Federal Court of Australia

Park, in the matter of Queensland Nickel Pty Ltd (in liq) [2024] FCA 912

ORDERS

THE COURT NOTES THAT:

Originating Process means the originating process filed by the Plaintiffs on 4 June 2024.

Judgment Sum means the sum of $102,884,346.26 paid by Mineralogy Pty Ltd to the Second Plaintiff in satisfaction of the judgment of the Queensland Court of Appeal delivered on 25 June 2021, any further payment made in respect of that sum, and any interest earned by the Second Plaintiff on that sum.

Trust Assets means the balance of the Judgment Sum that continues to be held by the Second Plaintiff and all assets of the Second Plaintiff held by it as trustee for QNIM and QNIR.

THE COURT ORDERS THAT:

1.    Prony Resources New Caledonia (formerly Vale Nouvelle-Calédonie SAS) be granted leave to appear at the case management hearing on 9 August 2024 pursuant to r 2.13(1) of the Federal Court (Corporations) Rules 2000 (Cth).

2.    The Plaintiffs are justified in paying from the Trust Assets the amount of $4,150,139.40 to Prony Resources New Caledonia (formerly Vale Nouvelle-Calédonie SAS), being the amount admitted by the First Plaintiffs in respect of the proof of debt lodged by Prony Resources New Caledonia (formerly Vale Nouvelle-Calédonie SAS) in the liquidation of the Second Plaintiff.

3.    By 4:00 pm on 30 August 2024, the Plaintiffs and Interested Persons file and serve any further affidavit material in relation to the relief sought by the Plaintiffs in paragraphs 3, and 6 to 8 of the Originating Process.

4.    By 4:00 pm on 9 September 2024, the Plaintiffs and Interested Persons file and serve an outline of submissions in relation to the relief sought by the Plaintiffs in paragraphs 3, and 6 to 8 of the Originating Process.

5.    By 4:00 pm on 16 September 2024, the Plaintiffs and Interested Persons file and serve any submissions in reply to the submissions referred to in Order 4.

6.    The relief sought in paragraphs 3, and 6 to 8 of the Originating Process be listed for a two-day hearing before Downes J commencing at 10:15 am on 24 October 2024.

7.    The costs of Prony Resources New Caledonia (formerly Vale Nouvelle-Calédonie SAS) be reserved.

8.    Costs be reserved.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

DOWNES J:

Background

1    On 9 August 2024 at a case management hearing, I made an order as sought by the plaintiffs in these terms:

The Plaintiffs are justified in paying from the Trust Assets the amount of $4,150,139.40 to Prony Resources New Caledonia (formerly Vale Nouvelle-Calédonie SAS), being the amount admitted by the First Plaintiffs in respect of the proof of debt lodged by Prony Resources New Caledonia (formerly Vale Nouvelle-Calédonie SAS) in the liquidation of the Second Plaintiff.

2    These are my reasons for making that order.

3    Many of the facts relevant to the background of this judgment are set out in Park, in the matter of Queensland Nickel Pty Ltd (in liq) (No 3) [2022] FCA 1301 (November 2022 judgment or J). I will adopt the same defined terms as appear in that judgment.

4    On delivery of the November 2022 judgment, I made the following order:

3.    The first plaintiffs are justified in paying the following amounts from the Trust Assets:

…

(c)    in respect of any proof of debt of a creditor which they have admitted (or where the decision has been varied by way of appeal so as to admit the claim), such amount as is admitted, following the expiry of any relevant time allowed for an appeal against that adjudication.

5    In support of, and otherwise relevant to, that order are the reasons at J [159]–[206] and J [412]–‍[415]. In that proceeding, the Palmer Parties had objected to the plaintiffs, QNI and its liquidators (as in the current proceedings), exercising rights of indemnity and exoneration in relation to Trust Assets of which QNI was no longer trustee. I concluded that the plaintiffs were justified in exercising rights of indemnity and exoneration, including in paying amounts in relation to admitted proofs of debt of creditors of QNI from the Trust Assets which resulted in the order referred to above.

6    The November 2022 judgment was upheld by the Full Court: Queensland Nickel Sales Pty Ltd v Park in his capacity as liquidator of Queensland Nickel Pty Ltd (in liq) (2023) 299 FCR 169; [2023] FCAFC 150 (Markovic, Banks-Smith and Halley JJ).

