Facing allegations of fraud from Wellington lawyer and entrepreneur Mike Garnham and his Garnham group of companies, ANZ Bank spent some $250,000 defending claims it said were improper, frivolous, vexatious and totally without merit. After the claims were struck out, the High Court awarded ANZ $150,900 costs.
The High Court was told ANZ bank poured considerable resources into preparing its defence to the Garnham claims filed in 2021. Bank records were searched and senior counsel hired. ANZ said Garnham contributed to these costs by failing to comply with court rules, raising untenable arguments about admissibility of evidence and persisting in pressing forward with litigation in the name of a company which had been struck off.
ANZ’s loan contract with Garnham Group included an indemnity clause allowing it to recover all costs in exercising and enforcing rights as creditor. Mr Garnham argued the bank’s litigation costs were attempts to avoid scrutiny of its conduct rather than protection of its loan rights. Justice Churchman disagreed.
Some, but not all, of ANZ’s costs were recoverable. While defending serious fraud allegations incurred costs, they were not strictly necessary in this case, he said. Final legal argument centred on only two issues, neither of them involving allegations of fraud. ANZ was awarded $150,900 as its costs of dealing with these two issues: whether the Garnham claims were time-barred and whether there had been an out of court settlement. ANZ went to extreme lengths in determining whether the Garnham fraud allegations had merit resulting in excessive costs which were not reasonably incurred, Justice Churchman said. These excessive costs could not be recovered as part of the loan indemnity, he ruled.
Criffel Deer Ltd v. ANZ Bank – High Court (21.09.22)
22.167