Protest outcome awaited before second hearing bid

The Securities Commission has reserved its right to try to get the Tranz Rail insider trading action heard in Wellington if a preliminary jurisdictional skirmish results in a reduction in the number of defendants.

High Court judge Hugh Williams confirmed a consent order for the Tranz Rail action to enter the High Court at Auckland's commercial list was made "without prejudice" to the commission's view that the case was "not appropriate" for list entry.

Three defendants - American investment fund Berkshire III, its former managing director and ex-Tranz Rail director, Carl Ferenbach, and the Australian-based former Tranz Rail finance chief Mark Bloomer - are protesting against the New Zealand courts' jurisdiction.

The upshot is that if the trio succeed, the two remaining defendants - Midavia Rail Investments (owned by Sir Michael Fay and David Richwhite) and Richwhite - may again face a commission bid to have the substantive case heard in Wellington.

Herald inquiries disclose a deal was reached between commission barrister Douglas White QC and three Queens Counsel acting for the defendants, to set aside a statement in a Court of Appeal judgment which seriously impacted on the commission's case.

The four agreed the statement - that the commission had no cause of action in its own right - was "obiter" (extraneous to the case). The commission wiped its proposal to appeal to the Supreme Court and consented to the action moving on to the commercial list - for now.