7    Following that appeal and the continuation of the adjudication process relating to QNI’s liquidation, the current proceedings were brought to finalise the liquidation and resolve the remaining issues, which consisted of:

(1)    outstanding oppositions to creditors’ claims;

(2)    questions relating to interest on the creditors’ claims;

(3)    special leave to distribute the remaining surplus; and

(4)    the release of the liquidators.

8    On 13 June 2024, I made orders:

(1)    joining the Palmer Parties as interested persons pursuant to the Federal Court (Corporations) Rules 2000 (Cth);

(2)    requiring the Palmer Parties to notify the plaintiffs by 4:00 pm on 20 June 2024 of any opposition to the plaintiffs paying a first and final dividend from the Trust Assets to any of the remaining creditors, being a list of creditors of QNI whose proofs of debt have been admitted by the first plaintiffs;

(3)    requiring the Palmer Parties to file and serve by 4:00 pm on 28 June 2024 any evidence in support of any opposition and any interlocutory application they wished to make; and

(4)    requiring the plaintiffs to notify all creditors of QNI of these proceedings and of their right to apply to be heard as an interested person.

9    The deadline for the third order above was subsequently extended by consent to 12:00 pm on 3 July 2024.

10    At a case management hearing on 8 July 2024, I made orders joining two creditors to the proceedings as interested persons, being the only creditors whose proofs of debt were the subject of objection by the Palmer Parties. The claims of those creditors have since been resolved and I granted them leave to withdraw from the proceedings.

11    Shortly before the next case management hearing on 9 August 2024, a dispute was raised by the Palmer Parties concerning payment by the liquidators to Prony Resources New Caledonia (formerly Vale Nouvelle-Calédonie S.A.S.). Prony appeared at the case management hearing as a result.

12    The plaintiffs, with the support of Prony, sought orders that they were justified in paying from the Trust Assets the amount of $4,150,139.40 to Prony, being the amount admitted by the first plaintiffs in respect of Prony’s proof of debt. The Palmer Parties sought orders including that the issue of whether this direction should be made be dealt with on 24 and 25 October 2024, at which the issues referred to above will be the subject of final hearing.

13    For the reasons below and as already observed, I ordered that the plaintiffs are justified in paying from the Trust Assets the amount of $4,150,139.40 to Prony in the terms set out above.

The Prony proof of debt

14    The proof of debt lodged by Prony arises from a supply agreement between it and QNI dated 13 February 2013.

15    By a Deed of Settlement and Release dated 11 December 2019 (Settlement Deed) agreed between the plaintiffs and Prony, Prony agreed (inter alia) to reduce the amount claimed in its proof of debt in the liquidation of QNI to $4,150,139.40. In return, the first plaintiffs agreed to admit that proof of debt in the liquidation, and that has occurred.

16    While Prony’s proof of debt had been the subject of opposition by the Palmer Parties, no affidavit material was filed by the Palmer Parties in relation to it as required by my order of 13 June 2024, as varied.

17    Instead, on 3 July 2024, the solicitors for the Palmer Parties sent an email to the solicitors for the plaintiffs which relevantly stated that:

Please note that our client has withdrawn its objection to the Vale/Prony POD.

18    A case management hearing was held on 8 July 2024 at which the Palmer Parties appeared and orders were made on the premise that there were only two proofs of debt which were the subject of objection by the Palmer Parties (which did not include the proof of debt lodged by Prony).

19    Following that case management hearing, the solicitors for the Palmer Parties emailed the plaintiffs’ solicitors on 8 July 2024 stating that there were “new circumstances” regarding Prony’s claim.

20    A further letter dated 10 July 2024 reiterated that the Palmer Parties had withdrawn their objection to the Prony proof of debt and relevantly stated that:

The new circumstance we adverted to in our email dated 8 July 2024, is that our clients (QNIM and QNIR) were continuing to seek to pay Prony directly the full amount of their claim (as set out below). We are now instructed that our clients have in fact paid Prony directly, the full amount described in the admitted proof of debt.

21    The Palmer Parties delivered a cheque to Prony’s offices in New Caledonia under cover of a letter indicating that the cheque was tendered pursuant to the Settlement Deed. However, by letters dated 11 and 15 July 2024 sent by the solicitors acting for Prony to the solicitors acting for the Palmer Parties, it was stated that the tender was not accepted for a range of reasons, including that Prony had an entitlement to interest under s 563B of the Corporations Act 2001 (Cth).

22    The Palmer Parties have subsequently withdrawn the tender and asked for the return of the cheque. They now seek to add a further issue to the hearing on 24 and 25 October 2024, being whether Prony is entitled to be paid the amount of its proof of debt from the Trust Assets.

