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- Unreported Judgment
SUPREME COURT OF QUEENSLAND
QNI Metals Pty Ltd & others v Parbery & others  QSC 76
QNI METALS PTY LTD
ACN 066 656 175
QNI RESOURCES PTY LTD
ACN 054 117 921
QUEENSLAND NICKEL SALES PTY LTD
ACN 009 872 566
(third defendant/not a party to the application)
CLIVE FREDERICK PALMER
(fourth defendant/not a party to the application)
CLIVE THEODORE MENSINK
(fifth defendant/not a party to the application)
IAN MAURICE FERGUSON
(sixth defendant/not a party to the application)
MINERALOGY PTY LTD
ACN 010 582 680
(seventh defendant/not a party to the application)
PALMER LEISURE AUSTRALIA PTY LTD
ACN 152 386 617
(eighth defendant/not a party to the application)
PALMER LEISURE COOLUM PTY LTD
ACN 146 828 122
(ninth defendant/not a party to the application)
FAIRWAY COAL PTY LTD
ACN 127 220 642
(tenth defendant/not a party to the application)
CART PROVIDER PTY LTD
ACN 119 455 837
(eleventh defendant/not a party to the application)
COEUR DE LION INVESTMENTS PTY LTD
ACN 006 334 872
(twelfth defendant/not a party to the application)
COEUR DE LION HOLDINGS PTY LTD
ACN 003 209 934
(thirteenth defendant/not a party to the application)
CLOSERIDGE PTY LTD
ACN 010 560 157
(fourteenth defendant/not a party to the application)
WARATAH COAL PTY LTD
ACN 114 165 669
(fifteenth defendant/not a party to the application)
CHINA FIRST PTY LTD
ACN 135 588 411
(sixteenth defendant/not a party to the application)
ACN 119 455 248
(seventeenth defendant/not a party to the application)
(eighteenth defendant/not a party to the application)
ALEXANDER GUEORGUIEV SOKOLOV
(nineteenth defendant/not a party to the application)
(twentieth defendant/not a party to the application)
SCI LE COEUR DE L’OCEAN
(twenty-first defendant/not a party to the application)
(twenty-second defendant/not a party to the application)
STEPHEN JAMES PARBERY IN HIS CAPACITY AS LIQUIDATOR OF QUEENSLAND NICKEL PTY LTD (IN LIQ)
ACN 009 842 068
QUEENSLAND NICKEL PTY LTD (IN LIQ)
ACN 009 842 068
JOHN RICHARD PARK, KELLY-ANE LAVINA TRENFIELD & QUENTIN JAMES OLDE AS LIQUIDATORS OF QUEENSLAND NICKEL PTY LTD (IN LIQ)
ACN 009 842 068
BS 6593 of 2017
7 April 2021
7 April 2021
The orders of the Court are:
of and incidental to the interlocutory application, to be assessed on the indemnity basis.
PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – COSTS – INDEMNITY COSTS – PARTICULAR CASES – HOPELESS CASES – where the applicants filed an interlocutory application seeking relief from an alleged breach of a settlement deed by the second plaintiff – where the application was also served on the first and third plaintiffs – where the applicants intended to apply for special leave in a different proceeding but did not do so – where the parties agreed to discontinue the application but remained in dispute as to the appropriate costs order – where the applicants contend that costs should follow the event on the standard basis – where the applicants seek to explain the late abandonment of the application on the timing of their decision not to pursue the special leave application – where the respondents argue for an indemnity costs order on the basis that the applicants’ case was always hopeless and should have been appreciated as such – whether the applicants’ case was reasonably arguable
QNI Metals Pty Ltd v Vannin Capital Operations Ltd  QSC 292, referred to
QNI Metals Pty Ltd v Vannin Capital Operations Ltd  QCA 24, cited
J P Moore QC for the first plaintiff/respondent
N J Derrington for the second and third plaintiffs/respondents
K Byrne for the first and second defendants/applicants
King & Wood Mallesons for the first plaintiff/respondent
HWL Ebsworth Lawyers for the second and third plaintiffs/respondents
Alexander Law for the first and second defendants/applicants
HIS HONOUR: I have before me an interlocutory application filed by the first and second defendants as applicants to which the first, second and third plaintiffs are the respondents. In order to explain the issues which must be resolved, it is necessary first to set out a little background.
The identity of the parties to the proceeding in which the interlocutory application was filed (the Queensland Nickel Proceeding), and the nature of the issues which arose between them are set out sufficiently for present purposes in my judgment in Supreme Court proceeding 6476/20 (the OA proceeding): see QNI Metals Pty Ltd v Vannin Capital Operations Ltd  QSC 292, published on 22 September 2020 at  to . I adopt what I there set out.
