Dunedin meat co-operative PPCS has been cleared of share warehousing allegations in its acrimonious bid to buy a controlling stake in listed Hawkes Bay-based meat processor Richmond.
In a High Court decision released on Friday, Justice Young dismissed three foundation allegations by Richmond and RJ Bell and others against PPCS thatthe southern meat company warehoused shares it was ordered to sell and was a defaulter in its share purchase transactions.
However, the judge upheld two historic accusations regarding a parcel of 290,000 "Nelson" shares bought separately but which PPCS failed to disclose when ordered to sell its stake in Richmond.
The judgment also found in the plaintiff's favour on a related issue over an agreement that another company, HKM, acted as a PPCS nominee to buy shares from the Meat Board in 1998.
At the time, PPCS was found to have breached Richmond's constitution with its arrangement and was ordered to sell its shares.
They were sold to Active Equities, from which allegations heard in the current court case arose.
Justice Young said in his 80-page decision that the hostility by some people associated with Richmond towards the southern company created the environment which led to errors of judgment by those who he said should have known better.
"It goes a long way to explain actions which might have otherwise been thought to have been inexplicable," he said.
But he said the lack of openness by PPCS about its intentions created suspicion and hostility.
The plaintiffs alleged PPCS used a loan agreement with Citibank to help Active Equities buy more than 14 million Richmond shares PPCS was ordered to sell for breaching Richmond's constitution, making the company a defaulter.
Justice Young disagreed, saying the action was "not within the mischief" of the Securities Amendment Act.
The plaintiffs also alleged that in 1999 an arrangement between PPCS and Peter Spencer's Company Toocooya Holdings, gave PPCS an interest in Toocooya shares.
Justice Young was not convinced, saying there were too many doubts associated with the allegation. The judge also rejected a further allegation that PPCS' ownership of the 290,000 "Nelson" shares which it forgot to disclose when ordered to sell its Richmond stake made PPCS a defaulter.
