Tuesday 22nd November 2011
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The directors of failed carpet maker Feltex Carpets and brokerages involved in the initial public float have lost their bid to shift a class suit to Auckland.
In an Oct. 7 written judgement, Judge Judith Potter turned down an attempt to shift the class action by some 1,800 former Feltex shareholders to Auckland, saying Justice Christine French had closely managed the proceedings in the Christchurch registry to date, and the precedent-setting case needed consistency through the pre-trial stages. The decision was published on Justice Ministry’s website this week.
“In a proceeding which is unique and complex, as this one is, the efficiencies that can be provided by management through the interlocutory stages to trial and preferably including trial, by an assigned judge, offer greater advantages,” the judgement said. “Such cost savings that might be achieved by transfer, are more than outweighed by the convenience and efficiency of continuing the close management and control of the proceeding by Justice French in the Christchurch registry.”
Former Feltex chairman Tim Saunders, chief executive Peter Thomas and directors Sam Magill, John Feeney, Craig Horrocks, Peter Hunter, and Joan Withers are subject to a class action alleging the company’s 2004 prospectus contained misleading information, or left out information that would impact on investment decisions.
Feltex collapsed in 2006, owing creditors between $30 million and $40 million, and destroying some $254 million in shareholder value.
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 are also subject to the suit.
Counsel for the defendants claimed the commercial list in Auckland would be more appropriate due to the likely number of applications and possible appeals to “prompt the orderly resolution of complex litigation of a commercial nature,” the judgement said.
A trial in Auckland would be more convenient for most of the defence counsel, and the plaintiff, former Feltex shareholder Eric Houghton, had been dragging out the proceedings by breaching timetable orders, defence counsel said.
Because the trial has only recently been given the go-ahead after Houghton secured a commercial litigation fund to pay for the action, it had previously been too early to apply for a shift of location, they said.
Judge Potter said that stance was “illogical” given the defence has always opposed the action proceeding in the three years and four months since it was first filed in Christchurch.
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