The same paragraphs sufficiently describe the relationship between the issues which arose in that proceeding and those which arose in Supreme Court proceeding 13947/20 (the Vannin proceeding).
On 3 August 2019, the parties to the Queensland Nickel proceeding reached a partial settlement of issues which existed between them and recorded that settlement in a deed bearing that date (the settlement deed). The terms of the settlement deed and the consent order which, pursuant to the settlement deed, Mullins J made on 5 August 2019 are set out in my judgment in the OA proceeding at  to . I adopt what I there set out. To make sense of what follows, it is necessary to quote those paragraphs (emphasis and footnotes in original):
- On 3 August 2019, the parties to the Queensland Nickel proceeding reached a partial settlement of issues which existed between them and recorded that settlement in a deed bearing that date. The trial of the Queensland Nickel proceeding continued in relation to issues not affected by the compromise. The settlement deed relevantly provided as follows:
- (a)By cl 2.2, the parties to the deed were obliged to jointly apply for “Consent Orders”, a term defined by reference to the orders set out in schedule 1B to the deed. The relevant aspects of schedule 1B were:
- (i)(By order 1) the Applicants would be ordered to pay to GE or Vannin the amount of any final money judgment which GE or Vannin obtained against Queensland Nickel within 28 days of being notified that such a judgment, not subject to a court ordered stay, had been entered.
- (ii)(By order 7) the Applicants would have leave to commence or continue proceedings (including by way of counterclaim) against Queensland Nickel in respect of any amounts which Queensland Nickel owed to GE or Vannin, but on terms that:
- Athe Applicants must indemnify Queensland Nickel in respect of any judgment obtained against it in, and its costs of, those proceedings;
- Bthey must not seek to enforce any judgment obtained in those proceedings against Queensland Nickel; and
- CQueensland Nickel was not required to take any active part in the proceedings and agreed to be bound by the determination made in those proceedings as to the extent of its liability, if any, to GE or Vannin as determined as between the Applicants on the one hand and GE or Vannin on the other, save as to costs.
- (b)By cl 2.1, the Applicants were obliged to pay certain monies into the trust account of the solicitors for the special purpose liquidators and they were obliged (after the Consent Orders were made) to pay other monies to a list of other creditors as listed in other schedules to the settlement deed.
- (c)By cl 2.3, cll 3 to 7 of the settlement deed inclusive had no effect and did not become operative until the Consent Orders had been made.
- (d)By cl 3, the Applicants authorised the solicitors for the special purpose liquidators to pay out the monies from their trust account to the Commonwealth and, once that occurred, the special purpose liquidators became obliged to procure a withdrawal of the relevant claim made by the Commonwealth and a release in respect of that claim.
- (e)By cll 4 to 6, the parties to the deed accepted various obligations to grant releases and to discontinue litigation in connection with the matters compromised.
- (f)By cl 7:
7. [The Vannin proceeding] …
7.1 Consent Order Payment
The parties acknowledge that [the Applicants] are entitled to exercise all rights at law arising as a result of any Consent Order Payment the subject of the Consent Orders.
7.2 Further rights of [the Applicants]
In addition to the rights referred to in clause 7.1:
- (a)as to [the Vannin proceeding]:
- (i)the [special purpose liquidator] himself whilst he is appointed as such and [Queensland Nickel] whilst the [special purpose liquidator] is appointed as such, will not seek to take any step which impairs the conduct of any claims by or defences available to [the Applicants] in relation to [the Vannin proceeding] and will as far as permissible by the Court, if required to be a party to any such proceedings, enter only a submitting appearance and otherwise abide the outcome of the determination as between [the Applicants] (on the one hand) and Vannin (on the other) of the issues between them as concern the claims the subject of the Consent Order Payment, save as to costs; and
- (ii)[the Applicants] may do all acts as may be required or necessary for the purpose of defending or enforcing any rights or remedies or of obtaining relief or indemnity from any claims brought by [Vannin].
- (g)By cl 8.7(a):
8.7 Further action
- (a)Each party must use reasonable efforts to do all things necessary or desirable to give full effect to this Deed.
- I interpolate, into the present chronological recitation of background, two points in relation to the potential operation of cl 7, in light of events which have happened up to the date of this judgment:
- (a)First, “Consent Order Payment” was defined in cl 1 of the settlement deed to mean “the orders in paragraph  and  of the Consent Orders”. So far as is presently relevant, that would mean a payment made to GE or Vannin of the amount of any final money judgment which GE or Vannin obtained against Queensland Nickel. No such payment has been made because no such final judgment has been obtained. Such a payment might occur if the Applicants paid the amount of a final judgment obtained by Vannin against them in the Vannin proceeding. It follows that the rights of which cl 7.1 speaks have not yet arisen.
