25 May 2018

Freezing orders application against Mr Palmer and Co in Queensland Nickel matter successful

This article was written by Emma Costello and David Cowling

The special purpose liquidators of Queensland Nickel Pty Ltd (in liq) have been successful in their application in the Supreme Court of Queensland for freezing orders against Mr Clive Palmer and several companies which he controls.[1]

Background

The special purpose liquidators of Queensland Nickel Pty Ltd (in liq) (the plaintiffs) applied for freezing orders and ancillary orders against Mr Palmer and a group of companies which Mr Palmer controlled (the defendants).  As the judgment of Bond J explained, an applicant for a freezing order must demonstrate:

  • a good arguable case against the defendant;
  • a danger or risk that steps might be taken with the result that the Court’s execution and enforcement process would be frustrated, in the sense that any judgment of the Court will be wholly or partly unsatisfied; and
  • it is in the interests of justice that the power to make a freezing order be exercised.

Judgment

Did the plaintiffs have a good arguable case?

Mr Palmer submitted that the plaintiffs had not established a good arguable case against him. Justice Bond rejected this submission, finding that the plaintiffs had “a good arguable case for such relief against Mr Palmer as would justify the amounts sought to be made the subject of freezing orders against him”.  Justice Bond even went so far as to say that “some parts of that case are matters in respect of which I am prepared to say the plaintiffs’ case is a strong arguable case”.

The corporate defendants did not dispute that the plaintiffs had established a good arguable case against them.

Was there a relevant risk?

Justice Bond found that there were “particular aspects of Mr Palmer’s previous conduct which would lead a prudent, sensible commercial person to infer that there is a real risk that he would take, or cause to be taken, steps outside court processes to attempt to frustrate or inhibit the prospects of enforcement or execution of any significant judgment against him or any of his companies”.

While Bond J did not find that there was a real risk that Mr Palmer would abscond, his Honour found that there was a “real risk of Mr Palmer entering into colourable transactions which, when discovered, would operate to inhibit or to frustrate enforcement or execution processes”.  His Honour did not consider it to be an answer to say that these transactions might be capable of being unwound by “lengthy and expensive insolvency processes”. 

Did the interests of justice favour the making of the orders sought?

Justice Bond ultimately found that it was in the interests of justice that orders should be made.  His Honour said that the question was “whether it is in the interests of justice that the power be exercised, in particular bearing in mind that the jurisdiction must be exercised with a high degree of caution and with proper consideration for the nature of the impact on the persons affected”. 

His Honour found, as part of the consideration of all the relevant factors, that there was a significant public interest in protecting the plaintiffs against the risk to the integrity of the Court’s processes and there were also significant private interests to be protected.  His Honour also found that the evidence of the suggested damage to the businesses conducted by the defendants was “unpersuasive”.  In particular, his Honour was unpersuaded by Mr Palmer’s argument that if orders were made he would make decisions not to proceed with business opportunities, and that the adverse consequences of those decisions made by him should be regarded as prejudice caused by the orders.  His Honour said:

“If Mr Palmer has the wealth that he says he has, then the harm caused by the making of the orders to his business interests and those of his companies, is not likely to [be] significant”.  (emphasis removed)

On balance, the interests of justice favoured the grant of the relief sought. 

Takeaways

The judgment demonstrates the willingness of the Court to take proactive steps in appropriate cases to ensure that the interests of creditors are protected in liquidations which are likely to involve significant litigation before there will be a pool of assets available for distribution amongst the creditors. 


[1] Parbery v QNI Metals Pty Ltd [2018] QSC 107 

Key contacts

Outbound investment: Managing risks and exiting with grace

Discover our top six tips in this Practical Belt and Road Guide.

Belt and Road
Share on LinkedIn Share on Facebook Share on Twitter Share on Google+
    You might also be interested in

    Trkulja v Google LLC (M88/2017) - The High Court has allowed an appeal to set aside a defamation proceeding brought by Mr Trkulja against Google LLC.

    13 June 2018

    The Supreme Court of WA provided guidance on the admissibility of hindsight evidence and determined that the position differed between individual and corporate plaintiffs.

    07 June 2018

    Australia is in the midst of its third major inquiry into the growing litigation funding industry in four years.

    06 June 2018

    This decision highlights issues faced by insurers in relying on exclusion clauses (even ones that are broadly drafted) to escape the operation of the Third Party Claim Act.

    25 May 2018

    This publication has been downloaded from the King & Wood Mallesons website. It is provided only for your information and does not constitute legal or other advice on any specific matter. If you require or seek legal advice you should obtain such advice from your own lawyer, and should do so before taking, or refraining from taking, any action in reliance on this publication. If you have any questions, please contact King & Wood Mallesons. See www.kwm.com for more information.