Bathurst Regional Council v Local Government Financial Services Pty Ltd (No 5) [2012] FCA 1200

Bathurst Regional Council v Local Government Financial Services Pty Ltd (No 5) [2012] FCA 1200

The Court found the Councils' claims against LGFS, S&P and ABN Amro for misleading and deceptive conduct, negligence and (in some cases) breach of contract and breach of fiduciary duty were made out. Proportionate liability regimes applied except with respect to equitable compensation for fiduciary breach. Damages are to be calculated as the principal amount paid for Rembrandt notes less cash out returned, no deduction for coupon payments. LGFS is entitled to contribution from S&P and ABN Amro. The claim by LGFS against AHAC for indemnity is also established. Directions are to be made for interest and costs.

Parties
Applicant: Bathurst Regional Council; First Respondent: Local Government Financial Services Pty Ltd; Second Respondent: ABN AMRO Bank NV; Third Respondent: McGraw-Hill International (UK) Limited; Cross Claimant on the Fifth Cross Claim: American Home Assurance Company; Applicant: Cooma Monaro Shire Council; Applicant: Corowa Shire Council; Applicant: Deniliquin Council; Applicant: Eurobodalla Shire Council; Applicant: Moree Plains Shire Council; Applicant: Murray Shire Council; Applicant: Narrandera Shire Council; Applicant: Narromine Shire Council; Applicant: Oberon Council; Applicant: Orange City Council; Applicant: Parkes Shire Council; Applicant: City of Ryde; Applicant: StateCover Mutual Limited
Jurisdiction
Australia
Judgment Date
05 November 2012
Procedural Posture
Civil / Reasons for Judgment Following Trial; Orders for Further Submissions and Directions
Outcome
Findings for the Councils (applicants) on substantial parts of the claims; findings for LGFS against S&P and ABN Amro; indemnity in favour of LGFS against AHAC. Orders for further submissions on interest, costs, and final orders.
Legal Topics
Breach of Contract, Financial Services, Implied Warranties, Australian Financial Services Licence, Derivatives, Debentures, Misleading and Deceptive Conduct, Rescission, Damages, Fiduciary Duty, Duty of Care, Restitution, Proportionate Liability, Insurance Indemnity
Contract Corporations Equity Insurance Negligence Restitution Statutory Interpretation Trade Practices +13 more

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Parties

Bathurst Regional Council

Applicant

Local Government Financial Services Pty Ltd

First Respondent

ABN AMRO Bank NV

Second Respondent

McGraw-Hill International (UK) Limited

Third Respondent

American Home Assurance Company

Cross Claimant on the Fifth Cross Claim

Cooma Monaro Shire Council

Applicant

Corowa Shire Council

Applicant

Deniliquin Council

Applicant

Eurobodalla Shire Council

Applicant

Moree Plains Shire Council

Applicant

Murray Shire Council

Applicant

Narrandera Shire Council

Applicant

Narromine Shire Council

Applicant

Oberon Council

Applicant

Orange City Council

Applicant

Parkes Shire Council

Applicant

City of Ryde

Applicant

StateCover Mutual Limited

Applicant

Procedural Posture

Civil / Reasons for Judgment Following Trial; Orders for Further Submissions and Directions

Legal Issues

  1. 1 Were the representations by LGFS, S&P, and ABN Amro misleading or deceptive?
  2. 2 Did LGFS breach duties of care to the Councils?
  3. 3 Was there a breach of contract by LGFS to the Councils (Cooma and Corowa)?

Ratio Decidendi

The Court found the Councils' claims against LGFS, S&P and ABN Amro for misleading and deceptive conduct, negligence and (in some cases) breach of contract and breach of fiduciary duty were made out. Proportionate liability regimes applied except with respect to equitable compensation for fiduciary breach. Damages are to be calculated as the principal amount paid for Rembrandt notes less cash out returned, no deduction for coupon payments. LGFS is entitled to contribution from S&P and ABN Amro. The claim by LGFS against AHAC for indemnity is also established. Directions are to be made for interest and costs.

Court Disposition

Findings for the Councils (applicants) on substantial parts of the claims; findings for LGFS against S&P and ABN Amro; indemnity in favour of LGFS against AHAC. Orders for further submissions on interest, costs, and final orders.

Orders

  • The parties are to confer and submit an agreed or competing timetable for submissions on outstanding issues of interest and costs and for making final orders within 21 days.
  • The proceeding is to be listed for directions on a date to be determined in consultation with the parties within a further 14 days thereafter.