ANZ Bank New Zealand cut a deal with a Taranaki farming family willing to pursue it through the courts over the way it sold interest rates swaps.

Sharon and Stephen Coomey and their Bushline family trusts sought compensation from ANZ, claiming the bank misrepresented the effect of the swaps and what terms it had committed when the $19.5 million loan was agreed in 2008.

The swaps had been used to help finance a $7.3 million farm as well as refinance almost $12 million of existing debt. The Coomeys had been long-standing customers of ANZ and its predecessor, National Bank.

The claim failed in the High Court, with a 2017 ruling that the bank hadn't agreed to fix the margin for five years, and while the bank did mislead the Coomeys by failing to properly disclose the downsides of swaps compared to a fixed-rate loan, no legal liability followed.


The Court of Appeal disagreed, ruling last year that ANZ misrepresented the nature and effect of the swaps. The bench also took the view that it wasn't fair and reasonable for the bank to rely on its disclaimers.

The Supreme Court today granted leave for ANZ to appeal all aspects of that decision, but since then the bank and the farmers have settled all issues except for whether ANZ had undertaken to fix the margin for five years.

On that matter, the bench was unanimous in its view that the margin on the swaps was fixed.

"Having found that Bushline did not prove that ANZ made the five-year commitment, we allow ANZ's appeal on the only issue now before us. It is not necessary for us to go on to decide whether or not ANZ agreed to fix the margin for the period of the swaps," the judgment said.

No costs

Both ANZ and the Coomeys agreed not to seek costs in the Supreme Court, although the judgment said it wasn't clear as to the status of cost awards in the lower courts after the settlement.

The decision was by Chief Justice Helen Winkelmann and Justices Susan Glazebrook, Mark O'Regan, Ellen France and Joe Williams.

ANZ had offered the Coomeys about $155,000 in compensation as part of its $18.5 million fund to settle potential claims over its sale of swaps to farmers. They rejected that.


The fund was part of a settlement reached with the Commerce Commission in 2014 after the regulator investigated the bank's conduct in selling the swaps. ANZ agreed to a High Court declaration that the sales were in breach of the Fair Trading Act by understating some of the risks and overstating some of the benefits to some customers between 2005 and 2009.

Interest rate swaps are typically used by large companies and institutions as a means to hedge interest rate risk, but from 2005 banks started marketing them to rural customers in New Zealand.