Often touted as a quick and relatively inexpensive way to deal with commercial disputes, arbitration was prolonged and expensive in a $1.2 million claim by livestock financier Stockco over funding for purchase of nearly 800 bulls rising two years old with allegations of dishonesty over delivery and ownership of the livestock.
Marcus Kight’s Hawkes Bay livestock financier Stockco Ltd was incensed by what was viewed as dishonest, opportunistic and obstructive behaviour by client The Big Basin Ltd.
Big Basin claimed stock were never delivered.
Stockco reserved particular ire for then Big Basin director, Oamaru-based Leonard Bourton, alleging he drove a ‘false narrative’ seeking to make a windfall gain. Companies Office records state Mr Bourton resigned as director in 2018.
Arbitrations are usually private. There is no public record.
Stockco’s private dispute with Big Basin made it into the public arena when Stockco disputed in the High Court the level of fees awarded by the arbitrator after its successful claim against Big Basin.
Stockco said it had spent $743,000 on legal fees. Much of this followed a pre-arbitration review of Big Basin’s allegation it never received the promised livestock. A prolonged arbitration hearing lasting ten days added to costs. Stockco said it had reduced its $743,000 claim down from the $850,000 cost actually incurred.
The arbitrator allowed a fee recovery at 51 per cent of costs claimed, payable by Big Basin.
Stockco challenged a reduction of this size as unreasonable.
Justice Radich confirmed the arbitrator’s assessment. Costs incurred lost proportion against the true nature of the dispute, he said.
The High Court was told Big Basin was able to dispute delivery of the bulls because Stockco was not initially aware of where the livestock were located. All Stockco knew was that the bulls were, or had been, in the hands of Mr Bourton and that some had reached Big Basin’s property near Lindis Pass in South Island’s Mackenzie Country.
The arbitrator resolved that there was a real possibility that some of the bulls were never in Big Basin’s possession. Shortcomings in Stockco’s systems and records created uncertainty.
Ultimately, the arbitrator found Big Basin liable for finance costs on a plain interpretation of Stockco’s financing contract, independent of any dispute about delivery.
Stockco Ltd v. The Big Basin Ltd – High Court (28.08.24)
24.207