- (b)Second, by order of the Federal Court made on 15 October 2019, the special purpose liquidator was removed as special purpose liquidator of Queensland Nickel. That occurred because his role as special purpose liquidator had come to an end. It follows that from 15 October 2019 onwards, the special purpose liquidator was no longer “appointed as such” within the meaning of cl 7.2(a)(i). It also follows that the time constraints imposed by the opening clause of cl 7.2(a)(i) (namely “the [special purpose liquidator] himself whilst he is appointed as such and [Queensland Nickel] whilst the [special purpose liquidator] is appointed as such”) could no longer be met. Thus, from 15 October 2019, cl 7.2(a)(i) could no longer be regarded as imposing any obligation on either the special purpose liquidator or on Queensland Nickel.
- Pursuant to the terms of the compromise, on 5 August 2019, Mullins J made the consent orders as set out in schedule 1B of the settlement deed (referred to at (a) above), although the text of what had been order 7 in schedule 1B was reproduced as order 6 in the orders made by her Honour. It is convenient hereafter to refer to her Honour’s orders of 5 August 2019 as the Consent Orders. They were relevantly in these terms:
- The Court orders that [the Applicants] pay to [GE or Vannin] (Claiming Creditor) the amount of any final money judgment obtained by that Claiming Creditor against [Queensland Nickel] which is not stayed by order of the court within 28 days of [Queensland Nickel] serving a written notification on [the Applicants] that such final money judgment not subject to a stay has been entered against [Queensland Nickel].
- [The Applicants] have leave to commence or continue proceedings (including by way of counterclaim) against [Queensland Nickel] in respect of amounts (if any) owed by [Queensland Nickel] to the Claiming Creditor, but on terms that:
- (a)[the Applicants] shall indemnify [Queensland Nickel] in respect of any judgment obtained against it in, and its costs of, those proceedings;
- (b)[the Applicants] may not seek to enforce any judgment obtained in those proceedings against [Queensland Nickel]; and
- (c)[Queensland Nickel]:
- (i)until further order, is not required to take any active part in the proceedings;
- (ii)otherwise agrees to be bound by the determination made in those proceedings as to the extent of its liability, if any, to the Claiming Creditor as determined as between [the Applicants] on the one hand and the Claiming Creditor on the other, save as to costs.
After the settlement deed and the consent order, and up to 2 June 2020, events took place in the Vannin proceeding as I set out in my judgment in the OA proceeding at  to . I adopt what I there set out. As is apparent from what I then wrote, the present applicants complained of the fact that on 2 June 2020, the present second plaintiff (Queensland Nickel) had consented to Vannin having retained Mr Doyle QC to act for it in the Vannin proceeding.
On 17 June 2020 the applicants commenced two applications.
First, by an interlocutory application filed in the Queensland Nickel proceeding, they sought:
- (a)a declaration that in consenting to Mr Doyle QC acting for the plaintiff in the Vannin proceeding, Queensland Nickel had breached cll 7.1, 7.2, and 8.7(a) of the settlement deed; and
- (b)an order pursuant to r 668(2) of the Uniform Civil Procedure Rules 2016 (Qld), or alternatively the inherent jurisdiction of the court, that order 1 in the consent order be set aside.
The interlocutory application identified that it was intended to be served on Queensland Nickel and the present third plaintiff (the general purpose liquidators). But it was also served on the present first plaintiff (the special purpose liquidator) as a proper party. The interlocutory application is the application which is presently before me for resolution.
Second, by an origination application dated 17 June 2020, the applicants commenced the OA proceeding. The respondents to the OA proceeding were:
- (a)Vannin and its solicitors;
- (b)Queensland Nickel;
- (c)the general purpose liquidators; and
- (d)the solicitors for Queensland Nickel and the general purpose liquidators.
The special purpose liquidator was not a party to the OA proceeding.
By the OA proceeding, the applicants sought the relief I set out in my judgment in the OA proceeding at . It suffices presently to say that they sought orders requiring each of the respondents to serve on them an affidavit deposing to their knowledge concerning communications between, on the one hand, Vannin and its solicitors and, on the other hand, Queensland Nickel, the general purpose liquidators and their solicitors, which communications were relevant to the Vannin proceeding and, in particular, concerned information passing between the respondents and Mr Doyle QC in respect of that proceeding since the date of the settlement deed.
