FIRST GAS LIMITED v GIBBS [2022] NZHC 713

FIRST GAS LIMITED v GIBBS [2022] NZHC 713 [8 April 2022]IN THE HIGH COURT OF NEW ZEALANDNEW PLYMOUTH REGISTRYI TE KŌTI MATUA O AOTEAROANGĀMOTU ROHECIV-2021-443-016[2022] NZHC 713BETWEEN FIRST GAS LIMITEDPlaintiffAND RUSSELL VICTOR GIBBSPARANI JOSEPHINE GIBBSLEIGH JOSEPH HORTONDefendantsHearing: 31 March 2022 (teleconference)Appearances: L P Wallace and J Atkin for the PlaintiffM Gibbs for the DefendantsJudgment: 8 April 2022JUDGMENT OF GRICE J(Without notice (Pickwick) application for stay of enforcement pending appeal)[1] This is an application by the defendant trustees (the Trust) for a stay ofexecution of the judgment given in this matter on 3 December 2021, including thepermanent injunction and declarations made in that judgment, pending an appeal tothe Court of Appeal.1[2] The plaintiff opposes the stay.[3] This matter has been brought on as an urgent application at short notice at therequest of the Trust. I have dealt with it as a without notice application, but First GasLtd (First Gas) has been served and appeared through counsel. It has filed a notice of1 First Gas Ltd v Gibbs [2021] NZHC 3309 [the Decision].opposition and submissions but has been unable to file the three affidavits referred toin its notice of opposition. I advised the parties of the result of the without noticeapplication at the teleconference on 31 March 2022. This is the reasons judgment.Background[4] In my substantive decision of 3 December 2021 (the Decision), I granted adeclaration in favour of First Gas concerning its rights to enter the Trust land and carryout repairs on the Maui Pipeline.2 I also issued a permanent injunction prohibiting theTrust from restricting, obstructing or otherwise interfering with the plaintiff's accessrights under the relevant easements and authorisations and prohibiting them fromtaking any action that restricted or interfered with First Gas' rights to enter onto theland for the purposes of, among other things, repairing or operating the Maui Pipeline.3[5] The central issue in the case was the interpretation of the statutory provisionsallowing entry on land on which the pipeline was laid for the purposes of repair. Thefocus was on whether First Gas' repair and maintenance rights were limited so it couldnot use as of right land beyond the 12 metre-wide easement strip in the course of itsrepair and maintenance work on the pipeline. I found that when First Gas wasrepairing the pipeline and carrying out any other authorised works and for entry andegress, storage and depositing of machinery and equipment, as well as depositing spoilincidental to the works, it was entitled to access and to use the land described in theeasement certificates beyond and not limited to the 12 metre strip of the pipelinecorridor. I also found there was no arrangement or agreement applying to future workson the pipeline, nor were First Gas' rights and powers conditional on its working inconsultation with the landowners apart from various notice requirements and theobservation of its statutory responsibilities. The orders issued were subject toconditions relating to notice and not disrupting the farming activities, as well asmaking good any damage or disruption to the land. The conditions were annexed tomy judgment.42 At [278].3 At [278].4 As Attachment 1 – Draft Conditions.[6] The Gibbs Trust lodged an appeal against that judgment. The grounds of thatappeal, Ms Gibbs tells me, will now be amended to include reference to an historicwritten agreement she has recently located in the course of her research ofparliamentary and related records. The agreement is between Maui Development Ltdand Federated Farms Inc,. It predates and Ms Gibbs says informs the interpretation ofthe legislation which was the subject of the Decision.[7] Ms Gibbs suggested that the court issue a stay requiring that the plaintiffcomply with the historic agreement a copy of which is attached to an affidavit of MrGibbs (dated 23 March 2022). The date of the agreement is not clear from the copyattached to Mr Gibb's affidavit. On its face, it is an agreement between MauiDevelopment Ltd and Federated Farmers of New Zealand Inc acting on behalf of allfarmers affected by the pipeline easements issued in respect of the Oanui to Aucklandgas pipeline and the Oanui to New Plymouth condensate pipeline.[8] Also attached to Mr Gibbs' affidavit are excerpts from Hansard relating to thepassage of the Petroleum Amendment Bill, dated 6 November 1974, and theNatural Gas Corporation Bill from 22 September and 4 and 25 October of a year thatis not apparent from the documents produced.[9] The agreement is produced for the purposes of establishing that the agreedwidth of the easements had been the subject of an agreement between an earlierpipeline owner and Federated Farmers. Mr Gibbs says that agreement is contrary tothe findings in the Decision and if that document had been before me, I would haveinterpreted the legislation, insofar as it related to rights of access by First Gas to repairand maintain the pipeline, differently.[10] A brief perusal of the agreement indicates that, while parts of the agreementrefer to the management and operation of the pipelines, the primary focus of theagreement is on the construction of the pipeline.