The High Court at Wellington has declined ANZ Bank's attempt to get a suit from more than 500 investors of failed Ross Asset Management thrown out early.

Justice Jillian Mallon ruled today that the $80 million class action must go to trial.

The investor case alleges David Ross's former bank, ANZ, knew certain payments misapplied RAM client funds and the bank dishonestly assisted RAM's breaches of trust, benefited from charging fees and interest through RAM's misused overdraft, and breached a duty of care in negligence.

Ross Asset Management was the country's largest ponzi scheme when it collapsed in late 2012. More than 800 investors believed more than $450 million was being managed on their behalf but actual losses were closer to $100 million. About $10 million has been recovered.


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In a 65-page decision, the judge says that while the plaintiff's claim might need some tidying up, the way it is formed does not prejudice the bank and the case needs to go to trial.

She said there was an only a "subtle" difference in the way the parties viewed the law of dishonest assistance, and the pleadings covered all of the requirements subject to "some residual issues."

Document discovery first

While the investors had not specified who the ANZ managers were who assisted RAM to misapply client funds, that issue was premature.

"The plaintiffs cannot be expected to provide the particulars when it has received some of the information from the FMA in a redacted form following ANZ's unsuccessful court proceeding opposing its disclosure. After discovery and the provision of further particulars on this point, there may or may not be an issue about aggregation. If there is an issue, it will be better considered on the facts."

Assessing the knowing receipt claim, the judge said that the law was not settled as to whether the standard of the banker having "should have known" was high enough.

"This is more appropriately considered when the facts at trial are determined," the judge wrote.


While suggesting other ways the arguments could be clarified, the judge said the investors could do that at a more appropriate time.

The judge also dismissed the notion that the investors could be out of time to bring a claim, saying that could also be argued at trial.

"In deciding who is right about this, the court may be assisted by the facts – for example, which investors were able to withdraw funds without suffering loss and why that was; and to what extent did RAM legitimately invest client funds in investments and account to those clients on those investments."

She ordered that the bank pay the investors' costs.

Not made public

A preliminary issue for the judge was the publication of evidence through what is known as the Sletcher affidavit, which contains volumes of emails that the Financial Markets Authority obtained, which show internal ANZ communications discussing the RAM accounts. There are heavy redactions to these emails.

The ANZ said that evidence was not admissible but the judge said she would consider it. However, the judge declined to make the affidavit available to the public, saying that would be unfair to ANZ if the documents were released before a trial.

"Open justice considerations were met by allowing media representatives to attend and report on the hearing of the strikeout application. This judgment and the substantive hearing will also meet open justice objectives."­­­

The claim has been a long time coming, as the FMA had to fight the bank for the disclosure of documents which have helped form the case. The FMA was finally able to give the documents to investors in April last year.

The case is being funded by LPF Group. Under its deal, the litigation funder takes 25 percent if it settles before July, and 30 percent thereafter. More than 500 investors have signed up.

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