NZX Limited v Ralex Commodities Pty Limited

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV-2011-485-1299 [2012] NZHC 1585

BETWEEN  NZX LIMITED

Plaintiff/First Counterclaim Defendant

ANDRALEC COMMODITIES PTY LIMITED First Defendant/First Counterclaim Plaintiff

ANDRALEC INTERACTIVE PTY LIMITED Second Defendant/Second Counterclaim Plaintiff

ANDGRANT DAVIS THOMAS Third Defendant

ANDGRANT THOMAS NOMINEES PTY LIMITED

Fourth Defendant

ANDDOMINIC LUKE PYM Fifth Defendant

ANDPYM FAMILY PTY LTD Sixth Defendant

ANDNZX HOLDING NO 4 LIMITED Second Counterclaim Defendant

ANDMARK RHYS WELDON Third Counterclaim Defendant

Hearing:         22 June 2012

Counsel:         B Latimour and B Cash for first and second counterclaim defendants

A R Galbraith QC and E M Greig for third counterclaim defendant T J North SC and J K Scragg for first and second counterclaim plaintiffs

Judgment:      5 July 2012

RESERVED JUDGMENT OF DOBSON J (Security for Costs)

NZX LIMITED v RALEC COMMODITIES PTY LIMITED HC WN CIV-2011-485-1299 [5 July 2012]

Introduction

[1]      This judgment deals with an application for security for costs that arose in the following context.

[2]      In 2009, the plaintiff (NZX) purchased a business in Australia that was in its start-up phase.   It had two components, one that was intended to evolve into an on-line grain trading business, and a second that involved the management of, and access to, electronically stored information in relation to supply of, and demand for, primary produce, in particular grain.   The first and second defendants (the Ralec companies) were the corporate entities that had devised and were managing the business, with the third to sixth defendants being the driving forces behind the Ralec companies, as well as the separate corporate entities used by the larger shareholders to own their holdings in the Ralec companies.

[3]      The sale and purchase agreement (SPA) provided for initial consideration of A$7 million that was paid by NZX.   The SPA also provided for the prospect of adding three other components to the consideration for the business, each of which depended on an aspect of subsequent performance of the business.

[4]      The business acquired has not performed to NZX’s expectations, and in these proceedings, NZX sues the vendor companies, and those who guaranteed the performance of the vendor companies, for breach of the SPA.  There are five causes of action alleging misrepresentation, breach of warranties, failure of on-going obligations, as well as a claim for misleading conduct under the Fair Trading Act

1986 and a claim against the guarantors of the vendors’ performance.

[5]      The Ralec companies have counterclaimed for breaches of the SPA, breaches of representations that it claims have induced entry into the contract by the vendors and guarantors, and misleading representations in trade under the Fair Trading Act or equivalent Australian statutes.  In addition to bringing the counterclaim against NZX, the Ralec companies have joined as additional counterclaim defendants a wholly owned  subsidiary  of  NZX,  NZX  Holding  No  4  Limited  (NZX4)  and  Mr Mark Weldon who was, at all times material to the causes of action and the counterclaims,

the chief executive of NZX.   They also allege breaches of duties of care owed to them by…