Richmond score in sideshow to takeover drama

By PHILIPPA STEVENSON

Richmond and its Bell Group shareholders have won a payout from investor Active Equities in another off-stage act to the main drama of the Richmond-PPCS takeover.

In the High Court on Wednesday, Justice William Young dismissed an application for costs made by Active Equities against Richmond and the Bell Group.

Turning the tables on Active's Paul Collins, Bruce Hancox and Patsy Reddy - all former Brierley executives - and their lawyer Paul Foley, the judge instead awarded costs of $3000 each to Richmond and the Bell Group.

In his decision, Justice Young showed wry humour over the many acts of the case that have played out before him last August and November, last month and this week.

"In this judgment I deal with what I hope (probably vainly) will be the last of the issues associated with this litigation ... "

Through its subsidiary Hawkes Bay Meat, Active Equities paid $29 million, or $2 a share, for more than 14 million Richmond shares in July 2000.

PPCS sold them to Active after Richmond found the southern co-operative had breached its constitution and ordered it to sell the holding it purchased from HKM Nominees.

The Bell Group alleged that Active Equities warehoused Richmond shares for PPCS but the allegation was abandoned before last August's trial.

It also alleged that transactions between PPCS and Active involved technical breaches of the Securities Amendment Act.

The judge made no adverse findings against Active, prompting the company to claim it was a successful party in the court proceedings and should be awarded costs.

The judge disagreed.

While the warehousing and technical breach allegations were not proved, the judge said the proceedings "viewed as a whole" could not be regarded as being unsuccessful for Active.

"The primary reason for declining Active Equities an award of costs is that it brought this litigation upon itself," he said.

A statutory declaration sworn by Collins was "so obviously wrong that it is really difficult to see how any sensible commercial person could have regarded it as being correct".

"The arguments advanced by Messrs Collins and Foley struck me as being forced and artificial.

"The declaration (or something like it) was necessary if Active Equities' transaction was to proceed smoothly. As a result of that transaction Active Equities was, in due course, to make in excess of $20 million ... thus a strong motive for Mr Collins (and thus Mr Foley) to do whatever it took to ensure that the transaction could proceed."

Justice Young said Reddy further contributed to suspicions surrounding Active's role when she denied the existence of a PPCS guarantee.

"Active Equities' misleading conduct made it inevitable that there would be legitimate enquiry into whether there had been a breach of the Securities Amendment Act."

The judge said he found it strange that neither Active nor PPCS responded to an invitation to confirm whether there was any arrangement between them over Active's costs in the proceedings.

Their silence was strange "unless there is, in fact, some arrangement" over Active's costs.

Justice Young said the litigation was "fundamentally the fault of PPCS given its role in the HKM transaction", which he found did breach the securities law.

Because PPCS was at fault, and Richmond and the Bell Group's conduct towards Active was reasonable, any costs awarded in favour of Active Equities would have been made against PPCS, the judge said.