Meat rivals go head-to-head in court

By PAULA OLIVER

Knives were drawn yesterday in the latest instalment of the long-running battle between meat company rivals Richmond and PPCS.

The two have been at war since the late 1990s, when PPCS tried to buy into its competitor but had its interest deflected because Richmond did not appreciate its overtures.

PPCS refused to go away and built up a stake using various techniques.

Yesterday many legal challenges against the hostile manoeuvres culminated in a hearing before five judges at the Court of Appeal in Wellington.

The feeling between Richmond and PPCS was evident from the first minute, when lawyers for either side could not agree on who should speak first.

They are battling over a High Court ruling and penalty handed down last year.

The ruling found that PPCS had committed "gross commercial misconduct" in building a stake in Richmond and hiding it from the company.

PPCS was found to have told a series of untruths, breached the Securities Amendment Act and concealed its position as it sought control of its competitor.

It received a penalty that included an order to forfeit some of its shares in Richmond and lose voting rights on others.

The Court of Appeal will, over four days, hear:

pf* An appeal from PPCS against the penalty.

pf* A cross-appeal from Richmond arguing that PPCS should forfeit all the shares it now holds in the company.

pf* Another cross-appeal from a group of Richmond shareholders, known as the Bell Group, who will also argue (on a different basis) that PPCS should forfeit all of its shares.

Legal sources say the outcome will be watched closely because it will demonstrate how far a company can go in using clandestine techniques and how harsh its punishment will be.

Yesterday, after a whispered huddle, the five judges ruled that Richmond's appeal should be heard first.

Bill Wilson, QC, representing Richmond and speaking before a gallery packed with the meat world's top brass, argued that all the shares held by PPCS should be forfeited.

Wilson said PPCS became a defaulter when it got involved in transactions with a group known as HKM Associates, which was a front for PPCS.

It was ruled that PPCS had breached notice and pause provisions in Richmond's constitution by conducting transactions using HKM as a front for its own activities.

To comply with the penalty associated with the ruling, PPCS sold those defaulter's securities to a group known as Active Equities.

But Wilson argued that PPCS still held a relevant interest in other shares but hid that interest.

Wilson said that meant the default was not remedied by the sale, and so PPCS remained a defaulter and all of the shares it held in Richmond were termed defaulter's securities.

His argument drew strong questioning from the Bench, who queried whether PPCS should be forced to sell shares it held now but had bought after the default.

Wilson argued that it should. "This was clear deception of both Richmond and the market," he said.

He urged the judges to look at decisions relating to Lion's long-running battle for Montana, which it eventually lost.

Lion was forced to sell more than just the shares it had acquired when it breached rules.

Wilson argued that the purpose of being forced to sell all shares, not just those that were tarnished, was to act as a deterrent.

In reply, Alan Galbraith, QC, representing PPCS, labelled much of Richmond's submission as emotive and irrelevant.

Galbraith said PPCS was no longer a defaulter because it had sold the shares in question.

He said the other shares held by PPCS were not acquired in breach of the notice and pause provisions, and therefore could not be pulled into the argument.

Galbraith said that Richmond's reliance on a decision relating to the Lion battle for Montana was wrong.

The court will tomorrow hear PPCS' appeal against its penalty.