Sharechat Logo

Ralec misrepresented relationship with grain handlers, NZX lawyers say

Monday 2nd May 2016

Text too small?

The former owners of the Australian Clear Grain Exchange made false representations about their relationships with Australian grain handlers, Wellington's High Court has heard.

Ralec is facing stock market operator NZX in what's expected to be a nine-week trial over NZX's purchase of the Australian Clear Grain Exchange in 2009. NZX is suing for between A$20.7 million and A$37.6 million, and Ralec has countered with a suit totalling A$14 million plus bonuses.

NZX claims Clear’s former owners, Grant Thomas and Dominic Pym, and their companies Ralec Commodities and Ralec Interactive misled NZX when it bought the commodities trading platform with “wildly inaccurate” forecasts. Ralec subsequently filed a counterclaim against NZX, later adding the market operator's former chief executive Weldon to the list of defendants. It claims NZX, which bought the platform for A$7 million with the potential for further earnouts, failed to fund the exchange sufficiently. The case pre-dates much of NZX's existing management, having first hit the courts in 2011.

This afternoon, counsel for NZX Brian Latimour told the court that Thomas and Pym had misled NZX by characterising their relationship with bulk handling companies (BHCs) as positive. BHCs provide storage, handling and port terminal services for bulk grains, and are vital for growers wishing to export bulk grains. 

"Clear's relationship with BHCs was, we submit, in fact, identified by Clear as a negative matter during Clear's first grain harvest over the summer of 2008 to 2009," Latimour said.

A letter from Pym to Thomas from Oct. 28, 2008, said Clear's issues with BHCs needed to be resolved, as they could seriously impact its business model, cash flow, and survival, Latimour said. Growers and buyers were uncertain about Clear's payment structure, and Clear had two clients which accounted for the majority of its business which it was desperate to keep happy, he said. 

The grain exchange was set up to take advantage of the break-up of the Australian Wheat Board monopoly and was looking to capture a slice of the A$100 million to A$150 million growers spent annually on commissions to sell their products.

NZX wanted to use the exchange to expand its agricultural products offering and use it as the basis for an agri-portal for spot market and commodity data, though that hasn't eventuated due to Clear's muted trading volumes.

Earlier in the day, Ralec's counsel requested the proceedings be live streamed to their clients and lawyers who will be in Australia for all or part of the trial, from the point when evidence is presented. NZX's lawyers said they needed to consult with their clients but would want to be clear about who had access to the live stream if it were to occur.

Opening statements for both sides have been predicted to take between five and six-and-a-half days.

  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

NZ dollar trades near 2019 low on Aussie rate outlook, China worries
Short window left to lock in good interest rates on term deposits
MediaWorks breakeven stymied by radio
Loan-to-value restrictions effective but have some drawbacks - RBNZ
Yili deal a timely cash injection for Westland farmers - ANZ
AFT interested in medicinal cannabis but says it's not commercially viable yet
Serko chalks up another year of 28% sales growth, profit dips on acquisition adjustment
NZ first-quarter retail sales grow 0.7%, slightly better than expected
SkyCity poised to enter online gaming space
AFT narrows net loss, turns cash flow positive

IRG See IRG research reports