Court hears test case as Vestar investors take first action

The first case against failed investment advisory group Vestar is to be heard in the High Court at New Plymouth today but a decision on the outcome is not expected for weeks.

New Plymouth law firm Dennis King Law is taking a test case involving a Hamilton investor against FP North, the company formerly known as Vestar, which is now in liquidation.

Lawyer Karen Towt said the case was the first of a number the firm was preparing against the company and could set a precedent for the others.

Towt said because FP North was in liquidation, it was pursuing the company's insurer QBE.

She said QBE were refusing to indemnify Vestar and the case was designed to get permission to pursue the insurance company for that indemnity insurance.

"QBE will end up standing in the shoes of Vestar."

She expected the judge to reserve a decision on the case but if investors were allowed to pursue the insurance company it would probably go to a trial where they would also add the former directors and investment committee to those they were trying to sue.

Towt said she would argue that the Vestar advisers were negligent and through their personal indemnity insurance the company should be covered by its insurance company.

Towt said she had 13 or 14 investors also looking to take cases but they could not be one multi-party action because they had individual issues.

The cases may also be added to a test case being taken in Auckland by lawyer Lawrence Herzog, who said he expected a date to be set within the next few weeks.

Herzog said his claim was based on negligence, breach of fiduciary duty and breach of the Fair Trading Act and was being taken against the directors and others involved.