A TERRITORY firm is suing a company owned by one of Australia's richest men over an alleged drilling debt.

Pine Creek-based Johannsen Drilling has issued a writ in the Darwin Local Court for a "substantial amount". Multimillionaire Joe Gutnick's Legend International allegedly did not pay for work at a diamond and phosphate prospect near Borroloolain 2007.

The man known as "Diamond Joe" is expected to defend the action.

A court-sponsored mediation conference is scheduled for early next year. Johannsen Drilling is headed by Taal Johannsen, whose grandfather designed the modern road train in 1946.

It has been a tough year for the company.

Johannsen Drilling was owed about $250,000 when GBS went bust and closed its mining operations in Pine Creek in October. GBS owed up to $400 million to contractors, many of them based in the Territory.

Mr Gutnick is president, chief executive and chairman of Melbourne-based Legend International, which is exploring in the Territory and near Mt Isain Queensland.

He was looking for diamonds near Borroloola when he found phosphate, one of the world'sboom commodities