Feltex case documents struck out
The investor leading a $185 million representative action against failed carpet-maker Feltex was a former assistant director of the Lord of the Rings movies and became interested in Feltex shares after buying some of its carpet.
But Eric Houghton's evidence was yesterday stalled as the plaintiff's and the defendants' cases risked "passing in the night", according to the judge hearing the case, with a string documents struck from the evidence, drawing laughter from former Feltex directors.
The representative action began in the High Court in Wellington this week, nearly 10 years after thousands of investors put more than $250m into Feltex's mid-2004 public listing.
Yesterday the beginnings of Houghton's evidence brief were heard.
He said he formerly worked in the film industry, and had studied at Victoria University.
He had been based in Motueka and had bought some Feltex carpet for his home, before the company's float, which he was "very impressed with the quality of". He said he became aware of the float of Feltex in May, 2004, and was interested in the company's shares because of his successful carpet purchase.
Houghton had been a client of Forsyth Barr, the fifth defendant in this case, since about 1995.
In late May, 2004, he read in the Dominion Post about the success of the Feltex offer.
"The IPO had been well received in the marketplace. It was a substantial part of our decision making."
As firm allocations were yet to close, he requested an allocation from Forsyth Barr of $20,000 - double his usual $10,000 share purchase.
But Houghton's evidence was marred by a succession of documents being struck from his brief.
Plaintiff lawyer Austin Forbes, QC, took him to Feltex's own announcements about the share offer and its subsequent financial performance, but Houghton said he had not seen them before.
Instead he believed he had either read about the company in The Dominion Post or heard about it on National Radio.
The documents in the brief were therefore opposed by the defendants, which led to many being omitted.
Later, arguments were heard for over an hour about documents which were presented as fact, but which Houghton himself could not possibly know were true or not. From these documents he was being asked to present evidence on how he would have invested had he known about them, but lawyer for defendant Credit Suisse, Justin Smith, QC, said it needed to be proved how an omission rendered a statement in the prospectus misleading.
Forbes said the case was built on an impression of a prospectus as a whole.
Justice Robert Dobson said Forbes risked proceeding in a manner which would mean Dobson would not have any evidence on which he could find in Houghton's favour.
Justice Dobson allowed the evidence to continue on the basis it was cast in terms depending on the accuracy of the documents relied upon.
These would be relied on only on the fact somebody at Feltex said it, and not as truth.