Feltex defendant granted right to appeal

Feltex collapsed in 2006, causing 8000 investors to lose millions of dollars. Photo / Hawke's Bay Today

Some investors in the class action against former directors of the failed carpet firm may be unable to be involved with the litigation as one of the defendants is given leave to appeal to the Supreme Court.

Around 3000 investors are taking representative action against former Feltex directors and allege the company's prospectus in 2004 - the year it floated - contained information that was misleading or wrong, or omitted to make information available that would have affected investment decisions.

Feltex collapsed in 2006, causing 8000 investors to lose millions of dollars. Investors, represented in court by Feltex shareholder Eric Houghton, are seeking a refund of the purchase price of their shares, plus associated interest and costs.

The proceedings were filed in March 2008 and issues associated with them have been fought out in numerous court battles since.

The defendants, who have denied the claims against them, include former chairman Tim Saunders, former chief executive Sam Magill and former directors John Feeney, Craig Horrocks, Peter Hunter, Peter Thomas and Joan Withers. Former director John Hagen is not involved in these proceedings.

Also targeted is Credit Suisse First Boston Asian Merchant Partners (which offered Feltex for sale), Credit Suisse Private Equity and joint lead float managers First New Zealand Capital and Forsyth Barr.

A bid by the defendants to halt the action was thrown out by the Court of Appeal last year.

However, the Credit Suisse respondents have today been given leave to appeal to the Supreme Court.

Chief Justice Dame Sian Elias and Justice Robert Chambers said today the leave to appeal was granted on the following grounds:

"Are the claims of some or all of the shareholders represented by [Eric Houghton] time-barred by virtue of limitation provisions in the Limitation Act 1950 or the Fair Trading Act 1986?".

It is understood that one possible consequence of this appeal is that some Feltex investors could be unable to be involved in the litigation.

The first part of the Feltex trial, estimated to take eight weeks, was scheduled to start on March 10 next year but it is not clear if today's decision will impact on this.