Consideration

23    Having regard to these events, it is understandable that the plaintiffs sought an order that they were justified in paying from the Trust Assets the amount of $4,150,139.40 to Prony, being the amount admitted by the first plaintiffs in respect of Prony’s proof of debt. This is so notwithstanding that the order is arguably unnecessary having regard to the order which I made upon delivery of the November 2022 judgment, as referred to above.

24    The Palmer Parties resisted the order being made on the basis that there needed to be a hearing which would involve the proper construction of the Settlement Deed. By the Settlement Deed, the supply agreement was terminated and, subject to Prony being able to prove its debt in the liquidation of QNI, Prony released and discharged the plaintiffs from claims arising out of, in relation to or in connection with that agreement.

25    The Palmer Parties submitted that the Settlement Deed resulted in a “new charter of rights” between the plaintiffs and Prony. Counsel for the Palmer Parties relied upon various clauses of the Deed to support this submission. The Palmer Parties further submitted that the Settlement Deed created a “new” debt, that “new” debt replacing the original debt which had arisen under the supply agreement. They submitted that, as the Settlement Deed was entered into after the replacement of QNI as trustee of the trust, the new debt had been incurred at that time as well, with the consequence that the plaintiffs cannot have recourse to the Trust Assets in paying that debt. In support of this contention, they cited Hillam v Iacullo (2015) 90 NSWLR 422; [2015] NSWCA 196 and Carter Holt Harvey Woodproducts Australia Pty Ltd v Commonwealth (2019) 268 CLR 524; [2019] HCA 20.

26    In response, the plaintiffs and Prony submitted that there was no genuine dispute which required resolution at a later hearing, and the issue could be resolved at the case management hearing. For the reasons given below, I agreed.

27    The relevant clause in the Settlement Deed states:

Proof of Debt

3.2    On the satisfaction of the conditions precedent in clause 5.1 of this Deed:

(a)    VNC agrees to reduce the amount claimed in its proof of debt made in the liquidation of QNI to AUD $4,150,139.40; and

(b)    the Liquidators admit VNC’s Debt to proof of debt in the liquidation of QNI in the amount of AUD $4,150,139.40.

28    VNC is a reference to Prony, and the Liquidators to the first plaintiffs. VNC’s Debt is defined as “the total net debt due from QNI to VNC in respect of supplies made under the Supply Agreement made between the Parties”.

29    Clause 3.2 therefore reduces and quantifies the value of the existing debt, which debt was incurred when QNI was trustee of the Trust Assets, for the purposes of admission of the proof of debt in the liquidation; for this reason, it is plain that the Settlement Deed does not create a “new” debt. There was no need for the proper construction of the Settlement Deed to be deferred to another day.

30    The Palmer Parties could not explain why their contention about the Prony proof of debt had not been raised earlier than the week of the case management hearing on 9 August 2024 other than to submit that the correspondence received from Prony’s solicitors had caused them to form a different view about Prony’s debt. However, there was no evidence to support that submission, and nor was there any evidence to explain why no affidavit material had been filed in compliance with my order of 13 June 2024 (as extended) in relation to the Prony proof of debt or why they had attempted to pay Prony the amount of its debt if there was a genuine dispute about it.

31    In circumstances where this proceeding has been conducted on a particular footing, and orders made as a consequence, it is unsatisfactory for a party to raise a new issue and seek to have that issue added to the issues to be addressed at the final hearing without adducing evidence to explain its sudden volte-face. This is especially the case in the context of a significant and protracted liquidation such as the one in this case. The lack of evidence only served to fortify my view that there was no genuine dispute being raised by the Palmer Parties which justified any delay in the order being made.

32    A subsidiary issue was also raised by the Palmer Parties concerning whether Prony was the same entity as Vale Nouvelle-Calédonie S.A.S (which entity entered the relevant supply agreement and Settlement Deed). However, this issue was without substance as the plaintiffs tendered extracts from French corporate registers that indicated that both entities had the same company registration number and were the same entity. These extracts established that Prony is the same entity as Vale Nouvelle-Calédonie S.A.S. and the Palmer Parties did not submit otherwise. There is therefore no genuine dispute about this issue.

Conclusion

33    For these reasons, I considered there to be no genuine dispute raised by the Palmer Parties which justified the issue of whether the order sought by the plaintiffs should be deferred to the later hearing. I also considered that the order sought by the plaintiffs was justified in the circumstances.

Associate:

Dated:    15 August 2024