by originating application on 15 July 2016.

[47] The applicants are Queensland Nickel and the general purpose liquidators.

[48] By amended originating application, the applicants sought directions, declarations and orders about matters including the following:

• (a) in relation to a Cessna aircraft:
  • (i) whether the general purpose liquidators would be justified in retaining possession of a Cessna aircraft until Queensland Nickel has recovered its costs and expenses incurred in operating the aircraft; and
  • (ii) whether the general purpose liquidators would be justified in incurring expenses on behalf of Queensland Nickel to secure possession of the aircraft and preserve the aircraft; or
  • (iii) whether the general purpose liquidators would be justified in causing Queensland Nickel to unconditionally transfer possession of the aircraft to Mr Palmer; or
  • (iv) whether the general purpose liquidators would be justified in causing Queensland Nickel to transfer possession of the aircraft to Mr Palmer on the condition that they receive satisfactory security for any claim Queensland Nickel may have in relation to recovery of the costs and expenses Queensland Nickel has incurred in operating the aircraft, and any beneficial interest Queensland Nickel has in the aircraft;
• (b) in relation to the remuneration of, and the debts incurred by, the general purpose liquidators in their former roles as administrators of Queensland Nickel:
  • (i) the manner in which, and the extent to which, the general purpose liquidators may withdraw amounts from funds in the possession or control of, Queensland Nickel over which QNI Resources, QNI Metals and Queensland Nickel Sales assert a beneficial interest;
  • (ii) whether the general purpose liquidators would be justified in treating the above funds as assets of Queensland Nickel for the purpose of indemnifying Queensland Nickel for its liabilities to the liquidators;
• (c) an order relieving the general purpose liquidators from liability for any negligence, default, breach of trust or breach of duty relating to the payment by them from the above funds in satisfaction of:

Proceeding BS7778/16 - the "Palmer Cessna proceeding"

[51] The proceeding was commenced by originating application on 1 August 2016.

[52] The applicant is Mr Palmer.

[53] The respondents are the general purpose liquidators and Queensland Nickel.

[54] By this proceeding Mr Palmer sought, amongst other things:

• (a) an order that Mr Palmer have leave to proceed against Queensland Nickel;
• (b) an order that the general purpose liquidators and Queensland Nickel transfer the Cessna aircraft to Mr Palmer; and
• (c) damages.

[55] The aircraft concerned is the same one as the aircraft referred to in the Cessna proceeding.

[56] The general purpose liquidators and Queensland Nickel filed an interlocutory application on 17 February 2017 by which they sought, amongst other things:

• (a) an order that Mr Palmer pay Queensland Nickel the amount of $2,030,487.22, being the amount Queensland Nickel has paid in operating and maintaining the aircraft; and
• (b) a declaration that Queensland Nickel is entitled to exercise a lien over the aircraft until the above amount is paid.

[57] On 21 April 2017[4] I ordered that the remaining issues in the Cessna proceeding, and the originating application and cross-application in the Palmer Cessna proceeding, be set down for a two-day trial before me on 17 and 18 August 2017.

[58] On the morning of the first day of the trial, I was informed that a deed of settlement had been executed by the parties, that the deed was subject to conditions, but otherwise obviated the need for the trial. On 27 September 2017 I was informed (by email to my associate) that the settlement had not been effected due to failure of relevant conditions.

[59] The present position is that Queensland Nickel and the general purpose liquidators seek an order setting the matter down for trial again, but their opponents still hold out hope for a settlement.

Proceeding BS3202/17 - the "Mineralogy proceeding"

[60] The proceeding was commenced on 29 March 2017.

[61] The plaintiff is Queensland Nickel. However, it is evident that the claim is advanced by Queensland Nickel at the instance of the general purpose liquidators.

[62] The defendant is Mineralogy.

[63] By its amended statement of claim Queensland Nickel advances three alternative money claims against Mineralogy.

[64] First, a contractual claim seeking to recover $105,981,599.81 paid by Queensland Nickel to Mineralogy on the basis that the amounts are repayable under a loan agreement. As to this claim:

• (a) Queensland Nickel's contention is that from 7 March 2011 onwards there was an agreement between Mineralogy and Queensland Nickel that amounts paid by Queensland Nickel at the direction of Mr Palmer and Mr Clive Mensink (who was a director of Queensland Nickel from time to time) and recorded in the Mineralogy Loan Account would be recoverable as loan amounts.
• (b) That agreement is said to be an inference from particular identified conduct of Mr Palmer and Mr Mensink.
• (c) The pleading then identifies various groups of payments said to have been made pursuant to that agreement, deducts amounts said to have been repaid, and arrives at the balance claimed.