The expressed purposes of the applicants in seeking that relief were the purposes of pleading or assisting them in the prosecution of causes of action for:
- (a)breach of the settlement deed and setting aside court orders made pursuant to the settlement deed;
- (b)restraining a breach of confidence; and
- (c)restraining lawyers from acting against them in the Vannin proceeding.
The first of those three grounds was obviously a reference to the present interlocutory application.
Although that application had been commenced at the same time as the OA proceeding, it was not sought to be progressed until after the resolution of the OA proceeding by me. As I have mentioned, my judgment in the OA proceeding was published on 22 September 2020. By order made on 9 October 2020, I made timetabling orders for the provision of written submissions from the applicants and from the special purpose liquidator and from Queensland Nickel and the general purpose liquidators and I listed the interlocutory application for hearing before me on 8 February 2021.
An appeal was filed from my judgment in the OA proceeding and the appeal was argued on 12 November 2020. By consent order made on 5 February 2021, the hearing of the interlocutory application was adjourned to a date to be fixed. The appeal judgment dismissing the appeal from my decision in the OA proceeding was published on 19 February 2021: see QNI Metals Pty Ltd v Vannin Capital Operations Ltd  QCA 24.
On 4 March 2021, I held a review hearing.
At the review, the applicants:
- (a)indicated they were considering seeking special leave to appeal to the High Court of Australia in respect of the appeal judgment; and
- (b)submitted that the appropriate case management directions to be made in respect of the interlocutory application were that the review should be adjourned to a date after the period for filing a special leave application had expired.
The applicants did not apply for a stay. I set the interlocutory application down for hearing on today 7 April 2021. That date provided the applicants sufficient time to file an application for special leave to appeal to the High Court of Australia if they chose to do so, and to bring an application for stay, again if they chose to do so.
The period for applying for special leave to appeal expired on 19 March 2021 and at about that time, the applicants, after considering the reasons of the Court of Appeal, decided not to make an application for special leave to appeal. Shortly thereafter, they determined that they should not proceed with the interlocutory application. Their solicitor deposed that the reason for that determination was because the issues determined by me in the OA proceeding would affect the interlocutory application. That may have been to understate the position because the applicants counsel frankly conceded before me today that if I had continued to hold the views as to the proper construction of the settlement deed which I had expressed in my judgment, the interlocutory application could not succeed. I observe in relation to that, that in light of the views expressed by the Court of Appeal at  to  and  to , it must have been thought likely that I would continue to hold the views that I had expressed in my judgment.
On 26 March 2021, the applicants instructed their solicitor to “discontinue the application.” The solicitor wrote to the respondents seeking their consent to that course. After an exchange of correspondence it became clear that all parties agreed that orders should be made dismissing the interlocutory application, but they were in dispute as to what was the appropriate costs order. The applicants conceded that costs should follow the event, but the respondents submitted that the costs should be assessed on the indemnity basis and the applicants submitted that costs should be assessed on the standard basis. I was informed yesterday that the issues for determination today would be limited to the form of the orders which should be made dismissing the interlocutory application, particularly the form of costs orders.
The essence of the respondents’ argument for indemnity costs was that the applicants’ case was always hopeless and should have been appreciated to be such. It turned, it was submitted, on hopeless arguments of construction of the settlement deed and on a recourse to equity and to the inherent jurisdiction for which there was never sufficient evidentiary foundation.
As to the former proposition:
- (a)The applicants had made clear in their submissions in October 2020 that they relied on cll 7.1, 7.2(a)(ii), 8.3(b) and 8.7(a) of the settlement deed to assert that they were entitled to exercise the rights of Queensland Nickel or to call on Queensland Nickel to exercise its rights to assist them.
- (b)But, as was conceded, the applicants’ arguments could not succeed if I continued to hold the views as to construction which I expressed in my judgment in the OA proceeding.
- (c)The respondents’ arguments relied on the construction of the settlement deed which had found favour in the two judgments I have mentioned and suggested that the application was always baseless and that the conduct of the applicants in making and continuing the interlocutory application was plainly unreasonable.
- (d)Queensland Nickel and the general purpose liquidators, for their part, separately contended that the conclusion of unreasonableness could more easily be inferred because of the late unexplained abandonment of the case and because they had made an offer to consent to dismissal of the application with no order as to costs, which had not been accepted. (I observe that the order was not a Calderbank offer, and it had expired by the time that the respondents suggested that they would rely on it in relation to costs.)
