Westpac
must provide further detail in its $50.8 million claim against former Lane
Walker Rudkin director Patricia Anderson.
Allegations of fraud must be clearly spelt out, the High Court ruled.
Westpac alleges that together
with former husband Ken Anderson she fraudulently misused letters of credit. He pleaded guilty four years ago to criminal
fraud charges. In its civil action
against Mrs Anderson, Westpac claims she is liable in the torts of deceit and conspiracy
to defraud. It alleges misuse of
short-term finance facilities masked financial difficulties at Lane Walker
Rudkin resulting in the Bank extending further financial assistance. The Bank’s exposure of $36 million as at
November 2005, when the alleged fraud started, reached $130 million when
receivers were appointed in April 2009.
The High Court was told receivers have recovered about $41 million.
Westpac alleges Lane
Walker’s $2.5 million letter of credit facility was misused multiple times
between 2005 and 2007; utilised as short-term working capital rather than for
its intended purpose of financing specific trade transactions. This gave a
misleading impression of Lane Walker’s liquidity and disguised the existence of
trading losses, the Bank claims.
Allegations of fraud or
dishonesty are very serious and must be pleaded with care and particularity,
Associate judge Osborne said. Detail is
required so the defence can adequately respond.
Vague allegations do not suffice. To the extent the Bank claims Lane
Walker was in financial difficulty, it must specify what amounted to this
financial difficulty. To the extent the
Bank claims Mrs Anderson was told of Lane Walker’s perilous financial position,
it must specify who told her and when.
To the extent the Bank claims it was misled as to Lane Walker’s
financial position, it must specify who in the Bank was misled and when. To the extent the Bank claims Ms Anderson
signed documents she knew to be false, it must specify these documents.
Westpac
v. Anderson – High Court (12.09.17)
17.114