The councils suffered losses of around $25 million following investments in complex synthetic derivatives arranged by Dutch Bank ABN AMRO, rated by S&P and sold by LGFS prior to the global financial crisis, according to a statement by commercial litigation funder Bentham IMF.
Bentham IMF executive director John Walker said the Federal Court “unanimously upheld the original finding of Justice Jagot that S&P’s AAA rating was to the knowledge of S&P, misleading and deceptive, and without reasonable basis”.
Bentham IMF also said the councils had been successful in their cross-appeal on apportionment of damages between the parties.
The litigation funder said apportionment of damages confines the liability of concurrent wrongdoers to an amount the court considers just in regard to the defendant’s responsibility for the damage or loss.
“Apportionment can pose difficulties for successful applicants who find one or more concurrent wrongdoers unable to meet their portion of the damages awarded,” said Bentham IMF.
The court found ABN AMRO and S&P liable for 100 per cent of the councils’ losses rather than the 33 per cent in the primary judgement.
Piper Alderman partner Amanda Banton, a lawyer representing the councils, said it was a landmark decision transforming the legal landscape in regard to apportionable claims for misleading and deceptive conduct.
“The standard defence tactic of apportioning blame has only made proceedings more complex – the strategy of blaming other parties to lessen liability is now significantly more limited,” said Ms Banton.
