Richwhite one, commission nil

David Richwhite has won the first round in what promises to be a long fight with the Securities Commission over allegations of insider trading in Tranz Rail shares.

Justice Hugh Williams ruled yesterday in the High Court at Auckland that all preliminary matters in the case would be heard via that court's commercial list. This makes it probable any trial will also be held in Auckland with an Auckland judge.

Commission director of enforcement Norman Miller said it was likely to appeal against the decision as it wanted the case heard in Wellington, where it was filed in October.

Unless the commission's appeal succeeds, the next round is set for the High Court at Auckland on March 4.

Roger Partridge, a lawyer acting for Richwhite, said Justice Williams had made the right decision and Richwhite's team was willing to get on and defend the case.

The commission filed proceedings in the High Court at Wellington over $83 million of share trades between February and May 2002.

However, Justice Williams ruled that under court rules Richwhite's lawyers had effected a transfer of the proceedings from the Wellington Registry to the Auckland Registry by endorsing the words "commercial list" on their statement of defence. This list operates in Auckland.

At a February 10 hearing in Auckland, Alan Galbraith QC, representing Richwhite and Midavia Rail Investments, co-owned with business partner Sir Michael Fay, argued that the "complex technical commercial dispute" ... "overwhelmingly" merited the commercial list.

Furthermore, Galbraith said, most witnesses would come from Auckland or overseas, Tranz Rail was based in Auckland and the share trades were conducted via Auckland brokers.

For the commission, Robert Dobson, QC, argued that nothing in the Richwhite-Midavia submissions overrode the "conventional proposition" defences could be filed only in registries where the claim was filed.

The commission claims six defendants avoided losses of up to $33 million by selling shares when they knew Tranz Rail had unpublicised problems.

Midavia was named as first defendant. The other defendants are Richwhite (formerly a Tranz Rail director), American investment fund Berkshire Fund III, Berkshire's former managing director and ex-Tranz Rail director, Carl Ferenbach, and former Tranz Rail chief financial officer Mark Bloomer.

All deny the allegations.

Boston-based Berkshire, Ferenbach and Australian resident Bloomer are challenging the jurisdiction of NZ courts to hear the case.

The sixth defendant, former Tranz Rail chief Michael Beard, settled a $155,691 claim against him on December 23 without admitting any liability.