THEY were the best of friends.
But now mining magnate Nathan Tinkler and his former business partner Matthew Higgins are facing off in a legal battle over royalty payments from the coalmine deal that propelled them from Hunter Valley pit electricians to millionaires.
Mr Higgins, who used to run Mr Tinkler’s maintenance business in Muswellbrook, is taking civil action in the Brisbane Supreme Court to gain access to the financial records of Oceltip, of which both are directors.
Court documents include allegations that Mr Tinkler has diverted funds from Oceltip’s bank account without Mr Higgins’s knowledge or approval.
Oceltip was set up in 2007 after the then friends famously sold or invested everything they had to scrape together a $1 million deposit to buy a neglected coal tenement at Middlemount, in central Queensland, for $30 million, through Mr Tinkler’s company Custom Mining.
Mr Higgins, who ran the drilling team at Middlemount and spent his evenings with Mr Tinkler at the local pub, had a 20 per cent share in the company that was sold in just over 12 months to Macarthur Coal for $65 million in cash and shares worth up to $210 million.
After the deal Mr Higgins walked away, from the business and the friendship, with a reported $53 million in cash from an initial investment of about $200,000. Mr Tinkler went on to sell his Macarthur shares months later for $442million.
But before selling Custom Mining the pair, who no longer speak, struck a coal royalty agreement that would bind them for the life of the Middlemount mine.
Their Newcastle-based company Oceltip, 75 per cent owned by Mr Tinkler’s wife Rebecca and 25 per cent by Mr Higgins’s wife Ruth, receives $1 for every tonne of coal mined from Middlemount, with payments due every quarter.
And it is understood Mr Tinkler – who is the subject of speculation about his financial situation – has been trying to sell the royalty payment for a one-off sum that could be worth as much as $20 million.
Oceltip’s quarterly royalty payments started in September 2009 at $3685 and grew to $484,519 in March and $519,355 in June this year.
Neither man has spoken publicly about what severed their solid friendship, with this legal battle the first insight into the relationship.
In correspondence submitted as part of the proceedings, Mr Tinkler’s right-hand man Troy Palmer described the pair as having no respect for each other.
‘‘It is no secret that Nathan and Matthew Higgins do not respect each other and have no desire to continue to deal with each other regarding the affairs of the company,’’ Mr Palmer wrote to Mr Higgins’s lawyer on November 14.
Mr Tinkler’s latest legal battle was sparked when Mr Higgins, who is extremely private and once told a journalist – ‘‘I’m confidential mate, I like to stay under the radar so I’m not interested in talking at all’’ – requested access to Oceltip’s financial statements and bank records.
An affidavit submitted to the court on November 29 by Mr Higgins’s lawyer, David Schwarz, details months of correspondence between the former friends’ legal teams and frustration by Mr Higgins over missing bank statements, no company ledger and allegations some royalty payments were diverted to one of Mr Tinkler’s private companies.
Mr Higgins, who is a part-owner in Newcastle restaurant Bacchus and paid a record-breaking $7 million in 2008 for Jesmond House, at Barker Street, The Hill, even offered several times to go to Oceltip’s office in Honeysuckle and photocopy the financial statements himself.
The affidavits include correspondence that shows he was turned away empty handed from the office in October and wrote personally to Mr Tinkler signalling his intention to hold a directors’ meeting on November 15 to discuss the financial state and future of the company.
About 15 minutes before the planned meeting, Mr Higgins’ lawyer received advice that Mr Tinkler, the only other director, was travelling and was unavailable.
When questioned by Mr Schwarz about Oceltip’s financial state, Mr Palmer replied on September 10: ‘‘It has since been discovered that under the previous management, there was some confusion internally as to who was entitled to the proceeds of the account.’’
On November 7, Mr Schwarz wrote directly to Mr Tinkler requesting Oceltip’s general ledger, several months’ bank statements and signatories for the company’s bank account.
‘‘It is evident from a review of the documents, so far produced by you, that a substantial portion of the royalty payments made to date by Middlemount Coal and Ribfield have been diverted from Oceltip, at your instigation or at the instigation of persons on your behalf ...,’’ Mr Schwarz wrote.
‘‘We are instructed that our client requires that the amount diverted from Oceltip be repaid to it immediately ... There are, it appears, significant tax liabilities that have not been satisfied.’’
The Tinkler Group has signalled its intention to sell the royalty deed to Noble Resources for an undisclosed sum or split the arrangement so Mr Higgins and Mr Tinkler no longer have to do business together.
Mr Higgins has refused any changes to the arrangement, until the company’s financials are made clear.
He is seeking access to Oceltip’s complete financial records and wants to appoint a third director, company secretary and company accountant.
Middlemount Coal is holding any future royalty payments in its trust account until it receives a signed statement from both directors nominating an agreed Oceltip bank account.
Mr Tinkler’s Sydney-based public relations spokesman declined to comment yesterday and Mr Higgins did not respond.
The matter is listed to be heard in the Brisbane Supreme Court tomorrow.