16 Nov 2011

NZX and Grain Exchange argue about hearing venue

7:41 am on 16 November 2011

The lawyer acting for the former owners of the Australian-based Grain Exchange says his clients are in the dark about what damages the NZX is seeking from them.

The NZX and the grain exchange were in the High Court at Wellington on Tuesday, arguing whether the case should be heard in Wellington or Melbourne.

The NZX purchased Clear Grain Exchange for $6.4 million from Ralec, owned by Grant Thomas and Thomas Pym in 2009, and used its technology and expertise to build its dairy futures trading platform.

But the relationship quickly soured, Mr Thomas and Mr Pym left, and in July things turned bitter after NZX sued Clear's owners for misleading and deceptive behaviour, arguing it had contributed to a substantial decline in the value of the grain exchange.

NZX lawyer Brian Latimour QC argued Clear performed poorly, failed to get close to trading and cost targets and fell out with critical grain industry players.

On the issue of where the case should be heard, Mr Latimour says negotiations and the sale agreement make it clear that any potential dispute could be heard in either New Zealand or Australian courts.

But counsel for Mr Thomas and Mr Pym, Tim North, argued the case should be heard in Melbourne because the grain exchange is based there, its key staff work there, and the relevant witnesses are Australian.

Mr North disputed that the exchange did not live up to promises, saying NZX chief executive Mark Weldon had admitted in a previous court hearing that the exchange was a start-up, high-risk business which required grain farmers to change their behaviour.

Mr North said the NZX has not spelt out what damages it is seeking from his clients, and despite conducting due diligence on the exchange, none of its modeling or forecasts have been provided to the court.

Justice Gendall hopes to release his decision before Christmas at the latest.