Critical decisions in Feltex appeal
The $150 million class action against the former directors and sellers of shares in the collapsed carpetmaker Feltex is still on track after critical decisions by the Court of Appeal released today.
The Court of Appeal has dismissed five appeals taken by the former directors, sellers and promoters of Feltex which could have terminated the representative action being taken by almost 3000 former shareholders.
The appeals were heard in August and taken against decisions of Justice French in the High Court last year where she approved the representative order allowing Eric Houghton to act on behalf of other shareholders, lifted a stay on the court action, and required Auckland merchant banker Tony Gavigan organising and managing the court action to satisfy the court there was a funder able to pay the full costs of the action.
The Court of Appeal in the rulings released today has upheld her judgments.
This is the second time the former directors, sellers and promoters have gone to the court of Appeal appealing several aspects of the High Court rulings.
Houghton and the shareholders who bought shares in Feltex in a public offering in May-June 2004 are alleging the prospectus was misleading and contained untrue statements.
Feltex collapsed in late 2006 with shareholders losing their investments. They are suing the directors, sellers and promoters of the shares.
The former directors of Feltex are Tim Saunders, Sam Magill, John Feeney, Craig Horrocks, Peter Hunter, Peter Thomas and Joan Withers.
The shareholder group is claiming losses and interest since 2004 in respect of 60 million shares bought at the time of the public offer at $1.70 each.
The five appeals to the Court of Appeal fell into two distinct categories.
The first category was challenges to Justice French's approval of the representative action and her approval of the litigation funding arrangements.
The second category of appeals was based on the argument that the claims of most if not all of the represented parties, the shareholders, were time-barred, that is too late, and should be taken individually.
The class action has not yet got to trail and the decisions being fought over are at the interlocutory stages.
The appeal court's judgment said the representative action ''is still some distance from trial''.
The court said it was satisfied adequate funding arrangements were in place, the litigation funding agreements were not an abuse of process and the directors were adequately protected if the court found in their favour and not the shareholders.