Banks to pay after Bell ruling

A COURT appeal has backfired for 20 banks, which will have to pay up to $3 billion to the liquidators of Alan Bond's former company Bell Group.

By InvestSMART · 18 Aug 2012

By InvestSMART ·
18 Aug 2012

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A COURT appeal has backfired for 20 banks, which will have to pay up to $3 billion to the liquidators of Alan Bond's former company Bell Group.

The WA Court of Appeal yesterday upheld a previous decision ordering the banks including Westpac, the National Australia Bank and Commonwealth to pay Bell Group and also increased the amount from $1.56 billion to a total that is likely to approach $3 billion.

In the longest running and most expensive case in Australian legal history, the court accepted part of Bell's counter-appeal, agreeing that the trial judge erred in his calculations and that damages and interest awarded should be higher.

The banks were also ordered to pay costs for both sides, estimated to be hundreds of millions of dollars.

Acting Justices Malcolm Lee, Douglas Drummond and Christopher Carr returned from retirement to hear the case because all other judges had been involved in earlier litigation. The saga began in 1990 when banks took out the corporate equivalent of mortgages over Bell Group's assets to try and keep the company afloat.

When Bell Group collapsed on April 18, 1991, the banks reaped $280 million from the sale of assets. The company's liquidators claimed the banks were also liable because they knew Bell Group was in trouble and sought to recoup the $280 million.

Acting Justices Lee and Drummond determined that the principal orders made by Chief Justice Neville Owen in 2006 were properly based on findings the banks knew the Bell Group directors had breached their duty.

Acting Justice Carr disagreed, finding no breaches had occurred.

Despite yesterday's decision, the case could continue to the High Court.

Outside court, Bell Group liquidator Tony Woodings urged the banks to accept the courts' decision. "I invite the banks to now take that decision, accept it, and allow the process of distribution to begin."

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Frequently Asked Questions about this Article…

What did the WA Court of Appeal decide in the Bell Group case?

The WA Court of Appeal upheld a prior ruling that 20 banks must pay the liquidators of Alan Bond’s former company, Bell Group. The court increased the damages and interest from the earlier $1.56 billion figure to a total likely to approach $3 billion and also ordered the banks to pay court costs.

Which banks were named in the Bell Group ruling?

The article says 20 banks were affected, specifically including Westpac, the National Australia Bank (NAB) and the Commonwealth Bank among those ordered to pay the Bell Group liquidators.

How much are the banks likely required to pay after the appeal?

The damages and interest awarded were increased from $1.56 billion to a total that is likely to approach $3 billion. In addition, the banks were ordered to pay costs for both sides, which the article says are estimated to be hundreds of millions of dollars.

Why did the liquidators claim the banks were liable in the Bell Group collapse?

According to the article, the liquidators argued the banks were liable because they knew Bell Group was in trouble when they took security over assets in 1990 and later reaped $280 million from asset sales after the company collapsed. The court accepted part of Bell’s counter‑appeal, finding the trial judge erred in calculations and that damages and interest should be higher.

How long has the Bell Group litigation been running and when did the company collapse?

The dispute is described as the longest running and most expensive case in Australian legal history. The saga began in 1990 and Bell Group collapsed on April 18, 1991.

Were the appellate judges unanimous in their findings?

No. Acting Justices Malcolm Lee and Douglas Drummond supported the principal orders based on findings that the banks knew directors had breached their duty, while Acting Justice Christopher Carr disagreed and found no breaches had occurred.

Could the Bell Group case still go to the High Court?

Yes. The article notes that despite the WA Court of Appeal decision, the case could continue to the High Court.

What did Bell Group liquidator Tony Woodings say after the appeal decision?

Outside court, Bell Group liquidator Tony Woodings urged the banks to accept the court’s decision so the process of distribution could begin. He invited the banks to take the decision, accept it, and allow distribution to start.