Wednesday 26th March 2014
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Justice Robert Dobson has ticked off Ralec, the sellers of the Australian Clear Grain Exchange, and local stock market operator NZX for litigation tactics distracting from the substantive issues of their long-running dispute.
The judge took a dim view of the way Ralec courted the local media in 2011 through shareholder Grant Thomas's lawyer Rob McGirr, according to a March 6 judgment published on the Justice Ministry's website. He also criticised NZX's lawyers, Bell Gully, for contacting Ralec shareholders to warn them the court could order the disclosure of those funding the claims and that they could face costs if they were unsuccessful.
"The court will treat as regrettable initiatives that divert attention from the prompt and efficient progress of the substantive issues requiring resolution," Justice Dobson said. "In this case, Ralec's attempt to generate anti-NZX media comment and NZX's attempt to warn Ralec shareholders off providing financial support for Ralec's counterclaim both fall into that category."
The Jan. 30 interlocutory hearing at the High Court in Wellington was the latest in a protracted dispute between the Ralec shareholders and NZX over the stock market operator's 2009 purchase of the Clear Grain Exchange for A$6.9 million.
NZX claims Clear's former owners, Thomas and Dominic Pym, and their companies Ralec Commodities and Ralec Interactive misled NZX when it bought the commodities trading platform with "wildly inaccurate" forecasts. Ralec subsequently filed a counterclaim against NZX, later adding former chief executive Mark Weldon to the list of defendants.
NZX sought to restrict the availability of confidential documents to lawyers who were admitted as practitioners in New Zealand, with the judgment citing a Dec. 18 affidavit by acting corporate counsel Robyn Dey raising concerns "at what NZX considers to be unethical or inappropriate conduct by Mr McGirr in dealing with the media in relation to the present dispute."
Several of Ralec's lawyers have since joined the New Zealand bar, and Justice Dobson said "the concerns raised by NZX are not sufficient to exclude them from those who can access confidential documents, once in each case they have undertaken to adhere to the legitimate scope of the constraints required on behalf of NZX."
On the Bell Gully letter to Ralec shareholders, the Australian company's lawyers sought an order for a full list of the recipients of the letter, and a prohibition on the law firm from repeating such communications.
Justice Dobson said "a variety of tactical ploys" often come to the attention of the court in civil proceedings, and are largely distractions outside the scope of the court's powers."
"In this present case, there is no jurisdictional basis, or indeed legal justification, for orders of the type that Ralec sought," the judgment said.
Justice Dobson ruled in favour of NZX that the scale of Ralec's application for discovery of 28,900 documents was "of sufficient magnitude in this case to warrant an order that Ralec re-list the documents, to apply a more focused and narrower test of relevance." Ralec has until May 2 to file a new list.
The judge also ordered a $10,000 increase in security for costs by Ralec to account for the discovery and inspection, to be paid by April 4.
NZX is entitled to costs and disbursements on its two successful applications and Ralec one-half of costs for its application.
Justice Dobson was reluctant to set a hearing date for the substantive trial, saying he wasn't satisfied that the issues are "thus far adequately defined to justify a reasonable projection of the length of trial that would be required, and when the parties would be ready for substantive hearing."
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