(Corrects number of banks in headline, third paragraph.)
Westpac Banking Corp. (WBC) and a group of lenders must pay more than A$2 billion ($2.1 billion) to liquidators of the Bell Group after Western Australia’s top court dismissed the banks’ appeal and increased the damages and interest owed.
A three-judge panel of the Court of Appeal of Western Australia by a 2-1 decision upheld the A$1.56 billion awarded by Supreme Court of Western Australia Justice Neville Owen in 2009 and added additional interest, damages and costs of litigation to the judgment.
The consortium of 20 banks led by Westpac, and including National Australia Bank Ltd. (NAB), Standard Chartered Bank, Commonwealth Bank of Australia and Credit Lyonnais, took security over assets of the Bell Group in 1990, a year before the company filed for bankruptcy. The liquidators sued in 1995 claiming the banks assisted the directors to breach their duties by agreeing to put up the security while knowing the company was insolvent.
“It is a dispute of Brobdingnagian proportions,” Owen wrote at the beginning of a 9,758-paragraph judgment in which he concluded the Bell Group was insolvent in January 1990 and the directors breached their duties.
The appeal court ruled that generally, Owen was correct in his decision.
The case has been the longest-running and most expensive in the country’s history, the West Australian newspaper reported today. Three former Federal Court judges were assigned the appeal case because all other judges in the state had been involved in the litigation, the newspaper said.
The banks are considering the judgment and the merits of appeal to the High Court of Australia, John Vaughn, spokesman for the lenders, said in a statement.
Bell Group was the company of Alan Bond, who had financed Australia’s successful bid for the 1983 America’s Cup yachting race.
In 1987, he purchased the Channel Nine television network from Australian billionaire Kerry Packer for A$1 billion. Bond declared bankruptcy in 1992, with personal debts of A$1.8 billion. Packer bought back the television channel for A$250 million.
The case is Westpac Banking Corp. v The Bell Group Ltd. 2012-WASCA 157. Supreme Court of Western Australia - Court of Appeal (Perth).
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