Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Appeal court boots out appeals against Feltex class suit

Court of Appeal boots out appeals against Feltex shareholders' class action

Nov. 23 (BusinessDesk) - Attempts by the former directors of the failed carpet-maker Feltex to halt a class action by 2,852 shareholders who lost $250 million have been thrown out by the Court of Appeal.

All five appeals against the class action started by Feltex shareholder Eric Houghton were rejected in a judgment issued by the court today, clearing the way for the class action seeking repayment of shareholders' original investment to proceed.

Feltex made an initial public offering of shares in mid-2004 and by December 2006 was in liquidation with all shareholders' funds lost.

Shareholders are alleging Fair Trading Act and Securities Act breaches, negligence, dishonesty and deception, although claims of breaches of fiduciary duty have been struck out in earlier appeals.

Former Feltex directors named in the action are its chairman and one-time Contact Energy director Tim Saunders, current MightyRiverPower and Auckland International Airport chair Joan Withers, Feltex's then chief financial officer, Sam Magill, and directors John Feeney, Craig Horrocks, Peter Hunter, and then chief executive Peter Thomas.

The appeals fell broadly into three categories: the way the case was being managed should not be allowed; statute of limitation rules should prevent shareholders seeking redress; and that some claims were not sufficiently made out to pass tests of arguability.

Counsel for the Feltex directors objected to the way in which the courts allowed Tony Gavigan, a former Fay Richwhite investment banker who has undertaken to organise case management, time to source guaranteed funding of at least $200,000 to meet court costs in the event the shareholders' action failed.

They also objected to Gavigan's conduct in the proceedings, including delays and missed deadlines, which a previous appeal court decision had found were more the product of "an excess of enthusiasm rather than bad faith."

"What was critical was securing Mr Houghton's access to justice through appropriate funding arrangements. That objective has now been satisfied," Court of Appeal president Mark O'Regan and fellow judges Tony Randerson and Rhys Harrison ruled.

On the complaints alleging Magill "engaged into manipulation" of Feltex's earnings, the judges agreed the "evidence in support was not strong", but that it "provided a sufficient factual foundation for arguability, involving as it does an element of deceit."

"Mr Houghton is on notice that he has a significant hurdle to cross if he is to prove" that Feltex had engaged in so-called "channel-stuffing", where goods in excess of those ordered had been sent to customers to boost reported revenue, along with alleged attempts to shift the timing of receipts.

"But for now, the action must remain," the court ruled.

Apparent conflicts between rulings in other Commonwealth jurisdictions were also rejected as grounds for appeal, with the judges siding with Australian judgments that justified the class action moving forward, rather than a "narrow" English ruling on statutes of limitation.

The appellants were, in effect, arguing for an unmanageable and wasteful exercise in which as many as 6,000 separate causes of action would be required, rather than a single class action, the judges said.

Reduced to its essential elements, this element of the appeals related to High Court rules intended to prevent "stale" or "ancient" claims being pursued, and the inability of defendants to mount adequate defences. These could not be held to apply in this case.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Air NZ Wine Awards: Victory For Villa Maria As Pinot Noir Thrills

It was a night to remember as Villa Maria Estate picked up one of the highest accolades of the evening, the O-I New Zealand Reserve Wine of the Show Trophy, at the 28th Air New Zealand Wine Awards. The Villa Maria Single Vineyard Southern Clays Marlborough ... More>>

ALSO:

/S00218/rbnz-releases-brighter-money-designs.htm">Future Brighter Money: RBNZ Releases New Bank Note Designs

New Zealand’s banknotes are getting brighter and better, with the Reserve Bank today unveiling more vibrant and secure banknote designs which will progressively enter circulation later next year. More>>

ALSO:

Commerce: Supermarket Inquiry Finds No Breaches By Countdown

The Commerce Commission inquiry into anti-competitive behaviour by Countdown supermarkets, alleged by former Labour Party MP Shane Jones, has found nothing to warrant prosecution, although it warns supermarkets to take care in the way they communicate... More>>

ALSO:

Crown Accounts: English Flags ‘Challenge’ To Budget Surplus

Finance Minister Bill English is warning next month’s half yearly fiscal and economic update from the Treasury may not forecast a budget surplus, saying that returning the government’s accounts to surplus in 2015 will be “a challenge”, given the decline in commodity prices and weak global inflation. More>>

ALSO:

March 2015: Netflix To Launch In Australia And New Zealand

World’s Leading Internet Television Network to Offer Original Series, Movies, Documentaries, Stand-Up Comedy Specials and TV Shows for Low Monthly Price More>>

ALSO:

Price Of Cheese (Is Up): Dairy Product Prices Fall To Five-Year Low

Dairy product prices fell in the latest GlobalDairyTrade auction to the lowest level in more than five years, led by declines in rennet casein and skim milk powder. More>>

ALSO:

Gordon Campbell: On The Australians Scoring Trade Points Against Us With The Chinese

It hasn’t been a great year for Trade Minister Tim Groser... To top it off, Australia has just signed a FTA with China that has far better provisions on dairy exports than what New Zealand currently enjoys in our own FTA with China. More>>

ALSO:

Iwi & Local Consultation: Oil And Gas Block Offer 2015 Begins

Energy and Resources Minister Simon Bridges today announced the start of the Block Offer 2015 process for awarding oil and gas exploration permits. More>>

Industrial Action: Stats NZ Throwing Public Money Away Duplicating Data

The Public Service Association (PSA) says Statistics NZ are throwing money away by collecting the same data twice for official statistics such as the Consumer Price Index... As part of the ongoing industrial action, field interviewers who are PSA members are continuing to collect data, but are not sending it through to Statistics NZ. More>>

ALSO:

Other Stats:

Space: Rosetta's 'Philae' Makes Historic First Landing On A Comet

After more than a decade traveling through space, a robotic lander built by the European Space Agency has made the first-ever soft landing of a spacecraft on a comet. More>>

ALSO:

Get More From Scoop

 
 
Standards New Zealand

Standards New Zealand
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news