Greymouth Gas Kaimiro Ltd v GXL Royalties Ltd

IN THE SUPREME COURT OF NEW ZEALAND
SC 98/2009
[2010] NZSC 30

BETWEENGREYMOUTH GAS KAIMIRO LIMITED, GREYMOUTH GAS PARAHAKI LIMITED, GREYMOUTH GAS TURANGI LIMITED AND GREYMOUTH PETROLEUM TURANGI LIMITED

First Appellants
ANDSWIFT ENERGY NEW ZEALAND LIMITED

Second Appellants

ANDGXL ROYALTIES LIMITED

Respondent

Hearing:24 March 2010

Court:Blanchard, McGrath and Wilson JJ
Counsel:M D O'Brien and B S Clarke for First Appellants

G M G Joe for Second Appellants
J S Kós QC and S Jerebine for Respondent

Judgment:30 March 2010

JUDGMENT OF THE COURT

A Leave to appeal is granted

BThe approved ground is whether GXL is required to plead to an allegation that it refused consent to the transfer of Swift’s interest in the petroleum permit to Greymouth for collateral reasons unrelated to Greymouth’s financial capability to meet obligations under the permit and the deed reserving to GXL a royalty interest.

REASONS
[1]           It is not the Court’s usual practice to give reasons when granting leave to appeal unless, which is not the case here, the leave precludes the advancing of one or more proposed grounds. However, it is necessary that we should say why we are of the view that the so called concession by GXL, which Greymouth accepted, does not determine the pleading issue between the parties in GXL’s favour.
[2]           GXL and Greymouth were agreed, in their written submissions to the Court of Appeal, that cl 7.2(a) of the Royalty Deed did not allow GXL to decline consent for any reason other than Greymouth’s financial capability. In other words, it did not allow GXL to refuse consent, in circumstances where it was established that Greymouth had sufficient financial capability, on other unrelated and/or subjective grounds.
[3]           Greymouth has pleaded that GXL refused consent for collateral purposes unrelated to Greymouth’s financial capability. In our view the agreement between the parties does not preclude an inquiry into that factual matter. Indeed, Greymouth said as much in accepting the concession.
[4]           The question on which leave is granted necessarily assumes that Greymouth may establish the existence of a collateral purpose on the part of GXL. In that circumstance, if it were also to be established that Greymouth did not in fact have the necessary financial capability, would GXL be prevented by the existence of the collateral purpose from withholding its consent?
[5]           That question does not arise unless two factual matters are established, namely the existence of an improper purpose on the part of GXL and a financial incapacity of Greymouth. Normally on an interlocutory appeal the existence of such contingencies would lead the Court to decline leave.
[6]           However, because the parties are at loggerheads about whether GXL must respond to Greymouth’s pleading of collateral purpose and GXL was successful in the Court of Appeal, it is necessary to grant leave. We do nevertheless urge the parties to consider whether it would not be preferable for them to resolve the pleading point as the issue of collateral purpose may be inescapable.
Solicitors:
Bell Gully, Wellington for First Appellants
Simpson Grierson, Wellington for Second Appellants
Russell McVeagh, Wellington for Respondent

CaseChat Overview and Summary

In the Supreme Court of New Zealand, the case of Greymouth Gas Kaimiro Ltd and others versus GXL Royalties Ltd was presented. The dispute involved the interpretation of a Royalty Deed, specifically regarding the conditions under which GXL could withhold consent for the transfer of interests in a petroleum permit. The court was asked to determine if GXL could refuse consent for reasons unrelated to the financial capability of Greymouth, the party seeking to transfer the interest. The case reached the Supreme Court following an earlier decision in the Court of Appeal, where leave to appeal was sought and granted. The central legal issue before the court was whether GXL was obligated to respond to an allegation that it had refused consent based on reasons unrelated to Greymouth's financial capability.

The Supreme Court examined the agreement between the parties, which stipulated that GXL could only refuse consent based on Greymouth's financial capability. However, the court found that this agreement did not preclude an inquiry into whether GXL had indeed refused consent for collateral reasons. The court held that the question of whether GXL could refuse consent based on collateral reasons unrelated to Greymouth's financial capability could still be explored. This decision was necessary because the parties disagreed on the pleading issue, and GXL had been successful in the Court of Appeal. The Supreme Court granted leave to appeal, urging the parties to consider resolving the pleading issue to avoid unnecessary litigation.

The Supreme Court concluded that the parties should address the pleading point to determine whether GXL must respond to Greymouth's allegation of a collateral purpose. The court emphasised that the grant of leave was not a determination on the merits of the case but rather a procedural decision to allow the appeal to proceed. The court also noted that the resolution of the pleading issue could potentially resolve the larger dispute, making further litigation unnecessary. The court did not provide a final outcome on the substantive dispute but rather directed the parties to address the pleading issue in further proceedings.

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established