WA: Judgment for more than $1.5 bln against banks in Bell case

AAP General News (Australia)
04-30-2009
WA: Judgment for more than $1.5 bln against banks in Bell case

PERTH, April 30 AAP - Liquidators of Alan Bond's former Bell Group of companies have
been awarded more than $1.5 billion following one of Australia's longest running legal
sagas.

West Australian Supreme Court Justice Neville Owen has ordered a syndicate of 20 banks,
including Westpac, National Australia Bank and the Commonwealth Bank, to pay Bell Group
creditors around $350 million, as well as an estimated $1.2 billion in compound interest.

The liquidators claimed banks took advantage of Bell Group in its dying days, securing
lucrative assets in return for refinancing.

They alleged the banks knew the group's stable of more than 80 companies was close to insolvency.

Justice Owen has already found that the banks did not engage in any "conscious wrongdoing"

or dishonesty in their handling of the matter.

But in his final judgment handed down on Thursday, he said "as a matter of principle"

the plaintiffs appeared to be entitled to "compensation calculated on the full amount
of primary monetary relief".

This amount was calculated at $350 million, with the $1.2 billion compound interest
to be added to the total.

Justice Owen rejected the banks' offer of $87 million in primary relief, which they
said would offset an interest payment "windfall" to creditors.

Justice Owen said he did not accept the proposition that the interest payment could
be seen as a "windfall", although he had treated the claim seriously.

"But I think the preferable course is to order the repayment of the primary monetary
relief and to permit the calculation of interest to be made on the full amount."

The syndicate of banks said an application for appeal would be lodged in the West Australian
Supreme Court.

"The banks believe they have strong grounds for an appeal and intend to set that process
in train as soon as possible," said legal firm Freehills spokesman John Vaughan, speaking
outside the court on behalf of the banks.

He also said the banks could be entitled to a substantial amount of the compensation
as creditors of the Bell Group.

The action, which began in the Federal Court in 1995 to reclaim funds for the unsecured
Bell creditors, has been heard over 406 sitting days and incurred costs well in excess
of $300 million.

More than 85,000 documents have been tendered to the federal and supreme courts over 13 years.

AAP was/sn/mn

KEYWORD: BELL

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