PPCS LIMITED V RICHMOND LIMITED CA CA253/02

PPCS LIMITED V RICHMOND LIMITED CA CA253/02 8 December 2003IN THE COURT OF APPEAL OF NEW ZEALAND CA253/02BETWEEN PPCS LIMITED Appellant AND RICHMOND LIMITED First Respondent AND R J BELL & ORS Second Respondents Hearing: 8 December 2003 Coram: Gault P Blanchard J Glazebrook J Appearances: A R Galbraith QC for Appellant W M Wilson QC for First Respondent R A Dobson QC for Second Respondents Judgment: 8 December 2003 Reasons: 17 December 2003REASONS FOR THE JUDGMENT OF THE COURT DELIVERED BY BLANCHARD J[1] The second respondents, collectively known as the Bell group, sought conditional leave to appeal to the Privy Council from the judgment of this Court delivered on 1 October 2003. At the conclusion of the hearing, which was combined with the hearing of the like application in Perry Corporation v Guinness Peat Group Plc, the application for leave was dismissed. We now give our reasons. [2] The appeal brought to this Court concerned only a question of remedy for an admitted breach by PPCS of certain disclosure obligations under the SecuritiesMarkets Act 1988. The Court determined that the order for forfeiture of shares owned by PPCS should remain but quashed an order made in the High Court prohibiting exercise of certain voting rights on other shares held by PPCS. The Bell group had contended for a greater level of forfeiture and for an order that PPCS should divest itself of the rest of its shares in Richmond. Those contentions were rejected. The Bell group wishes to pursue those rejected contentions before the Judicial Committee of the Privy Council. PPCS also sought conditional leave but Mr Galbraith QC informed the Court that his client did not wish to pursue that application, seeking reduction in the level of forfeiture, if, as happened, the Bell group did not obtain leave. [3] There was also before the Court an application for conditional leave by Richmond but at the hearing it was withdrawn on a basis agreed with PPCS. [4] The application by the Bell group relied upon both r2(a) and r2(b) of the New Zealand (Appeals to the Privy Council) Order 1910. [5] As far as r2(a) is concerned, we took the same view as in the Perry Corporation case, namely that, although the value of the Bell group's shareholdings may be affected by any change in the level of forfeiture of PPCS's shares, the proposed appeal does not involve, directly or indirectly, any claim or question to or respecting the property or civil rights of the members of the Bell group. It is not their shares which are in issue. [6] As to r2(b), we were entirely unpersuaded that the level of forfeiture, i.e. the scale of the penalty to be suffered by PPCS, is a matter of great public or general importance. It is, on the contrary, a very fact specific matter. The facts of the case were unusual and very unlikely to be replicated in a future case. A particularly unusual feature was the way in which the shareholding originally built up by PPCS in breach of the disclosure requirements was sold down but later able to be repurchased, without there having been an arrangement to that effect with the purchaser. The circumstances in which the repurchase occurred did not give rise to any new breach of the legislation.[7] It was suggested during argument before us on the leave application that in varying the orders made by the High Court this Court has indicated a more lenient stance on penalties generally under the Securities Markets Act. That would be to misread our judgment. [8] In any event, the level of penalties in this jurisdiction is very much a matter for determination locally by Judges who are familiar with local conditions and precedents. It is not a matter in respect of which the Judicial Committee could claim particular expertise, especially since, as Mr Galbraith pointed out, the United Kingdom has an entirely different regime. [9] A further matter which weighs with us is the desirability of bringing to an end the protracted litigation which is affecting the market in Richmond shares. There would be likely to be significant delay before the matter could be substantively heard in London. [10] Conditional leave was therefore refused and the Bell group ordered to pay costs of $3,000 to PPCS together with reasonable disbursements.Solicitors: Chapman Tripp, Christchurch for PPCS D J S Parker, Wellington for Richmond Buddle Findlay, Christchurch for Bell Group