What do public nuisance, unjust enrichment, set-off, the PPSA and tax law have in common? They are all before the High Court in a complex directions application to be determined soon,1 arising from the liquidation and receivership of the Tamarind group owned Tui joint venture.
Tamarind operated the Tui oil field 50km off the Taranaki coastline, until a failed drilling campaign in 2019 drove the joint venture into insolvency. The Ministry of Business, Innovation and Employment (MBIE) ultimately stepped in to decommission the oil field at a cost of over US$180m and claimed these costs as an unsecured creditor in the company liquidations. But can the Crown establish a legal basis for the claim? And can the Crown – as it did here – refuse to pay the tax rebates it admits are owed to the joint venture by relying on rights of set-off?
The Crown has based its creditor's claim on public nuisance, unjust enrichment and breach of statutory duty. But there are issues with each head of claim, leading the liquidators to ask the Court to determine whether the claim is admissible:
The claim doesn't fit neatly into public nuisance. No obvious "harm" or interference with public rights has occurred; the oil field was in an area to which regulations (even today) prevent any public access.2 There is also an issue of standing: no other public nuisance case has sought damages for the Crown in its own right. Previous public nuisance claims by the Attorney-General have either sought injunctions or been relator actions seeking damages on behalf of a private individual or local authority. There is also a timing issue that may prevent admissibility of a tort claim: the Crown only incurred costs after the companies went into liquidation, which suggests any tort only arose then.
Unjust enrichment is also problematic. The Court of Appeal rejected this as a standalone cause of action in 1999,3 and the facts don't clearly fit any recognised cause of action based on unjust enrichment, such as for discharge of a liability under compulsion4. For example, a 2020 Cabinet Paper recorded that both MBIE and Treasury considered that the Crown had a constructive rather than legal obligation to remediate, based on an international accounting standard5. And can the joint venture companies be said to have been enriched after they had gone into liquidation with no assets available to meet unsecured creditor claims?
A breach of statutory duty by the joint venture did occur, but this does not necessarily mean there is a right to damages in tort. A strong indication that Parliament never intended to confer a private right of action to damages in the Crown Minerals Act 1991 is the various other enforcement provisions it contains (including many that were added as a direct consequence of the Tui clean-up), with none at the relevant time enabling the Crown to seek damages for a failure to comply with permit conditions. Causation may also be an issue here, as the Crown had no clear legal obligation to decommission the field.
Even if the claim were admissible, a further (and perhaps bigger) question is whether set-off is available to the Crown, or whether it must pay $38m in tax rebates to the joint venture and ultimately to the secured creditor. The liquidators and receivers asked the Court to determine this question because there are various problems with the claimed set-off based on their analysis:
Liquidation set-off under s 310 of the Companies Act 1993 appears to operate as a code in liquidation, meaning no other form of set-off is available.6
Liquidation set-off seems unavailable due to a lack of mutuality. The Crown's claim is against the joint venture companies, but the claim to the tax rebates is beneficially owned by the secured creditor because it arose before the joint venture companies were in liquidation.
Legal set-off (if available) does not extend to unliquidated damages claims and also requires mutuality.
Equitable set-off (if available) also requires mutuality. The Crown relies on s 102(1)(b) of the Personal Property Securities Act 1999, under which the rights of an assignee of an account receivable (ie the tax rebate) are subject to any defence or claim of the account debtor against the assignor, including by way of set-off, that accrues before the account debtor acquires knowledge of the assignment (ie the appointment of the receivers). However, it is not clear whether the tax rebate is an "account receivable", and the Crown seemingly knew about the secured creditor's interest before the right to the rebate accrued.
It is difficult to see how equitable set-off could operate to "impeach" or "extinguish" the joint venture's entitlement under the Income Tax Act 2007. How can equity intervene when tax legislation has its own established set-off provisions?
A further complication is that one of the joint venture companies is Australian, meaning Isac J has to consider any differences in the legal position on set-off in Australia.
One thing is clear: the judgment will not be short. And with $38m of tax at stake, the likelihood of appeal is high. Watch this space.
1 Isac J heard the case over ten days in February 2026. Judgment is expected before the end of the year.
2 Continental Shelf (Umuroa Installation Safety Zone) Regulations 2008.
3 Rod Milner Motors Ltd v Attorney-General [1999] 2 NZLR 568 (CA) at 576.
4 The Crown’s approach to decommissioning the Tui Oil Field in response to operator Tamarind liquidation.
5 International Public Sector Accounting Standard 19.
6 Nylex (New Zealand) Ltd (in rec & in liq) v Independent Timber Merchants Co-Operative Ltd (2010) 20 PRNZ 41 (HC).