[65] Second, an alternative restitutionary claim seeking to recover $75,799,506.99 paid by Queensland Nickel to Mineralogy on the basis that the amounts were not paid as a gift. For present purposes it suffices to note that it seems that the amounts covered by this claim may fall within the first claim and that the difference may be that some part of the claims in the first claim are not pursued on a restitutionary basis.

[66] Third, an alternative restitutionary claim seeking to recover $56,117,345.15 paid by Queensland Nickel in discharge of debts incurred by Mineralogy on the basis that the amounts were paid at the request of Mineralogy. Again, for present purposes it suffices to note that it seems that the amounts covered by this claim may fall within the first claim and that the difference may be that some part of the claims in the first claim are not pursued on a restitutionary basis.

[67] Mineralogy's position is articulated in an amended defence and counterclaim filed 19 May 2017. Amongst other things:

Proceeding BS4720/17 - the "Martino (s. 418A) proceeding"

[68] On 3 May 2017, at the instance of Mr Palmer and purportedly pursuant to the China First charge, China First purported to appoint Mr Domenic Martino as an agent and authorized officer of Queensland Nickel (the Martino appointment). On 4 May 2017 at 12:39pm, Mr Palmer signed a deed of settlement on behalf of Mineralogy and China First and sent it to Mr Martino. Later that evening Mr Martino signed the deed purportedly on behalf of Queensland Nickel. It is convenient to refer to the deed as the "Martino settlement deed".

[69] Amongst other things, the Martino settlement deed purported to record:

• (a) Queensland Nickel's agreement to discontinue the Mineralogy proceeding, and not to make future claims against Mineralogy which had been the subject of the Mineralogy proceeding;
• (b) the mutual releases and discharges by Queensland Nickel, China First and Mineralogy in relation to each other from all claims which each might have against the other concerning the Mineralogy proceeding;
• (c) Queensland Nickel's release:

... of all directors and related parties of [Mineralogy] and [China First] as defined under the Corporations Act 2001 (of [China First]) from all claims, actions, suits, causes of action, demands, complaints, damages and costs that have accrued to the date hereof.

[70] Thereafter, Mr Martino purported to take steps to discontinue the Mineralogy proceeding.

[71] The proceeding first came before me on an urgent application for injunctive relief on 9 May 2017 by Queensland Nickel and the general purpose liquidators, who had not been consulted by Mr Martino before he took the steps described above. I made interim orders in the Mineralogy proceeding: see Queensland Nickel Pty Ltd (in liq) v Mineralogy Pty Ltd [2017] QSC 90. An originating application (in what became the Martino (s.418A) proceeding) was filed on 11 May 2017, and on 18 May 2017 I granted interlocutory injunctions: see Queensland Nickel Pty Ltd (in liq) v Martino [2017] QSC 95.

[72] The applicants in the proceeding are Queensland Nickel and the general purpose liquidators and the respondents are Mr Martino, China First and Mineralogy. The final relief sought by the plaintiffs includes:

• (a) an order pursuant to s 418A of the Corporations Act that the Martino appointment was invalid and that Mr Martino did not validly assume control over Queensland Nickel's property on about 3 May 2007;
• (b) a declaration that the Martino settlement deed and the documents by which he purported to take steps to discontinue the Mineralogy proceeding were not legally effective to bind Queensland Nickel or to discontinue the proceeding and orders setting them aside;
• (c) declarations that Mr Martino's conduct amounted to breaches of his various duties;
• (d) declarations that China First's conduct was in breach of various obligations it owed;
• (e) orders restraining Mr Martino from taking any steps pursuant to his purported appointment; and

Proceeding BS4902/17 - the "Report required by controller (s. 430) proceeding"

[75] The proceeding was commenced by originating application on 16 May 2017.

[76] The applicants are Queensland Nickel, the general purpose liquidators and the special purpose liquidators.

[77] The respondents are Mr Martino and China First.

[78] On 3 May 2017 Mr Martino, purporting to act as agent for China First, purported to issue notices under s 430 of the Corporations Act requiring the general purpose liquidators and special purpose liquidators to produce certain reports.

[79] By this proceeding the applicants sought, amongst other things:

• (a) a direction under s 479(3) of the Corporations Act that the applicants are justified in applying under s 1322(4)(d) for an order extending the time for complying with notices purportedly issued pursuant to s 430 by Mr Martino as agent for China First on 3 May 2017, notwithstanding the general purpose liquidators' denial of the validity of the notices and the purported appointment of Mr Martino as controller of Queensland Nickel; and
• (b) an order under s 1322(4)(d) that, if and to the extent that the notices are valid, the time for compliance with the purported notices is extended until 14 days after the determination of the Martino (s. 418A) proceeding.

