Court Orders MED to Pay Substantial Costs to Feltex Directors
The District Court has today released the attached judgment awarding costs to the former directors of Feltex in relation
to the unsuccessful prosecution brought by the Ministry of Economic Development. The Court has ordered that the Ministry
pay the directors a total of $952,111:00. This amount is reimbursement for legal and other costs incurred by the
directors in successfully defending the claim.
At paragraphs 26 and 44 of the judgment, Judge Jan Doogue held:
 I accept that the way the prosecution conducted the investigation fell below what was reasonably required. The
prosecution failed to have proper regard to or draw the obvious conclusions from the information provided to it by the
directors ... The prosecution failed to access and consider all relevant documents available to it from the Securities
Commission, including documents disclosing serious errors by Ernst & Young in the conduct of its review engagement.
 I conclude, in summary, that the prosecution chose to proceed to put the directors on trial without giving fair and
adequate consideration to the steps the directors took to ensure that the standard would be complied with and were
probably under a misapprehension that the directors were not entitled to rely on advice and assistance from management
and professional advisers. Had the prosecution given fair and adequate consideration to the steps the directors took
with a proper appreciation of the legal position the prosecution may well have not proceeded.
Tim Saunders, the former Chairman of Feltex, said: “The Court’s earlier decision confirmed that we acted honestly and
carefully at all times and were not guilty of the charges alleged by the Ministry. This further judgment now confirms
that those charges should never have been brought, and that we should never have had to face the ordeal of a criminal
trial. This is a further vindication of our conduct and we are very pleased with the outcome.”
“I understand that this is one of the highest awards of costs ever in a criminal case in New Zealand.”
“There are two ongoing civil claims which have been brought against some of the Feltex directors. We are continuing to
defend those claims, and are confident of successful outcomes in those cases also.”