Feltex litigants must pay $1m
The backers of an investor class action against directors of failed carpet-maker Feltex have been ordered to pay $1 million to a trust account by 5pm tomorrow, after missing a January 15 deadline.
The money is security for costs in case investors lose the lawsuit, due to begin its High Court hearing in March.
In a procedural ruling issued on Tuesday, Justice Robert Dobson criticised the plaintiffs, represented by Feltex investor Eric Houghton, for failing to comply with the earlier deadline.
"It is quite inadequate to allow the deadline for compliance with the order for security for costs to pass without any communication on the topic to either those acting for the defendants or to the court," he said.
Lawyers for the defendants - former Feltex directors Tim Saunders, Sam Magill, John Feeney, Craig Horrocks, Peter Hunter, Peter Thomas and Joan Withers, as well as broking firms Credit Suisse First Boston, First NZ Capital and Forsyth Barr - had sought an order for dismissal of the case unless the money was paid into the court by Thursday.
Justice Dobson declined the request, ordering that London-based litigation-funding firm Harbour Litigation Fund could pay $1m to a trust account of law firm Wilson McKay.
He also allowed the late filing of expert evidence for the plaintiffs from former Macquarie Equities investment director Arthur Lim.
The evidence had been due to be filed by December 17, but was finally filed on January 6.
Macquarie became a co-manager of Feltex's initial public share offer in 2004, which meant the firm assuming responsibility for selling $20 million of shares in the float.
Justice Dobson ordered the plaintiffs to ensure defendants had access to Macquarie documents in case they wanted to challenge the factual content of Lim's evidence. Defendants could also challenge the admissibility of the evidence at a hearing on March 4, a week before the trial.
The lawsuit alleges false and misleading statements were made in prospectus documents for Feltex's $250m float. Within a year of the IPO, Feltex issued a profit warning and subsequently collapsed into liquidation in December 2006.
Justice Dobson said the time allocated for the High Court hearing would run until May 23. "If absolutely necessary, part of the week starting 26 May may also become available. If the hearing does run as long as that, then an inevitable consequence would be the delay in delivery of my judgment."