[80] On 17 May 2017, I ordered, by consent, that the time for the general purpose liquidators and special purpose liquidators to comply with the notices issued pursuant to be extended until 5:00pm on the date of the hearing of the originating application in the proceeding.

[82] The proceeding was commenced on 30 June 2017.

[83] The plaintiffs are Queensland Nickel and the special purpose liquidators.

[84] For present purposes it is not necessary to essay a summary of the causes of action advanced in the SPL proceeding. The body of the statement of claim is 101 pages long and there are more than 100 pages of schedules. It suffices to identify the claims for relief which are advanced. I summarize these below (but without attempting to be exhaustive or to deal with the various ways in which claims for relief are put in the alternative).

[85] As against QNI Resources, Queensland Nickel claims:

• (a) an order that, QNI Resources pay to Queensland Nickel the sum of $32,000,000.00 for debt or as monies paid and received;
• (b) a declaration that particular debts are secured by an equitable lien over the assets of the joint venture, or by an equitable lien over the assets held on trust by Queensland Nickel, and that those liens have priority over any other security interests created by QNI Resources to related parties, including the China First charge;
• (c) an order that the special purpose liquidators or other appropriate persons be appointed as receivers to all of the assets of the joint venture and that the receivers be given broad powers; and
• (d) an order that QNI Resources pay to Queensland Nickel the sum of $167,972,482.97 or alternatively, the sum of $152,067,557.12, claimed under call notices purportedly issued under the joint venture agreement (or as damages for breach of contract).

[86] As against QNI Metals, Queensland Nickel advances the same claims as are advanced against QNI Resources except where amounts are claimed, the claims are for proportionately lesser amounts reflective of QNI Metals lesser interest in the joint venture: instead of $32,000,000.00, the sum of $8,000,000.00; instead of $167,972,482.97, the sum of $41,993,120.74 and instead of $152,067,557.12, the sum of $38,016,889.28.

[87] As against Mr Palmer, Queensland Nickel seeks orders that Mr Palmer pay to Queensland Nickel a number of discrete sums for debt or as moneys paid and received. The sums total $73,282,685.77. As will appear there are other claims advanced against Mr Palmer.

[88] As against the sixth defendant (Mr Ferguson), Queensland Nickel seeks an order that Mr Ferguson pay to Queensland Nickel $300,000.00 for debt or as moneys paid and received.

Proceeding BS9757/17 - the "Call Notice proceeding"

[109] The proceeding was commenced in the Federal Court on 20 July 2017. It was transferred to the Supreme Court by order of Reeves J on 13 September 2017. I made an order placing it on the commercial list to be managed with the other related proceedings on 14 September 2017.

[110] The applicants are QNI Resources and QNI Metals.

[111] The respondents are the special purpose liquidators and the general purpose liquidators.

[112] The applicants advanced claims in the Federal Court concerning:

• (a) the invalidity of certain call notices issued by the special purpose liquidators which purported to seek $209,965,603.71 from the QNI Resources and QNI Metals, pursuant to the terms of the joint venture agreement to which they and Queensland Nickel were parties;
• (b) unconscionable conduct by the special purpose liquidators and the general purpose liquidators; and
• (c) actions taken by the special purpose liquidators beyond the powers granted to them by the order of Dowsett J of 18 May 2016: see [11] above.

[113] No interlocutory steps have yet been taken in the Supreme Court.

[114] As I have mentioned, I had raised concerns as to the coherence and efficiency of the various related claims being advanced in separate proceedings and proceeding down separate tracks towards separate trials, as had been the apparent contemplation of Queensland Nickel and its liquidators.

[115] I listed the proceedings for review before me on 17 October 2017 to commence to address those concerns, but that review was not able to proceed because of a recusal application which Mr Palmer advanced in relation to my continued involvement in an application by Queensland Nickel and the special purpose liquidators for interlocutory Mareva orders in the SPL proceeding. I dismissed the recusal application: see Parbery v QNI Metals Pty Ltd [2017] QSC 231.

[116] Ultimately the review proceeded before me on 3 November 2017.

[117] Submissions before me were made by essentially three groups:

• (a) the Palmer interests;[5]
• (b) the general purpose liquidators; and
• (c) the special purpose liquidators.