As to the latter proposition, the respondents suggested that the inadequacy of the evidentiary foundation must be taken to have been implicitly recognised by the fact that the applicants did not seek to progress the application until after the resolution of the OA proceeding and, once that proceeding was finally lost on appeal, the interlocutory application was abandoned. Further, they point out that the applicants had never been able to identify any relevant circumstance or information in the possession of Mr Doyle QC that arguably justified the assertion that the applicants were prejudiced by Queensland Nickel giving consent to Mr Doyle acting against Queensland Nickel. Even if the construction of the settlement deed advanced by the applicants had been reasonably arguable, so it was submitted, the applicants should not have commenced the interlocutory application until after their entitlement to the relief sought by the OA proceeding was resolved. It was unreasonable not to do that, and if it had been done, then all the costs of the interlocutory application would have been avoided because once the OA proceeding was lost, one could infer that the interlocutory application would never have been commenced.
The special purpose liquidator separately submitted that his claim to indemnity costs was even more compelling in light of the fact that: (1) he had been removed as liquidator before the conduct of which the applicants complained had even occurred; and (2) the applicants’ apparent reliance on cl 7.2(a)(i) was misplaced for reasons both the Court of Appeal and I had recognised. I am not persuaded that this point improves the special purpose liquidator’s position. No relief was sought against him. And the applicants had clarified that they placed no specific reliance on that clause in their submissions of 23 October 2020.
It follows that, to my mind, the question whether the respondents should have their costs on an indemnity basis rises and falls on whether I accept that such an order is justified by the other submissions that they have advanced.
For their part, the applicants simply characterise this as a case in which they had lost an argument which was reasonably arguable. Costs should follow the event but only on the standard basis because, they submit, simply to contest and lose litigation does not of itself expose a losing party to an indemnity costs order. They point out that they have explained the reason for the late abandonment of the interlocutory application, namely the timing of their ultimate decision not to pursue special leave to appeal from the decision of the Court of Appeal in the OA proceeding. They point out that the costs orders made by me and by the Court of Appeal in the OA proceeding require costs to be paid on the standard basis.
In my view, contrary to the applicants’ submissions, this is an appropriate case for an indemnity costs order. Using the vernacular, the interlocutory application was a beat-up when it was commenced and has been confirmed to be so by subsequent events.
A reasonable response to Queensland Nickel’s conduct in consenting to Mr Doyle QC acting for Vannin as proposed would first have been to consider rationally whether there was any real risk that the applicants would suffer prejudice by reason of the conduct complained of, and, if there was, to consider whether there was any legal or equitable remedy available to the applicants to prevent that risk coming to pass.
But it had already been made clear before the applicants commenced the interlocutory application that Mr Doyle QC would not be acting for Vannin. As the Court of Appeal observed (see the judgment in the OA proceeding at (b) and  to ), the risk of dissemination of truly confidential information was so low as to mitigate against interfering on a discretionary basis. To my mind, that should have been obvious to the applicants and that realisation should have been enough to suggest that nothing needed to be done. But the applicants did not take that course. Instead, they filed the interlocutory application and essentially speculated on the success of the OA proceeding being able to fish out a case which might have retrospectively justified the commencement of the interlocutory application.
I accept the respondents’ argument that the applicants’ case was always hopeless and should have been appreciated to be such. As the Court of Appeal had noted, Queensland Nickel’s right to the preservation of confidence and the avoidance of conflict of interest in respect of Mr Doyle QC was not the applicants’ right. That should have been obvious to the applicants.
I accept the respondents’ argument that the applicants’ case turned on hopeless arguments of construction of a settlement deed and on a recourse to equity and to the inherent jurisdiction for which there was never sufficient evidentiary foundation. The interlocutory application should never have been commenced and the respondents should be compensated for the costs they have incurred because of it having been commenced by having their costs assessed on the indemnity basis.
For completeness, I observe that it is not relevant that there was no indemnity costs award in the OA proceeding. Before me indemnity costs were not sought, and there is no indication that the issue was considered by the Court of Appeal in the Court of Appeal’s reasons for judgment.
I make the following orders:
- (a)The interlocutory application filed 17 June 2020 is dismissed.
- (b)The applicant first and second defendants must pay the costs of–
- (i)the first plaintiff; and
- (ii)the second and third plaintiffs,
of and incidental to the interlocutory application, to be assessed on the indemnity basis.
Some other third party creditors, not presently relevant, were also dealt with by the schedule: see order 2 of schedule 1B.
By the time the deed was entered into, there was only one remaining special purpose liquidator, previous special purpose liquidators having validly resigned
The renumbering occurred because order 4 from schedule 1B had become unnecessary and was not made.
- Published Case Name:
QNI Metals Pty Ltd & others v Parbery & others
- Shortened Case Name:
QNI Metals Pty Ltd & others v Parbery & others
 QSC 76
07 Apr 2021