Councils face big legal bill

By CHRIS DANIELS

The Auckland City, Manukau City and Papakura District councils face a bill of more than $1 million in their court battle with power company Vector.

The councils have been challenging the ownership structure of Vector, the lines company of former Mercury Energy.

The Auckland Energy Consumer Trust was taken to court as part of the same case.

The councils wanted the Vector directors replaced and C-class shares held by law firm Russell McVeagh McKenzie Bartleet scrapped.

The role of the firm and the potential powers it had came under scrutiny after the last year's power blackout in Central Auckland.

Yesterday, in the High Court at Auckland, Justice Paterson said the councils had achieved what they wanted before they even went to court and would have known it.

Vector and the trust were entitled to recover legal costs from the councils, he said.

The councils' own legal bill is believed to be more than $1 million and the cost for Vector and the trust more than $500,000.

Justice Paterson said it was suggested during a 1993 case between the Auckland City Council and the Auckland Electric Power Board that "the potential to secure a huge asset/income base for no consideration underlay the councils' attitude at the time and that litigation. It may still be the underlying factor."

Later, Vector chief executive Patrick Strange appealed to the councils to let the company get on with its job.

"As the judge points out, this is the third time the councils have fought and lost expensive court actions related to the ownership and governance of Vector. I only hope this is the end of such unnecessary costs for our customers."

The future ownership of Vector's $1.5 billion asset base is being vigorously debated, but Dr Strange said he did not want to speculate on the councils' motivation in taking the latest legal action.

In his 49-page judgment, Justice Paterson spoke of the councils' using their position for "an unspecified collateral purpose."

The amount of money they had spent in court battles "illustrates that they see far more at stake than the subject matter of the present proceedings."

A new Vector constitution adopted in August had given the councils exactly what they wanted anyway.

As no evidence was given by any council chief executive or elected member, "it is only possible to speculate on the fundamental reason for these proceedings."

In a joint statement after the judgment was released, the three councils said the issue had still not been satisfactorily settled.

No finding had been reached on the C-class shares and the ownership of the electricity lines was still as flawed as it had been when the power failed last year.