Diamond Exchange poised for court

7.2 k views | Posted October 07, 2010 | By Coleby Nicholson

The application to wind up Diamond Exchange is set for a Supreme Court hearing next week, while it appears there are still many customers waiting for their order or a refund from the company.

A 519G wind-up application was filed on September 15 by Tim Stanford of Morgan Trusscolt Capital (MTC), who is claiming an amount of $235,923.38 relating to a loan agreement entered into in October 2009.

The case has been scheduled to be heard on Wednesday, October 13.

Diamond Exchange chief financial officer Simon Middleton said two weeks ago the matter would be resolved the following week, but Stanford told Jeweller late yesterday that he had heard very little from the company, and the matter would be resolved in court next week.

Following the wind-up application, which coincided with an influx of unrelated consumer complaints about the company to the JAA, Middleton told Jeweller on September 20, “We’ve had discussions with them [the creditor] this morning, so hopefully we can find some level ground. We think that it’s appropriate that when there’s a winding-up order, and even though we dispute it [the order], that it’s not appropriate to be trading so we will re-open on Wednesday.”

Stanford said he was expecting that the court would act quickly. When asked what he thought the outcome of the directions hearing would be he said, “They [Diamond Exchange] might request some form of extension, but I doubt whether they would get it given they have had plenty of time so the judge at that point will have to consider appointing a liquidator.”

The other option for the judge is to dismiss the wind-up application.

Diamond Exchange eventually remained closed for four days rather than the proposed two days and then re-opened for business. The Jewellers Association of Australia (JAA) has been handling more than 30 consumer complaints which resulted in it posting an “important Announcement Regarding Diamond Exchange” on its website – jaa.com.au.

Jeweller has been inundated with consumer complaints from people who have read the stories on Jewellermagazine.com and many have detailed their unhappiness with Diamond Exchange. One went as far as advising, “never buy diamonds online”.

The JAA is now advising anyone who is still waiting for their order or refund from the online retailer to contact Ron Lane of Garland Hawthorn Brahe Lawyers on (03) 9629 5551.

JAA chief executive Ian Hadassin said, “We are advising those consumers who have contacted us that the solicitors for the petitioning creditor who has instituted winding up proceedings are Garland Hawthorn Brahe Lawyers. If other creditors want to appear they should contact or get lawyers to contact them and let them know that they will be standing in line to be substituted as a creditor if his client settles.”

Two consumers that contacted Jeweller said Diamond Exchange staff told them the company had been sold, but Sanford said, “I would be very surprised if that has happened.”

The Supreme Court documents filed by MTC list Diamond Exchange’s directors as Wayne Soloman, James Francis and John Buckby, but an Australian Security and Investments Commission (ASIC) record shows that on September 21 a change of officeholders notification had been filed with the corporate watchdog. Further documents show that Buckby had resigned from Diamond Exchange.

Of most concern to many in the industry, including the JAA, is that customers’ personal records of their dealings with Diamond Exchange suggest that the company was failing to make refunds to existing customers within the promised 14 days while at the same time it was taking upfront payments from new buyers.

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