‘Abuse of process’ ruling could cost Clive Palmer a poultice

Clive Palmer has been ordered to pay hundreds of thousands of dollars over what the court found was ‘an abuse of process’.

Clive Palmer has been ordered to pay hundreds of thousands of dollars in indemnity costs to his Chinese arch-rival Citic over what the West Australian Supreme Court found was “an abuse of process” by the federal MP’s legal team.

Supreme Court judge John Chaney took the unusual step of awarding indemnity costs — which will allow Citic to claim every cent it spent on the cases from Mr Palmer’s private company Mineralogy — to reflect what he described as “a mark of disapproval on the part of the court about the improper or unreasonable conduct” behind Mr Palmer’s case.

The costs order relates to Mr Palmer’s attempt last year to hit Citic with two law suits seeking $10 billion in damages. The legal claims were launched by the MP amid a blaze of publicity, but dismissed in November by Justice Chaney as “vexatious”.

The financial hit could hardly have come at a worse time for Mr Palmer, following the collapse of his Queensland Nickel refinery into administration on Monday.

While the amount of costs by Citic were not detailed in the judgment, the bill could run into the hundreds of thousands.

Mineralogy may struggle to meet the legal bill, with court affidavits lodged by Mr Palmer’s executives last year showing Mineralogy had less than $500,000 to its name as of June. The same affidavits showed that Mineralogy was spending close to $30 million a year but was generating less than $4m a year in revenue.

Justice Chaney took the unusual step of awarding indemnity costs rather than the more common course of taxed costs — under which only a portion of legal costs are picked up by the other party — because of “exceptional circumstances” behind the dismissed claims.

“There must be some special or unusual feature in the case to justify the court exercising its discretion to depart from the ordinary practice,” he said in his decision. “An order for indemnity costs is a mark of disapproval on the part of the court about the improper or unreasonable conduct of a party in the litigation.”

Justice Chaney found that the failed lawsuit appeared to be an attempt by Mineralogy to circumvent an earlier order by the court restricting the company from making changes to its case in other matters.

Mineralogy and Citic have become embroiled in a host of legal disputes amid an increasingly toxic relationship.

Citic paid Mineralogy and Mr Palmer $US415m in 2006 for the rights to develop the Sino Iron project in the Pilbara region. Citic has since spent $12bn building the mine, which has been more costly and far less productive than expected.

Operational problems at Sino Iron coupled with numerous legal disputes between the two mean Mr Palmer has received few of the royalties he expected.