Meat bodies urged 'Don't drag out $10m wrangle'

By PHILIPPA STEVENSON agriculture editor

Meat NZ and the Meat Industry Association are being urged not to further drag out a 7-year legal battle they have twice lost in the courts at a cost to farmers of up to $10 million.

The Appeal Court last week dismissed the appeal of both bodies over last year's High Court decision which awarded about $6 million to former Taumarunui meat company Paramount Export and its export arm, Ronnick Commodities.

The money was for lost value and damages plus interest and legal costs.

The meat companies, described by Justice Richard Heron in the High Court at Wellington last year as "vibrant and successful," went into receivership and liquidation after being denied quota for the valuable European Union sheep meat market in 1996.

Paramount, initially a horse meat exporter which moved into sheep processing, was Taumarunui's second biggest employer.

It closed in 1997 with the loss of 100 jobs.

Ron Russell, Paramount and Ronnick's sole shareholder, said two courts had now confirmed his companies had been entitled to about 1 per cent of the EU sheepmeat quota and it was time for Meat NZ and the Meat Industry Association "to accept defeat and the ruling of the courts".

The farmer-funded Meat NZ, formerly the Meat Producers Board, and the export meat company-financed association formed the Meat Planning Council in the 1990s to allocate European quota. The role was previously handled by the board alone.

Russell said the tragedy of the case was that the two bodies, "driven by an arrogant refusal to react positively to well-reasoned submissions, will cost New Zealand farmers at least $10 million, including accrued interest and legal fees.

"This attitude has been on going for the past seven years.

"Until litigation commenced in 1996 the matter could easily have been dealt with at no cost to the board and minimal cost to the MIA members.

"One per cent of the EU quota spread over the whole industry is of little significance."

Mismanagement of the case meant costs continued to escalate each day at an alarming rate, he said.

The Appeal Court said that until the 1994-95 year Paramount and Ronnick had received EU quota on the basis of their current year's production. A new basis of allocation was introduced that year which replaced current season production by historical performance based on a three-year rolling average.

Three per cent of the total export tonnage was not allocated but held back for new entrants to the meat industry and for existing participants disadvantaged by unforeseen circumstances. An independent tribunal was set up to decide applications for the reserve quota.

Paramount and Ronnick applied for reserve quota for 1995-96 because in the qualifying period they were gearing up to be a significant export production house. Their export chain was operating by November 1993 but the plant was not licensed by the European Commission until October 1994.

"They were, they say, unique in this," the court said "For everybody else the 3-year average and the discretionary top-up system would fairly deliver their proportionate share." But for the 1995-96 year Paramount and Ronnick received less than a third of the quota they expected, plunging them into chaos and panic mode.

The tribunal's allocation decision was not made until May 1996 but by then Paramount and Ronnick had already shipped to Europe more than their quota entitlement. They sued for the losses resulting from various decisions on quota made in 1995 and 1996.

Meat NZ chief executive Neil Taylor said he was extremely disappointed by the Appeal Court decision and that commonsense had not prevailed.

"The quota allocation system has worked well for a long time and we wish to see the integrity of the allocation process upheld."

Association executive director Brian Lynch said the case had been expensive and the association would weigh its options after legal advice.

Any decision to register an appeal to the Privy Council would have to be made by October 1.

Russell said he hoped the present Meat NZ directors would recognise the "follies of their predecessors and not follow in their footsteps".

He said that in the unlikely event of the case going to the Privy Council he would cross appeal and was confident of more success.