Court dismisses appeal against $185m group claim over Feltex
The Supreme Court has dismissed an appeal which could have seen thousands of investors dumped out of a group claim for $185 million in damages from the failure of carpet-maker Feltex.
A representative action began in the High Court at Wellington last month, nearly 10 years after thousands of investors put more than $250m into Feltex's mid-2004 public listing.
Feltex had offered shares to the public for $1.70 each, but the company collapsed just two years later and went into receivership.
Former shareholder Eric Houghton, on behalf of 3639 shareholders, has said they were misled into buying shares by the "very rosy picture" painted in the failed carpet-maker's prospectus.
The claim, which was being heard six years after it was filed, was against the directors of Feltex, the sellers of the Feltex shares and the promoters of the issue of Feltex shares to the public in mid-2004.
The Court of Appeal in November, 2012, dismissed five appeals by the defendants which could have derailed the representative action.
But in April last year the Supreme Court granted the former seller of shares in the company leave to appeal a decision on whether the claims of some or all of the shareholders represented by Houghton were "time-barred".
The High Court trial, now into its fourth week, had proceeded before Justice Robert Dobson on the basis this appeal to the Supreme Court would not delay it.
In the appeal Credit Suisse Private Equity and Credit Suisse First Boston Asian Merchant Partners LP had questioned whether some of the shareholders represented were too late in filing their claims.
If the appeal had been successful it could have meant most of the 3639 shareholders could be too late to joint the action.
However, the Supreme Court yesterday dismissed the appeal by a majority.
Credit Suisse had submitted the claims were time-barred by limitation provisions in the Limitation Act or Fair Trading Act.
Its lawyer, Adrian Olney, had said a decision in favour of Houghton's High Court claim would establish the legal platform for individuals to pursue claims for relief. But they would each need to bring and prove individual claims, which would now be time-barred. Furthermore, each shareholder would need to establish their own evidence of reliance and loss.
Justice John McGrath, delivering the judgment, said time ceased to run for all shareholders who purchased shares when the claim was first filed in 2008.
There was nothing which restricted the claim to deal solely with common issues.
"How individual issues including damages are to be dealt with is a matter for the High Court," he said.
The Dominion Post