Millionaire environmentalist Graeme Wood is considering legal action against the chairman of a Tasmanian parliamentary inquiry into the sale of the Triabunna woodchip mill.
Parliament's cross-party community development committee is investigating the sale of the former Gunns mill in 2011 to Mr Wood, the Wotif founder, and Tasmanian businesswoman Jan Cameron.
The inquiry was to resume this morning, after yesterday's sitting heard allegations about personal grudges, political interference and hidden business agendas.
Mr Wood said the committee had exceeded the authority of parliament.
In a statement, he said the terms of reference fell outside the committee's scope and, as such, he believed parliamentary privilege no longer stood.
He said the committee's chairman, Liberal MP Guy Barnett, had used privilege to make "groundless criticisms" which were unjustified and inaccurate.
"The Chair of the Committee has used parliamentary privilege to make groundless criticisms - none of which are justified or accurate," he said.
"It seems that in the headless rush to call this inquiry some very basic checks and balances were completely ignored by the government."
Mr Wood is seeking legal advice about whether to proceed with defamation action.
He also wanted the hearing stopped.Tasmanians want to know what happened to mill: Treasurer
Treasurer Peter Gutwein has defended the inquiry, saying people wanted to know why the mill closed.
"It's a matter for Mr Wood, I'm not going to comment on whether Mr Wood may or may not take legal action," he said.
"The purpose of the inquiry is to gain an understanding so that Tasmanians can be clear about what went on in regards to the sale of that business and that site.
"The loss of that mill to the Tasmanian forest industry has created a great deal of financial distress; it shut down in large the southern woodchip market."
Mr Gutwein said several witnesses, including the Forest Industry Association's Terry Edwards, told the inquiry they believed the mill would reopen at some stage.
"Terry Edwards I think made it perfectly clear that they were of the view that that mill would reopen at some stage, I think he used the words that they were conned," he said
Yesterday, the committee heard that a personal grudge between Gunns chief Greg L'Estrange and Forestry Tasmania boss Bob Gordon was one of the reasons the mill was sold to the environmentalists.
The mill, bought for $10 million, was being turned into a tourism venture by the new owners.
The hearing was scheduled to continue today.