ANZ Bank has spent the day trying to convince the court a claim against it for damages related to the crash of the Ross Asset Management company should be ruled out.
ANZ wants the case struck out. Photo: 123RF
ANZ Bank is at the High Court in Wellington facing a suit from 550 investors who [https://www.rnz.co.nz/news/business/410415/victims-of-ponzi-scheme-seek-80-million-from-anz-bank-in-lawsuit claim it either knew or should have known that Wellington financial adviser David Ross was operating a Ponzi scheme.
Ross was jailed in 2013 after pleading guilty over the fraud, which left investors $115m out of pocket when the company, Ross Asset Management, collapsed in 2012.
The investors have argued their money, which should have been held in a trust account, was frequently used to pay back overdrafts in other accounts, which the bank should have been aware of.
The bank rejects this and wants the claim struck out.
A lawyer for ANZ, Neil Campbell, began the day by stressing allegations of fraud and dishonesty were serious and should be made with "care and particularity".
He said the allegation was too vague and would not stand up in court.
"It is not at all clear what is meant by client monies generally. There is a distinct lack of clarity around the scope or ambit of those transactions.
"It's not clear that it's confined to the money in the client account... it's difficult to be sure."
He also submitted the main crux of the claim was not around the bank allowing the account into overdraft in the first place, but around how the overdrawn money was paid back - which was not something the bank had control over.
"It's true that the ANZ didn't have an obligation to honour the payments that created the overdraft in the first place but the real complaint is about the second part of the transaction.
"They are at liberty to honour overdrafts [but] once they've done that they can't stop their client making a payment to clear the overdraft."
He argued the bank's duty of care was not for investors, but to their client.
Another lawyer for ANZ, Stephen Hunter, went on to say the bank would have had no meaningful gain from the transactions.
"The only meaningful sense in which ANZ is better off as a result of that transaction is the 60 cents for bank fees."
Lawyer for the claimants Justin Smith QC briefly began his submissions, before court finished for the day.
He said a number of precedents used by ANZ's lawyers were irrelevant.
He drew on another precedent to make the point that ANZ was liable for assisting the dishonest use of funds, because it knew the client funds should not have been used by David Ross for his own purpose.
The hearing continues tomorrow.
