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Queensland Judgments

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Authorised Reports & Unreported Judgments
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China First Pty Ltd & Anor v Mount Isa Mines Ltd & Ors  
Unreported Citation: [2018] QSC 163
EDITOR'S NOTE

This case involved an application to set aside a declaration and orders made in the absence of the applicant companies. The applicants contended they were necessary parties due to the effect the declaration and orders may have on the value of their security interests. Brown J considered a submission that the materiality of the effect of any orders, or a sufficient commercial interest, could render a non-party a necessary party. Her Honour rejected that submission and emphasised that the correct test, as settled by the High Court, is that a non-party is only a necessary party if their rights or liabilities are directly affected. Here, any effect on the commercial value of the applicants’ security was only indirect or consequential.

Brown J

15 June 2018

Background

Mount Isa Mines were the long-term lessees of a wharf in Townsville. Pursuant to a licence agreement, Mount Isa Mines granted Queensland Nickel Pty Ltd non-exclusive access to the wharf. Queensland Nickel used the wharf to transport ore to its refinery. [4]–[5]. However, in March 2016 Mount Isa Mines terminated the agreement, following a failure by Queensland Nickel to pay harbour dues in late 2015. [9].

In an earlier proceeding, Mount Isa Mines had sought a declaration (and related orders) that it was entitled to remove equipment owned by the Queensland Nickel companies from the wharf. [1]–[2]. The equipment was used for unloading and moving ore. [6]. On 20 November 2017, Atkinson J made that declaration and orders. [1]

This application

In this application, China First Pty Ltd and Waratah Coal Pty Ltd (‘the applicants’) sought to set aside the declaration and orders made by Atkinson J, and to be joined as parties to that proceeding. The applicants contended that they were necessary parties because they were directly affected by Atkinson J’s orders. [2], [15].

The basis for the contention that they were directly affected by the orders was that they were the holders of registered charges over all of the property owned by companies in the Queensland Nickel group. [13]–[14]. They therefore had an interest in the equipment on the wharf, and an interest in the Queensland Nickel companies having a viable refinery business. [30]. The applicants produced affidavit evidence indicating that the equipment may be damaged if removed, because it was welded onto the wharf rather than bolted. Its removal could result in a reduction of its value. Further, the evidence suggested that there may be no alternative port available to the Queensland Nickel companies, which was necessary for the viable operation of the refinery business. It was contended that removal of the equipment would therefore “effectively destroy the business and destroy the value of the applicants’ security”. [7], [30]–[31].

Who is a necessary party?

Brown J noted that after final orders have been made in a proceeding (as here), the enquiry of whether a party was a necessary party must be “directed to the orders actually made”. As to who is a necessary party, her Honour summarised the effect of the High Court’s decision in John Alexander’s Clubs Pty Ltd v White City Tennis Clubs Ltd (2010) 241 CLR 1 as being that: “where a court is invited to make or proposes to make orders directly affecting the rights or liabilities of a non-party, the non-party is a necessary party and ought to be joined”. (Emphasis added.) [22].

The applicants contended that a commercial interest alone may be sufficiently affected to render a non-party a necessary party. [19], [24]. In this regard, reference was made to a decision of the Full Federal Court, where it was said that the direct affect test “involves matters of degree, and ultimately judgment, having regard to the practical realities of the case, and the nature and value of the rights and liabilities of the third party which might be directly affected”. [26]. The applicants contended that this suggested that the court must have regard to the materiality of the effect of any orders, and not just their direct effect per se. [27].

Brown J rejected these arguments, emphasising that the correct test as set out by the High Court in John Alexander is whether the non-party’s rights and liabilities are directly affected. Her Honour said (at [28]):

“The practical reality of the case and the nature and value of the rights of a non-party which may be directly affected are matters to which the Court must have regard in determining whether those rights are directly affected but those matters are not a substitute test.”

Whether the applicants were necessary parties

The declaration made by Atkinson J was simply that Mount Isa Mines was entitled to remove the equipment. That declaration, and the associated orders, did not create any new rights, declare any proprietary interests, or compel any course of conduct. [42]. Further, the entitlement of the applicants to exercise any of their rights under the charges was unaffected. [47]. Although the commercial value of the applicants’ security may be affected by the declaration and orders, “that can only be regarded as an indirect or a consequential effect.” [43].

In summary, the applicants did not establish that they were necessary parties to the previous proceeding. Accordingly, their application to set aside the previous declaration and orders and be joined was dismissed. [56]–[59].

W Isdale