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The Supreme Court has rejected stock exchange operator New Zealand Exchange's (NZX's) appeal to overturn a Court of Appeal ruling in favour of the Bank of New Zealand and Access Brokerage.
In September 2006, the High Court struck out a claim by the bank and Access against NZX, but in February the Court of Appeal overturned that decision and awarded costs against NZX and auditors Deloittes.
NZX appealed to the Supreme Court but, in its ruling released today, the court rejected the appeal and awarded $5000 costs and "reasonable disbursements" jointly to BNZ and Access.
Access, an online brokerage, went into liquidation four years ago after a $5 million shortfall in client funds was discovered.
About 10,000 investors were left with a total of $43m frozen in the brokerage's trust account, which was eventually unfrozen by BNZ.
BNZ jointly underwrote the shortfall in funds with the exchange, but along with Access' liquidators took NZX to court to recover the money.
They claimed NZX and its accountant, Deloittes, had inspected Access' records before it collapsed but were negligent as they failed to discover the extent of its problems.
The High Court agreed with NZX's claim that there was no arguable case NZX was legally liable because it said it was a regulator and immune to private duties. However, the Court of Appeal overturned that ruling and the Supreme Court has backed it up.
"The bank and the liquidators of Access are now claiming substantial damages against the applicant," the Supreme Court finding said.
"This litigation, delayed for so long by the strike-out application, should go to a hearing as soon as possible."
A report by the Securities Commission following the Access collapse found shortcomings in the way NZX monitored brokers, although it recognised the stock exchange operator had made significant progress since demutualisation to tighten up market monitoring.
In May, former Access boss Peter Marshall was sentenced to three years' jail for fraud.
- NZPA
