Feltex hearing in November

AUCKLAND: 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 and lead plaintiff Eric Houghton has been cleared to return and represent investors in the case.

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

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 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.