In a decision handed down on 25 June 2021, the Queensland Court of Appeal has ruled that Clive Palmer’s company, Minerology, must pay $102,884,346.26 to the liquidators of Queensland Nickel (QNI). This has been heralded as a major win for the creditors of QNI, whom the money will be passed on to.
This decision marks another chapter in the long running saga of the collapse of QNI. In 2016, QNI fell into administration and was soon after liquidated. This left hundreds of those who were working at the nickel refinery run by QNI in North Queensland out of a job and many creditors unpaid.
In 2019 a claim for $200 million was issued in the Supreme Court of Queensland by liquidators. The claim was soon after settled by Palmer in a deal which satisfied the debts of many of the creditors. However, an additional claim was made against Minerology in 2020 for the remaining unpaid debts.
The 2020 claim was based on an argument by liquidators that QNI had authorised payments of approximately $100 million to Minerology whilst insolvent in 2016. Liquidators argued that these payments were made as loans from QNI to Minerology and were therefore repayable, with interest. However, the 2020 case fell in favour of Minerology with the primary judge finding that QNI had no right to claw back the loans. Despite this finding, the primary judge agreed that the money received by Minerology was no doubt QNI’s money.
This decision was appealed to the Queensland Court of Appeal on two grounds. The first ground was that the primary judge was mistaken in their finding that QNI did not have a right to lend the funds to Minerology. The funds were held in a trust of which QNI was the trustee. The primary judge found that this was a bare trust and QNI was a bare trustee. Bare trustees have limited scope of what they can do with trust funds and they generally have no active duties to perform. This finding meant that QNI did not have a right to lend the funds and therefore did not have a right to demand repayment. However, the Court of Appeal disagreed. The Court of Appeal found that QNI had active duties as trustee that meant it was not a bare trustee and therefore had the ability to transfer the trust funds to Minerology.
The second ground of appeal was that the primary judge erred in finding that the loans were from joint venture parties related to QNI, not QNI itself. As such, there was no right for QNI to demand repayment from Minerology. After considering the loan documents and other evidence, the Court of Appeal, again, disagreed. The Court of Appeal found that the conclusion that the loans were made by the joint venture parties to Mineralogy could not be sustained. Rather, it was found that the loans were made by QNI as trustee and QNI was entitled to have them repaid.
Ultimately, the liquidators of QNI were successful in their appeal. As a result, the Court set aside the original judgment and ordered that Mineralogy repay the $100 million worth loans back to QNI. This signals a big win for many of the unsatisfied creditors. However, the Orders have not yet been finalised and the parties have until 16 July 2021 to make further submissions. It remains to be seen whether there is a further appeal to the High Court. Given Mr Palmer lists litigation as a hobby, a further appeal may reasonably be anticipated, especially considering the amounts involved.