24 Nov 2011

Grain exchange court case to be heard in New Zealand

7:15 am on 24 November 2011

The former owners of the Australian-based Clear Grain Exchange have lost their battle against stock exchange operator NZX to stop the case being heard in New Zealand.

NZX sued Clear's owners, the Victorian-based Grant Thomas and Thomas Pym, for misleading and deceptive behavior in July.

It argued they had contributed to a substantial decline in the value of the grain exchange, which NZX bought in 2009 for $7 million.

The legal stoush between NZX's Mark Weldon and Mr Thomas and Mr Pym has been bitter, with the Australians taking their own legal action in Victoria.

A hearing at the High Court in Wellington last week dealt with where the case should be heard.

Clear's former owners argued it should be in Melbourne because the exchange and key staff are based there and the relevant witnesses are Australian.

NZX's lawyers argued that Wellington is the appropriate place, saying Clear's sale agreement made it clear that any potential dispute could be heard in either New Zealand or Australian courts.

In his judgement, Justice Gendall says New Zealand's High Court is the most suitable forum to hear the case.

He also dismissed Mr Thomas' and Mr Pym's claims to throw out NZX's case entirely.

Justice Gendall says the amount of material generated by both sides about who was responsible for the grain exchange's performance indicates there are serious issues that need to be tested in court.

The focus is now on the grain exchange's under-performance, and whether Mr Thomas and Mr Pym are legally liable.

NZX says the two men breached their agreement and various laws, including the Fair Trading Act, with Clear performing poorly, failing to get close to trading and cost targets, and falling out with critical grain industry players.

It has yet to say how much it'll seek in damages from Mr Thomas and Mr Pym.

For their part, the two men argue Mark Weldon admitted the exchange was a start-up, high-risk business, and they'll defend themselves vigorously.

They are themselves counter-suing NZX for more than $A14 million they say they're still owed.

Mr Thomas and Mr Pym have to file statements of defence within 30 days.