Liquidators of Alan Bond's former Bell Group of companies have been awarded more than $1.5 billion, the largest payout ever awarded in Australia.
Liquidators of Alan Bond's former Bell Group of companies have been awarded more than $1.5 billion, the largest payout ever awarded in Australia.
Western 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.
In addition, the banks must pay costs of $82.5 million.
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 today, 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, represented by Freehills, said an application for appeal would be lodged in the Western 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 Freehills partner John Vaughan, speaking outside the court on behalf of the banks.
He also disputed the final payout amount.
"On the basis of the orders, it is still not possible to arrive at an accurate net figure," Mr Vaughan said.
"In calculating the effect on the banks, one of the complicating issues is that the banks still rank in priority to the bondholders, so this recoupment needs to be taken into account to get a net figure.
"The banks are likely to recover a substantial proportion of the amounts paid form the ultimate distributions figure on a liquidation."
Meantime Blake Dawson, which represented the plaintiffs, welcomed today's decision.
"The Court's final orders represent a significant victory for the plaintiffs, which was achieved as a result of the determination and persistence of the liquidator, Mr Tony Woodings, and the indemnifying creditors, in particular the Insurance Commission of WA, in seeing this long and complex matter through to final determination at first instance," Blake Dawson managing partner John Carrington said.
The Insurance Commission of WA, which largely bankrolled the case, said the judgment is an important and positive step in the legal process.
"It is a great shame that it has taken so long to get to this point," the commission said in an emailed statement.
"It will be a greater shame if the matter continues on, but this decision lies with the parties.
"For the Insurance Commission's part, it remains committed in its efforts to protect and recover its investment in 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.
