Date set for next stage of Feltex court drama

Feltex directors John Hagen, left, Peter Thomas, Tim Saunders, Peter Hunter and Michael Feeney at a media conference in 2010.

Former Feltex directors will be back in court in November for the second stage of a civil trial that has weaved its way through the highest courts over the last decade.

A stage two hearing has been set down for five weeks from November 4, with lead plaintiff Eric Houghton cleared to return and represent investors in the case.

This follows the Supreme Court paving the way for former Feltex shareholders to pursue the directors of the failed carpet maker over whether a false forecast in the prospectus left them out of pocket.

The Herald understands Justice Robert Dobson intends to issue a minute on the appropriate procedure to deal with certain issues that were highlighted in the Supreme Court decision last August.

That decision by Chief Justice Sian Elias and Justices Susan Glazebrook, Mark O'Regan, Terrence Arnold and Stephen Kos ruled the 2004 Feltex prospectus contained an untrue statement over forecasts for that year - enough to warrant the second stage of a trial.

The decision veered from the Court of Appeal, which in 2016 deemed the misstatement to be immaterial information for investors.

The High Court will now have to work out whether the untrue statement caused a loss for investors.

"This means that a court must determine whether the effect of the untrue statement was such that the market value of the securities for which the investor subscribed would have been lower than the price paid if the misleading statement had not been made or, put another way, if the prospectus had complied in all respects with the Securities Act and the Securities Regulations," the Supreme Court decision said.

Feltex was floated on the stock exchange in 2004 at an issue price of $1.70 a share, but those shares were "effectively worthless" just 18 months later when the company was placed into liquidation.

Some 3639 former Feltex shareholders sought $185 million from former Feltex directors and IPO promoters.

The Supreme Court judges dismissed an appeal against First NZ Capital and Forsyth Barr as joint lead managers, saying those investment firms were not promoters under the act.

Former directors Timothy Saunders, Samuel Magill, John Feeney, Craig Horrocks, Peter Hunter, Peter Thomas and Joan Withers, sale promoter Credit Suisse Private Equity and vendor Credit Suisse First Boston Asian Merchant Partners now face the second tranche of the trial.