[11] Ms Gibbs took some time to outline the meaning of the documents. However,whether the documents are able to be adduced on appeal, and the effect of them if theyare, will be matters for the Court of Appeal. They may be relevant to an assessment tobe made when considering a stay.[12] Because of the existence of these documents, Mr Gibbs alleges that First Gasdefaulted in discovering them and should be held in contempt of court.[13] Before making the present application to the Court, the Trust had applied directto the Court of Appeal for a stay. The Court of Appeal indicated it was appropriate forthis Court to first consider the stay and, if the stay was refused, the matter mightproceed on to the Court of Appeal. This is the process contemplated by r 12(3) of theCourt of Appeal (Civil) Rules 2005 (the Rules). In a Minute dated 23 March 2002,Cooper J indicated he saw no reason why that procedure should be departed from inthis case.5[14] In addition, his Honour noted there were orders sought by the Trust whichapparently invoked the contempt jurisdiction in relation to alleged failures by First Gasto provide discovery. He indicated that was not a matter which ought to be pursued inthat Court as if it were a court of first instance. Any application in that respect shouldbe made to the High Court.6[15] In relation to the stay application, insofar as it sought orders to removestructures, his Honour said:7 I note the advice of counsel for the respondent that the fencing and watermonitoring structure will be removed within the next two weeks. There isinsufficient information before the Court to justify making an order in respectof those structures and given the timeframe it seems unnecessary to deal withthat issue as a matter of urgency.[16] His Honour also noted that the application to adduce further evidence insupport of the appeal, was not a matter that needed to be dealt with urgently and couldbe subject to an interlocutory hearing prior to the fixture for the appeal if that wasnecessary.85 Minute of Cooper J, Gibbs v First Gas Ltd CA29/2022, 23 March 2022 at [3].6 At [6].7 At [7].8 At [8].Legal principles[17] Rule 12 of the Rules provides for this Court to stay execution of a decisionpending the determination of the appeal, subject to any conditions this Court thinksfit.9[18] An application under r 12(3) requires the Court to balance the competing rightsof the party who obtained the judgment appealed from (that is, the benefit of thatjudgment) against the need to preserve the appellant's position against the event of theappeal succeeding. The object has been described as:10 to arrange matters that, when the appeal comes to be heard, the appellatecourt may be able to do justice between the parties, whatever the outcome ofthe appeal may be [19] Factors to be taken into account in the balancing exercise include:11(a) whether the appeal may be rendered nugatory by the lack of a stay;(b) the bona fides of the applicant as to the prosecution of the appeal;(c) whether the successful party will be injuriously affected by the stay;(d) the effect on third parties;(e) the novelty and importance of questions involved;(f) the public interest in the proceeding; and(g) the overall balance of convenience.9 Court of Appeal (Civil) Rules 2005, r 12(3) and (4).10 Minnesota Mining & Manufacturing Co v Johnson & Johnson Ltd [1976] FSR 139, [1976] RPC671 (CA) at 676 per Buckley LJ, cited by the Court of Appeal in New Zealand Insulators Ltd vABB Ltd (2006) 18 PRNZ 459 (CA) at [13].11 Keung v GBR Investments Ltd [2010] NZCA 396, [2012] NZAR 17 at [11]; and DymocksFranchise Systems (NSW) Pty Ltd v Bilgola Enterprises Ltd (1999) 13 PRNZ 48 (HC) at [9].[20] While not included in this list, the apparent strength of the appeal now appearsto be generally recognised as an additional factor.12Grounds for stay application by the Trust[21] The grounds put forward by the Trust for the stay application are that thesubstantive declarations and injunction enable First Gas to enter and re-enter the Trustland to carry out works within and beyond the easement, to permit and cause unlimiteddisruption and damage, including permanent damage, to the Trust farm and land,including cultural values, without any discussion, consultation, and negotiation, inbreach of "the Maui pipeline agreement". That is the agreement attached to theaffidavit of Mr Gibbs between Maui Development Ltd and Federated Farmers ofNew Zealand Inc.[22] Insofar as evidence of damage occurring due to the First Gas works, Mr Gibbssays that the First Gas works has been causing hazards. He says in his affidavit:(a) On 27 October 2021, First Gas erected a fence on the Trust land atPariroa, pursuant to the Court order and interim injunction. Thestructure was for the purpose of excluding the Trust stock from theproject area.(b) The Court order and injunction did not provide for any discussion,consultation or negotiation with the Gibbs whānau regarding stockexclusion standards and methods.(c) On 4 January 2022, during the Christmas period, Mr Gibbs went tocheck the work and the cattle had been walking over the netting andfence. The calves and cows were walking in and out of the worksiteand stepping over and through the netting each time. He producedvideo footage he took on that day.12 Keung v GBR Investments Ltd, above n 11, at [11].