[118] The Palmer interests:

• (a) sought the consolidation of four proceedings, namely the Voidable transactions proceeding, the Mineralogy proceeding, the Martino (s. 418A) proceeding and the SPL proceeding;
• (b) proposed to discontinue the Queensland Nickel declarations proceeding and the Call Notice proceeding, because the matters raised in those proceedings could be advanced as part of a defence and counterclaim in the proposed consolidated proceeding;
• (c) proposed that no further directions be made in relation to the Cessna proceeding and the Palmer Cessna proceeding, at least until close of pleadings in the proposed consolidated proceeding, flagging the possibility that the dispute might still resolve despite the thus far failed settlement;
• (d) proposed that the Glencore Interpleader proceeding proceed at least to the determination of the separate question, the trial of which was to proceed before me on 6 November 2017; and

[124] In order to determine how to respond to the foregoing submissions, it is appropriate to identify the nature of the overlap between the four proceedings.

[125] The first point to make is that, contrary to submissions advanced by the special purpose liquidators, there is in fact a common plaintiff to all proceedings, namely Queensland Nickel. And, contrary to the general purpose liquidators' submissions, it is wrong to think of the Mineralogy proceeding as "their ... relatively narrow claim" which might become embroiled in the special purpose liquidators' extensive claims, the latter being something which the plaintiff in the Mineralogy proceeding might have a lesser interest. The claim in the Mineralogy proceeding is Queensland Nickel's claim, as are most of the claims advanced in the SPL proceeding.

[126] Second, the overlap between the Voidable transactions proceeding, the Martino (s. 418A) proceeding and the Mineralogy proceeding is obvious because in each proceeding the validity of the China First and Waratah Coal transactions, the Martino appointment and the Martino settlement deed is in issue, giving rise to the need in those cases to address the matters identifid at [45] and [74] above. But the same issues are also likely to arise in the SPL proceeding.

• (a) First, it already forms part of the SPL proceeding to advance an attack on the China First charge: see [103] above. In the SPL proceeding the basis on which the charge and the associated share subcription agreement is said to be voidable is different because reliance is placed on s 588FE(6A): see the statement of claim at [300]. Further, one of the claims which is advanced is expressly stated to be "in the alternative to the claims made by the GPL's in the [Voidable transactions proceeding]": see the claim at [19](c) and statement of claim at [301] and [363](c).
• (b) Second, Mr Palmer has said he will raise them: see above.

[133] The sources of my power to respond to the concerns which I have raised and to the proposal which has been advanced by the Palmer interests, are as follows:

• (a) Because all of these matters are being managed by me on the commercial list, I have the power conferred on me by Practice Direction 3 of 2002 at [18](a):

(a) The Commercial List Judges may make such orders or give such directions as appropriate to ensure the just, efficient and expeditious disposal of cases on the List. ....

(b) Such directions may extend to dispensing with pleadings or further pleadings.

(b) The Uniform Civil Procedure Rules 1999 (Qld) confer power to order consolidation and make associated directions by:

• (i) rule 78, which provides:

The court may order that 2 or more proceedings be consolidated if -

(a) the same or substantially the same question is involved in all the proceedings; or

(b) the decision in 1 proceeding will decide or affect the other proceeding or proceedings.

(ii) rule 80, which provides that should the Court order the proceedings be consolidated, it may give whatever direction it considers appropriate for the conduct of the proceeding or proceedings.

(c) Rules 366 and 367 of the Uniform Civil Procedure Rules relevantly confer the following powers:

Rule 366: Application for directions

(2) The court may give directions about the conduct of a proceeding at any time.

Rule 367: Directions

(1) The court may make any order or direction about the conduct of a proceeding it considers appropriate, even though the order or direction may be inconsistent with another provision of these rules.

(2) In deciding whether to make an order or direction, the interests of justice are paramount.

[134] To my mind the following four propositions are both true and obvious.

[135] First, the various bases on which Queensland Nickel and its liquidators seek to impugn the China First and Waratah Coal transactions should be determined in a way which also binds all the parties interested to support the validity of the transactions.

[136] Second, the various bases on which:

• (a) Queensland Nickel and its liquidators seek to impugn; and
• (b) other parties seek to support the validity of and indeed to rely upon,

the Martino appointment and the subsequent Martino settlement deed should be determined in a way which binds all those parties.

[137] Third, absent some compelling reason to the contrary (and none has been identified) Queensland Nickel should not be permitted to prosecute claims against the same defendant(s) in multiple separate proceedings by regarding the claims in one proceeding as "in the alternative" to claims which it advances in another proceeding.

