ASB misled court in 'half-truth case' - Judge

File photo / NZ Herald

Two fraud victims' $3.8 million lawsuit against ASB can go ahead without the pair needing to pay $60,000 upfront after a judge found the bank had misled the court.

It is the latest development in an ongoing saga between ASB and the victims of fraudster Blair Fitzsimons - who stole millions of dollars from his former employer, Pioneer Insurance.

A general manager at the Napier firm, Fitzsimons drew cheques on the company's account with ASB in favour of entities he was associated with.

He was later prosecuted and jailed for his crimes.

Two of Pioneer's minority shareholders, Robert Elvidge and John Gifford, have taken action against the bank, seeking $3.79 million in damages suffered by the company.

They allege the bank had no mandate to honour the cheques which Fitzsimons drew and say it failed in its duty to warn Pioneer of the thefts.

Although not the first time Elvidge and Gifford has targeted ASB with proceedings, the latest action has been on foot since 2011.

The following year ASB got an order for $62,500 of security for costs against the pair from Associate Judge Rob Osborne.

Security for costs is where a party will pay money into the court so it will be available to meet some of the expenses of their opponent if a claim fails.

But last year Elvidge and Gifford applied to rescind the security for costs order on the grounds the bank had not disclosed all relevant evidence to the court - in particular a letter, an email and some transaction summaries.

ASB said it not include it because it did not consider it relevant.

But Associate Judge Roger Bell this week said in presenting some pieces of information but not others, ASB had actively invited the court "to draw incorrect inferences on misstated facts".

"This is a half-truth case...it [the bank] misled Judge Osborne on a central issue in his decision," Associate Judge Bell said.

"This is alas one of those rare cases where orders were improperly obtained," he said.

The judge rescinded the security for costs order and said the first tranche which Elvidge and Gifford had already paid should be refunded.

While the bank had applied for the court to a strike out the plaintiff's claim, summary judgment, a dismissal and a stay, these were all dismissed by the judge in the same decision.

In a response this afternoon, ASB said it was "surprised and disappointed by the judge's findings".

"We do not agree with his comment that the bank acted with impropriety. We are reviewing the judgment and assessing our appeal options. We will be making no further comment at this time," a spokesman said.