Tuesday 15th November 2011
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Clear Grain Exchange’s opposition to NZX’s legal action in the local courts amounts to “reneging” on its contract, the High Court in Wellington heard today.
Counsel for the stock exchange Brian Latimour said the sale and purchase agreement signed by Clear’s owners and the NZX stipulated it would be governed under New Zealand law, and in the event of a breakdown in the relationship, either party can elect to pursue a claim in New Zealand or the Australian state of Victoria.
“It should be conclusive, because what the defendants are now doing by resisting is reneging on contractual commitments,” Latimour said.
NZX has to prove there’s an answerable case, and that the arrangement is covered by New Zealand law if it wants to proceed with its application against Clear owners Grant Thomas and Dominic Pym and their companies Ralec Commodities and Ralec Interactive.
Latimour told the court Clear’s forecasts that it would trade 1.5 million tonnes of grain by June last year were inflated, and after two years of NZX ownership the platform has yet to meet half that target.
Clear’s owners misrepresented the likely volumes to be traded on the platform and talked down operating expenses, which misled the NZX when it purchased the exchange in 2009 for A$6.9 million, he said.
That also included overstating a relationship with GrainCorp, Australia’s biggest grain bulk handler, which failed to attract the expected trading volumes.
Today’s hearing in chambers before Judge Warwick Gendall will determine whether there’s an arguable case to answer and if the New Zealand courts are appropriate jurisdiction.
Judge Gendall had earlier turned down an application from NZX to have media excluded from today’s hearing, saying many hearings in chambers are open to media representatives and the interests of open justice wouldn’t be served if it was kept behind closed doors.
“I don’t think any parties should be too precious about responsible reporting that takes place,” the judge said.
Latimour said the stock exchange is seeking to claw back the cost of funding the exchange, lost profits from the platform and the fall in value, minus pay-outs to Thomas and Pym had they eventuated.
Australian counsel for Clear, Tim North, will give his address later this afternoon.
The case is set down for one day and is continuing.
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