Kapuni Gas: Todd Petroleum v. Vector Gas

Todd Petroleum described as the “nuclear option” threats by Vector Gas to stop processing Todd’s drawdown from the Kapuni field as the two ramp up a long-running dispute over Vector’s pricing.  The High Court refused Vector’s request that a six-week trial scheduled for next April be split in two: first to determine interpretation issues; the second, competition and pricing issues. 

Commerce Act litigation in 1997 forced owners of the Taranaki Kapuni Gas treatment plant to process competitors’ gas at a reasonable price.  This price was set in a 1999 arbitration with producer price index adjustments applied every two years.  Nearly two decades on, Todd holding extraction rights from the Kapuni field and Vector Gas as owner of the Kapuni Gas treatment plant dispute the 1999 arbitration both as to its effect (interpretation issues) and its relevance (competition and pricing issues).  Vector says market dynamics have changed since the 1997 High Court ruling.  The position should be revisited.  In any event, the formula for fixing a processing fee is no longer reasonable, it says.

Justice Dobson refused Vector’s request to split the trial into two separate hearings.  The factual background is complex, he said.  There is twenty years of history behind the litigation.  Evidence relevant to interpretation issues will cross over into competition issues.  There is a risk findings of fact made at a first hearing could hamper decisions at a second.  A second hearing is delayed if there are protracted appeals from the first, he said.           

Todd Petroleum v. Vector Gas – High Court (29.09.17)

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Money Laundering: Internal Affairs v. Ping An Finance

Failure to comply with money-laundering rules resulted in a $5.29 million penalty for Auckland currency remitter Ping An Finance.

Owned by Xiaolan Xiao, Ping An Finance (Group) New Zealand Ltd ostensibly operated as a low value remittance service from offices above Auckland’s Queen Street for Chinese migrants and students.  But Internal Affairs investigators unearthed a large-scale operation which over the 2014 calendar year handled transactions totalling over $105.4 million.  The High Court was told there had been a wholesale failure to carry out due diligence on customers as required by the Anti-Money Laundering and Countering Financing of Terrorism Act.  Proper customer records were not kept.  Mandatory reporting of high-value transactions was not carried out.  Justice Toogood said Mr Xiao misled Internal Affairs in the course of its investigation and demonstrated a complete disregard for the Act’s requirements.  Out of some 1500 transactions surveyed, 173 transactions raised suspicions.  They included multiple transactions with individual customers on the same day, or within a short period, transactions for large amounts and high-value cash deposits.  There were multiple transactions with 122 customers and no evidence of any customer identity recorded to properly identify their business.  The most egregious example was a $444,444 wire transfer by one customer in July 2014 followed up with three separate transactions by the same customer four days later transferring a further $700,000.

Failures to properly document transactions, conduct proper due diligence on customers or report suspicious transactions can lead to fines of up to two million dollars for each non-compliance resulting in a combined potential liability of some eight million dollars.  Classified as civil penalties, proof is required to the civil standard of proof only; on the balance of probabilities.

Neither Ping An Finance nor Mr Xiao defended Internal Affairs’ claim.  Born in Beijing, Mr Xiao is a New Zealand citizen. 

Internal Affairs v. Ping An Finance Group – High Court (28.09.17)

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Bankruptcy: Official Assignee v. Mathiesen

The High Court ordered a Timaru property sold to meet bankruptcy debts over the objections of a Gabrielle Mathiesen who argued in vain that a husband cannot bankrupt his spouse.  Attempts to shelter her replacement home in a family trust were not successful.

Ms Mathiesen has been in court on multiple occasions seeking amongst other things a writ of habeas corpus complaining bankruptcy proceedings amount to a form of imprisonment and alleging in further proceedings contempt of court by Insolvency Service staff.  None of these claims succeeded.  The Insolvency Service seeks to recover $530,212; funds used by Ms Mathiesen’s family trust to purchase a Timaru-Pareora Road property where she lives.

The High Court was told Ms Mathiesen separated from her husband in 2004.  She then set up a family trust (Sweet Pea Trust) naming herself, her children and grandchildren as beneficiaries.  The former matrimonial home, part of a horse stud at Bellevue Road, Cambridge, was then transferred to the Sweet Pea Trust with a debt back to Ms Mathiesen for the value of the property.  Bellevue Road was subsequently sold with Ms Mathiesen shifting to south Canterbury.  The Trust purchased a replacement property.  She was bankrupted in 2013 by her husband to enforce a $326,000 Family Court relationship property order.  Part is payable by Ms Mathiesen personally; the rest by Sweet Pea Trust.

Ms Mathiesen does not own her residence in Timaru; that is owned by the Sweet Pea Trust.  But she does “own” the debt back owed her by the Trust.  This debt is owed by a trustee of the Trust who took title to the Timaru property on behalf of the Trust.  Trustees have an automatic right of indemnity against Trust assets for debts properly incurred on behalf of any Trust.  Standing in the shoes of the trustee, the Insolvency Service sued to have Trust assets sold to recover payment.  Justice Gendall ordered sale of the Timaru home.  It is the Trust’s only asset of any value.  The court was told Timaru District Council is also looking to sell the property, for unpaid rates.

Official Assignee v. Mathiesen – High Court (26.09.17)

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