[138] Fourth, the procedural solution whch should be adopted is that which will promote the just and expeditious resolution of all the real issues in the four proceedings concerned, as between all the parties interested in those issues, and at a minimum of expense to all those parties. In this regard, it is also material to consider the claims of other litigants and the public interest in achieving the most efficient use of Court resources.[6]

[139] As to the first two propositions, I observe that the parties interested in supporting the validity of the China First and Waratah Coal transactions will extend beyond the parties to the three proceedings commenced by Queensland Nickel and the general purpose liquidators (namely, QNI Metals, QNI Resources, China First, Waratah Coal, Mineralogy and Mr Martino) and will include persons who are parties only to the SPL proceeding. The most important of these is Mr Palmer personally, but it is distinctly possible that other natural and corporate defendants to the SPL proceeding might seek to fall within the ambit of the purported release by Queensland Nickel of "all directors and related parties of Mineralogy and China First as defined under the Corporations Act 2001 (of China First) from all claims, actions, suits, causes of action, demands, complaints, damages and costs that have accrured to the date hereof". It simply does not make sense to contemplate resolving the question of the validity of the impugned transactions and instruments in a way which does not bind all the relevant parties. The proposals advanced by the liquidators do not pay sufficient regard to this concern.

[140] As to the third proposition, Queensland Nickel has sought to do this in the SPL proceeding to the extent I have identified in [126] and above. The only explanation for taking that course is the historical explanation that decisions were separately made by the general purpose liquidators and the special purpose liquidators. But that explanation is not a sufficient justiifcation for permitting that course. In any event, one wonders why it could be regarded as "for the better conduct of the liquidation" or "for the general advantage of the persons interested in the winding up" that there be the existing multiplicity of proceedings, with the existing extent of overlap. No convincing justification for that course has yet been presented by either set of liquidators.

(in this order referred to as the four separate proceedings);

(b) pleads in a coherent way the material facts upon which they rely in support of those claims for relief;

(c) indicates clearly which, if any, of the claims for relief are:

• (i) advanced by the general purpose liquidators but not by special purpose liquidators; or
• (ii) advanced by the special purpose liquidators, but not by the general purpose liquidators.

[149] I observe that the Palmer interests proposed that Queensland Nickel and its liquidators could have until 1 December 2017 (or alternatively 12 January 2018) to prepare a consolidated pleading. I did not understand that Queensland Nickel and its liquidators sought the later date, if I was minded to require a consolidated pleading to be delivered. Accordingly I will require that they comply with the first order on or before 1 December 2017. If compliance with the order gives rise to any difficulty as between the two sets of liquidators, then the obvious solution would be for them to take advantage of the liberty to apply which I will reserve to all parties. See also my comments at [144] above, but also note footnote 7.

[150] I also observe that the consolidated statement of claim would not differ materially from the consolidated statement of claim which would be prepared if I had made a formal consolidation order. However, in order to preserve (at least for the present) the separate existence of the four proceedings, an order must be made the effect of which is to identify how the consolidated pleading would relate to the separate proceedings, given that it would contain pleas against persons who are not necessarily party to each separate proceeding, and would advance causes of action which are not necessarily advanced in each separate proceeding. Hence the second order below.

[151] Second, the consolidated statement of claim:

• (a) must be filed in each of the four separate proceedings and will stand as the statement of claim in that proceeding, but only insofar as and to the extent that:
  • (i) it advances claims by and against persons who are already parties to that proceeding; and
  • (ii) it advances claims which could be made in that proceeding without the need for amendment to the originating process in that proceeding; and

[159] I direct the parties to bring in minutes of order giving effect to these reasons for judgment.

[1] McPherson's Law of Company Liquidation (online service, Westlaw AU) at [8.220].

[2] Two other proceedings were commenced during the period and have been dealt with. They do not feature in this discussion.

[3] QNI Resources Pty Ltd v Park [2016] QSC 222 at [147].

[4] The order was formalised on 27 April 2017.

[5] Each of the following parties was represented by senior counsel and solicitors: QNI Resources, QNI Metals, Queensland Nickel Sales, China First, Waratah Coal, Mr Palmer (in the Palmer Cessna proceeding), Mineralogy, and several other companies beneficially owned by Mr Palmer. Mr Martino, Mr Sokolov, Mr Ferguson and Mr Palmer (in the SPL Proceeding) were represented by solicitors.

[6] Cf Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175.

[7] Given the reference to "these proceedings" in order 5 made by Dowsett J consideration would have to be given as to the forum in which the application should be made. I express no view on that question.