Todd Taranaki Limited v Energy Infrastructure Limited HC Wellington CIV 2006 485 2372

[2007] NZHC 1593

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV 2006 485 2372

BETWEEN  TODD TARANAKI LIMITED First Plaintiff

ANDTODD POHOKURA LIMITED Second Plaintiff

ANDENERGY INFRASTRUCTURE LIMITED First Defendant

ANDSHELL EXPLORATION NZ LIMITED Second Defendant

Hearing:         7 February 2007

Counsel:         J B M Smith and A S Olney for the Plaintiffs

J E Hodder and N S Wood for the Defendants

Judgment:      8 February 2007

JUDGMENT OF WILD J:  RELELASE OF DEFENDANTS FROM UNDERTAKING TO COURT

[1]      By application filed and served on 2 February, the defendants (Shell) apply for an order releasing them from the undertaking given by them to the Court and recorded in [119] of the judgment I gave in this proceeding on 26 January.

[2]      The plaintiffs (Todd) oppose the application.  Todd:

a)        Seeks an adjournment of the application to 14 February earliest (and preferably to  1  March,  by  which  time  it  asserts  a  hearing  of  the

application will most likely be unnecessary), on the basis Todd has

TODD TARANAKI LIMITED AND ANOR V ENERGY INFRASTRUCTURE LIMITED AND ANOR HC WN CIV 2006 485 2372  8 February 2007

not   had   sufficient   time   properly   to   prepare   its   opposition. Alternatively:

b)       Asks that the release from the undertaking not take effect until 1

March  (7  days  after  the  end  of  the  shut  down  of  the  Maui  and Pohokura oil and gas fields.   The shut down is for 12 days from midnight tonight).

[3]      I grant Shell’s application, and release Shell from its undertaking, that release to take effect at noon tomorrow, 9 February 2007, unless Todd earlier pays the invoices referred to in (3) of the undertaking, or reaches agreement with Shell as to payment.

[4]      I now give, briefly, my reasons.  The undertaking was offered by Shell to the Court in the context of Todd’s unsuccessful application for interim injunctive relief, in the form of orders effectively requiring Shell to accept from Todd for storage in the Omata Tank Farm (OTF) co-mingled McKee and Mangahewa and Pohokura oil and condensate.

[5]      Relevantly, the undertaking was by the EPJV (not a party to this proceeding) to give Todd continued access to the EPJV’s pipeline from the Pohokura Production Station (PPS) to the OTF, on terms that Todd pay the invoices referred to in (3) of the undertaking.

[6]      Todd has not paid those invoices.

[7]      At all material times Todd has disputed its liability to pay those invoices. The parties have agreed to take that dispute to arbitration, as one of the issues referred to in [123]a) of my judgment.   Thus, payment by Todd of the invoices would be without prejudice to Todd’s position in the arbitration, and subject to reimbursement of any overpayment.

[8]      Todd’s  opposition  is  based  on  an  argument  that,  quite  apart  from  the undertaking, it has an agreement with Shell/the EPJV for continued access to the EPJV’s pipeline pending the arbitrator’s award.

[9]      Having considered the documents relied on by Todd as comprising that agreement (summarised by Mr Smith in the ‘Summary of undertaking’ document he handed up to me at yesterday afternoon’s hearing), I am satisfied the agreement was for continued access pending determination of Todd’s interim injunction application. In short, that agreement is spent and only the undertaking recorded in [119] of my judgment gave Todd continued access to the EPJV’s pipeline beyond 26 January.

[10]     The  documents  relied  on  by Mr  Smith  as  comprising  the  agreement,  or referred to by Mr Hodder in demonstrating that the terms of the agreement were not as Mr Smith submitted, are:

a)       MacKenzie J’s minute of 25 October 2006.   Paragraph [2] of this minute records Shell’s assurance “that oil can continue to flow in the meantime”.  Read in its context, both of [2] and of the whole minute, “in the meantime” clearly refers to the interim up to the hearing of the interim injunction application.

b)       The  27  October  memorandum  of  Todd’s  counsel  to  the  Court.

Paragraphs  5(b)  and  7(b)  both  expressly refer  to  Shell  and/or  the EPJV pipeline owners continuing to carry Todd’s oil in the EPJV pipeline “pending the hearing of the injunction application”.

c)       The 3 November memorandum of Shell’s counsel to the Court.  The reference in paragraph 5 of that memorandum to “in the meantime” again  clearly refers  to  the  interim  pending  the  hearing  of  Todd’s interim injunction application.

d)MacKenzie  J’s  further  minute  of  10  November.    Similarly,  the Judge’s reference in [3] to Shell’s counsel having “given an assurance that oil can continue to flow in the meantime”, is a clear reference to

the   interim   pending   the   hearing   of   Todd’s   interim   injunction application.

[11]     As the undertaking was to give continued access in return for payment, and as Todd has not paid, Todd no longer has any entitlement to access, or to the protection of the undertaking.  Shell is entitled to be released from its undertaking, as the terms on which it gave it have not been met.

[12]     Todd’s argument that no loss could accrue to the EPJV from Todd having continued access to the EPJV’s pipeline is beside the point.  The point is that Todd simply has no legal right to access to or use of a pipeline belonging to a third party.

[13]     To  summarise,  Shell’s  application  is  granted.     It  is  released  from  its undertaking with effect from noon tomorrow, Friday 9 February 2007, unless Todd earlier complies with or reaches agreement upon the payment terms.

[14]     Todd is to pay Shell’s costs of the application on a 2B basis, including for second counsel, together with disbursements as fixed by the Registrar failing agreement.

Solicitors:

Russell McVeagh, Wellington for the First and Second Plaintiffs

Chapman Tripp, Wellington for the First and Second Defendants