(d) Mr Gibbs has had to go to Pariroa on a much more frequent basis tocheck on the cows and calves due to the presence of the unsafe First Gasfence. He said he could not be there all the time. Mr Gibbs' cattle yardsare about 6 kilometres away from Pariroa.(e) On 18 March 2022, he went to check the First Gas worksite at Pariroa.The calves and cows were walking in and out of the worksite, steppingover and through the netting. He produced further video footage hetook of this.(f) The fence is not fit for purpose and is a continual hazard to the stock.The presence of this hazard is causing damage and has the potential tocause further damage and injury to the stock.(g) The most likely risk is entanglement and/or wire cuts on the legs andudders of the cattle. The presence of the fence is causing anunnecessary work and time burden as well as the stress of liability tothe Gibbs whānau under the Animal Welfare Act 1999.(h) On 9 December 2021, First Gas installed a structure on the land forwater monitoring, pursuant to the Court order and injunction. The orderand injunction did not provide for any discussion, consultation ornegotiation with the Gibbs whānau regarding the design of thestructure.(i) Once installed, First Gas realised the cattle would likely break the inletand outlet, so it erected a post rail fence around the structure on17 December 2021. A picture was produced of a wooden fence.Mr Gibbs says the fence is not fit for purpose as it was not high enoughto exclude the cattle. The presence of this hazard had the potential tocause damage and injury to the stock. It was causing unnecessary workand time as well as stress of liability to the Gibbs whānau under theAnimal Welfare Act.[23] Mr Gibbs also filed a memorandum in support of the application. Thattraverses the background to this matter and relies on the Maui Pipeline Agreement,which Mr Gibbs says is:13 the grandfather of the middle-line proclamation procedure and thePetroleum Act itself, the middle-line proclamations and easements themselvesissued pursuant to section 70A (now section 71), easement fees, andrestoration and compensation agreements. First Gas purchased the Mauipipeline from MDI on this basis.[24] The Trust says it is beyond the power of the High Court to extend the width ofthe easements or to set the provisions and protections the Petroleum Act, themiddle-line proclamations, the Public Works Act and the Maui Pipeline Agreement.[25] The crux of the submission is that the Maui Pipeline Agreement overrides thelegislation and it is evidence that the interpretation of the legislation enabling FirstGas to have access was wrong. Therefore the appeal is on strong grounds.[26] Mr Gibbs says that if the stay is granted, First Gas could still maintain andoperate the pipeline, but it would have to negotiate to carry out works and access thatfall outside First Gas' easement rights under the terms of the historic agreement.[27] In her oral submissions, Ms Gibbs summarised matters, saying the stay wasurgent because:(a) First Gas was not giving the notice required under the conditionsattached to the Decision. This included to provide at least two weeks'notice to the landowner of any activities that it or its contractors plannedto undertake on the land, except in the case of emergencies,14 and to useits best endeavours to avoid disruption to the landowner's farmingactivities on the land, including ensuring all gates remain closed at alltimes, provided that they may be opened and immediately closed foraccess purposes.1513 Memorandum on behalf of RV & PJ Gibbs Family Trust, dated 24 March 2022, at [15].14 The Decision, above n 1, at Attachment 1(c).15 At Attachment 1(a).(b) The fencing and structures which First Gas has put on the land are adanger to livestock, as described above.The position of First Gas[28] Ms Wallace for First Gas has filed a notice of opposition and submissions. Shesaid in her oral submissions:(a) The pipeline buckle or break has been fixed which was the immediatereason for the proceeding and an earlier interim injunction. The land isnow near reinstatement, although the bypass pipeline is yet to beremoved.(b) Her understanding was that all notice requirements under the draftconditions had been met. In view of the fact these matters had onlybeen raised today, she had no specific information on that issue andsought time to make enquiries.[29] Ms Wallace indicated because of the timeframe she had not yet filed evidence.She also indicated it was unclear as to what a stay in relation to these proceedingswould effectively achieve. This is because the remedies granted were as follows:16A. The following declarations:a. That PEC 269143, PEC 269148, Pipeline Authorisation 4410-16 and the Petroleum Act 1937 authorise the Plaintiff to:i. enter onto the Defendants' land over which PEC269143 and PEC 269148 are registered for thepurpose of gaining access to the Maui Pipeline and toperform any action or operation necessary for thepurpose of inspecting, maintaining, repairing oroperating the Maui Pipeline;ii. enter onto the Defendants' land with or withoutservants, workmen and agents and with all suchequipment, machinery and materials as may benecessary for the