Feltex directors want answers

August 18th, 2012

Directors of failed carpet maker Feltex are demanding clarity over a deal to fund a class action against them, as they seek to have the man leading a $150 million case removed.

Lawyers for the former directors, as well as the sellers and promoters of Feltex, are in the Court of Appeal in Wellington this week appealing against a High Court decision to allow a representative action proceed.

David Cooper, acting for the former directors of Feltex, said the main funder of the appeal, Joint Action Funding Limited, was a single purpose entity just for the action with no background or expertise in litigation.

its sole director and majority owner Tony Gavigan ”has not conducted himself in a suitable matter,” Cooper said, claiming he had made misleading statements about comments made by the Securities Commission regarding Feltex, and other aspects of the case.

meanwhile the funding structure of the case was unusual, with the actual backer of the case, London-based Harbour Litigation Funding, offering little in the way of detail on how an agreement between it and Joint Action Funding Limited was structured.

Cooper faced repeated questioning from the panel of judges, in particular Justice Tony Randerson about what exactly he was seeking about Harbour Litigation Funding, with the entity appearing to have significant capital.

”It would be helpful if you could specify what you want because it is possible [opposing lawyer Austin] Forbes could help you,” Justice Randerson said, adding that ”responsible counsel” would have discussed the matter.

Justice Rhys Harrison asked if security orders over costs would be enough to satisfy his clients, because there was ”not a lot in this” appeal.

Austin Forbes, senior counsel for the representative action’s plaintiff Eric Houghton, said Harbour was the largest litigation funder in Britain.

its agreement with Joint Action Funding was akin to the relationship between a customer and a bank and was an ”investment agreement” type arrangement.

Forbes assured the court the agreement covered the costs imposed by the court as well as premiums on insurance to cover costs, however it was not up to Houghton to waive a confidentiality agreement.

– © Fairfax NZ News

Feltex directors want answers

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