The Supreme Court has rapped two of the country's major law firms over the knuckles for acting for parties in a major gas dispute where their own letters were part of the issue.In a six-year dispute between Vector Gas and Bay of Plenty Energy over the pri
The Supreme Court has rapped two of the country’s major law firms over the knuckles for acting for parties in a major gas dispute where their own letters were part of the issue.
In a six-year dispute between Vector Gas and Bay of Plenty Energy over the price of gas under a supply contract, Justices Bill Wilson, Andrew Tipping and Peter Blanchard voiced disapproval of law firms Russell McVeagh and Chapman Tripp.
In the judgment this month, Justice Tipping said lawyers in firms writing to each other on behalf of clients should not then represent those clients if the correspondence became part of the legal action.
He said in this case, Russell McVeagh’s Hamish McIntosh (acting for respondent Bay of Plenty Energy) was the “lead author” of a key letter in October last year, which was central to the action.
Justice Wilson said it was “undesirable” and in that situation, lawyers were at risk of acting as witnesses and losing objectivity.
Chapman Tripp, acting for National Gas Corporation (now Vector), was also involved in letters dating back to 2004.
In its decision, the court allowed Vector’s appeal and ordered Bay of Plenty Energy to pay almost $5 million for gas supplied since the legal action began, along with $15,000 costs (and disbursements).
The case revolved around a gas supply agreement in 2004, which Todd Energy subsidiary Bay of Plenty Energy claimed was priced at $6.50 a gigajoule, including transmission costs.
However, Vector successfully disputed the claim, arguing it was exclusive of transmission costs (at $1.86 a gigajoule).
Bay of Plenty then successfully appealed to the Court of Appeal but the Supreme Court overturned the decision on February 10.
In the judgment, Justice Blanchard said the issue was now about how much Bay of Plenty should pay to Vector for gas supplied to it in the meantime and whether that included transmission costs.
If it did include transmission costs, Bay of Plenty would have to pay about $1.4 million more, but if it did not, the amount owed would be $4.6 million.
The two parties argued over the interpretation of “$6.50 per GJ” in letters between law firms.
Justice Tipping said the case raised issues about interpreting written contracts in prior negotiations and whether it was allowed.
