Tuesday 2nd May 2017
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Former Feltex Carpets shareholder Eric Houghton has been granted leave by the Supreme Court to challenge a Court of Appeal ruling that dismissed his long-running suit against the promoters and directors of the failed carpet-maker.
Supreme Court Chief Justice Sian Elias and Justices Terence Arnold and Mark O'Regan approved the appeal to New Zealand's highest court on the question of "whether the Court of Appeal erred in dismissing the applicant’s appeal."
In dismissing Houghton's appeal to the lower court last year, the bench of the appeal court had found that while there was conduct that could be deemed misleading or deceptive, it wasn't material enough to cause loss.
Houghton had sued the former Feltex directors, owners and sale managers in a representative action seeking $185 million including interest for shareholders who his suit said had been misled by the 2004 prospectus. In the original High Court suit, Justice Robert Dobson had found in favour of the defendants, while noting some criticisms of the offer documents. The appeal court, in rejecting Houghton's appeal, had noted that the forecast for earnings in the 2004 financial year in the prospectus gave Houghton grounds to pursue a claim that the document contained misleading statements
In seeking leave to appeal to the Supreme Court last month, Houghton's lawyer Patricia Mills argued that because the Feltex prospectus contained an untrue statement it wasn't a valid offer document and meant, therefore, that the company wasn't entitled to offer securities to the public.
The Supreme Court justices said that "given the complexity of the issues the applicant raises, the court would be grateful for the assistance of senior counsel at the hearing," which they intend to be heard in the last week of July, if possible.
They noted that the respondents - the directors, two Credit Suisse entities and brokerages First NZ Capital and Forsyth Barr - had expressed their intention "to support the Court of Appeal judgment on other grounds".
The respondents are fielding 11 lawyers, including four Queen's Counsels.
Feltex failed in 2006.
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