carrying out of any inspection,maintenance, repair or operational works;16 At [278]–[279].iii. deposit and store from time to time upon any landadjoining any such inspection, maintenance, repair oroperational works all such machinery and material ofany kind as may be used in carrying out any suchworks; andb. The Plaintiffs access rights are not conditional upon First Gasproviding all project documentation to the Defendants orholding project team meetings inclusive of the Defendants'participation.B. A permanent injunction prohibiting the Defendants, together with theirsuccessors[,] administrators, assigns and agents, from:a. restricting, obstructing or otherwise interfering with thePlaintiffs access rights under PEC 269143, PEC 269148,Pipeline Authorisation 4410-16 and the Petroleum Act 1937;and/orb. allowing or taking any action that restricts[,] obstructs orinterferes with the Plaintiffs rights to enter onto theDefendants' Land for the purpose of inspecting, maintaining,repairing or operating the Maui Pipeline.[279] The above declarations and orders are subject to the conditionsattached.[30] Therefore, if there was a stay of execution, all that would occur would be thatthe parties would be forced back into a deadlock about access and the defendantswould obstruct access by First Gas unless their demands were met. This was theposition at the time the interim injunction was obtained prior to the substantivehearing.[31] An interim injunction was issued allowing First Gas access. By the time of thesubstantive hearing, the Gibbs had issued trespass notices to relevant staff andcontractors, preventing First Gas from entering the land to carry out repairs to thebreak in the pipeline. There was urgency as the pipeline needed to be repaired priorto Auckland Anniversary Day, 29 January 2022, which was identified as the best timefor shutdown to join the repaired pipeline and decommission the bypass line. Theshutdown of the pipeline disrupted the North Island gas supply which had significantdownstream effects for the customers of the gas, including the Huntly power station.Timing was crucial.Analysis (without notice application)[32] Although the repairs have now been completed, First Gas still requires accessto finalise the remediation of the land and to carry out ongoing repairs and monitoring.Ms Wallace has indicated that First Gas is meeting the requirements of the conditionsattached to the substantive orders. However new allegations about lack of notice aroseat the teleconference and she needed to take further instructions on that issue.[33] Ms Gibbs said if the Trust was seeking to impose the terms of the historicagreement on First Gas as terms of the stay that was outside the ambit of a stay ofexecution.[34] I decline to grant a stay of execution on a without notice basis. The repair workhas been carried out and ongoing maintenance, repair and remediation must be carriedout by First Gas as a matter of priority. A stay would not add anything to the conditionsalready in place. In fact the stay would likely cause a deadlock over access to thepipeline.[35] First Gas, through Ms Wallace, has indicated that it would adhere to theconditions attached to the decision granting of the declaration and injunction. Theseinclude using its best endeavours to avoid disruption of the landowner's farmingactivities, to keep the landowner informed of work to be carried out, to make good anydamage or disruption caused to the land, and a number of other conditions, includingthe health and safety provisions. Those conditions require First Gas to use its bestendeavours not to disrupt farm work which would include ensuring the Trust's animalsare not put in dangerous situations.Conclusion[36] With the indication by counsel that First Gas will meet its obligations underthe conditions and the priority need to ensure continuing access to the pipeline, Iconclude the application does not warrant granting on an urgent basis.[37] In addition, First Gas has not had sufficient time to prepare its evidence andsubmissions on the application for a stay. The parties have agreed on a timetable toenable the matter to be set down for hearing of the on notice application as follows:(a) The Trust will file and serve any further evidence on or before 19 April2022.(b) First Gas will file and serve any evidence, including in response to theallegations made at the teleconference today, on or before 6 May 2022.(c) A date for hearing of the interlocutory application for stay is to be setfor one day.(d) Submissions are to be filed as follows:(i) For the Trust, 10 days before the date of hearing.(ii) For First Gas, five days before the date of hearing.(iii) Any reply, strictly in reply, by the Trust, three days before thehearing.[38] The date for hearing is not to be set before 30 March 2022.[39] In relation to the other applications:(a) The application for contempt is to be dealt with to proceed separatelyand dealt with in the usual course. A date is to be set for a first call.(b) The application to adduce further evidence and any other mattersrelating to evidence on appeal are matters for the Court of Appeal indue course.[40] Costs on this application are reserved.____________________Grice JSolicitors:Plaintiff in PersonGovett Quilliam, New Plymouth