NZX nudges ahead in 'no holds barred' battle over Clear Grain exchange

NZX came out ahead in the latest instalment of its "no holds barred" battle with Ralec, the Australian sellers of the Clear Grain Exchange, winning a small costs award ahead of next year's eight-week trial.

Wellington-based NZX was awarded costs of $12,500, plus disbursements by Justice Robert Dobson in the second ruling on interlocutory matters this year in its long-running dispute with Ralec. Of the five applications NZX sought during an October hearing, it was partially successful on three, while five of Ralec's seven applications were turned down.

"The overall merits of the positions contended for the respective parties are somewhat more nuanced than that summary might suggest," Justice Dobson said in his Dec. 3 judgment. "I have previously aired my concerns at a lack of proportionality in the interlocutory disputes, and that influences my attitudes to awards of costs."

Justice Dobson didn't award costs in his decision in February this year, saying the parties should have been sharpening their focus on the substantive hearing rather than trying to "score points on orders requiring what would inevitably be relatively modest contributions to the costs that have already been incurred."

Last year, he criticised both parties for their litigation tactics, saying it was a distraction from the substantive issues in a dispute where NZX is suing for between A$20.7 million and A$37.6 million, and Ralec has countered with a suit totalling A$14 million plus unspecified bonuses.

NZX claims Clear's former owners, Grant 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.

The case pre-dates much of NZX's existing management, hitting the courts in 2011, and the stock market operator has said its legal bill was likely to reach $4 million before the substantive hearing next year.

The substantive hearing will start in May next year, and Justice Dobson repeated his concerns about the way NZX and Ralec had been litigating the matter.

"The extent of interlocutory disputes reflects a 'no holds barred' approach on both sides, and it is reasonable to project that the same approach will apply to contesting all factual and legal issues at trial," the judgment said. "Each side blames the other for conducting itself unreasonably in progressing interlocutory issues and preparing the case for trial. To the extent that the detail of dealings is revealed to the court, I incline to the view that both sides must accept some responsibility."

The applications covered attempts to strike out the other's claims, get greater access on discovery, increase security for costs, and provide more detail on the losses claimed.

NZX was unsuccessful in its bid to add the other shareholders in the Ralec group of companies as defendants to the action "to add solvent entities that would increase NZX's chances of being able to enforce any substantial judgment it obtains."

Justice Dobson also stayed a separate proceeding against the Australian-based parties pending an outcome on the present dispute.

(BusinessDesk)