Victims of a fraudster who swindled millions of dollars from their business said their bank withheld evidence and breached its mandate, allowing the fraud to occur.
In the High Court at Auckland this morning Robert Elvidge and John Gifford sought to press their claim against ASB over the defrauding of their business, Pioneer Insurance, by employee Blair Fitzsimons.
Fitzsimons pleaded guilty in October 2008 to eight charges of fraud and was jailed for four and a half years.
Elvidge and Gifford failed in earlier court action to prevent ASB from selling their homes by mortgagee sale to recover losses caused by Fitzsimons' fraud.
The Hawke's Bay pair claim ASB are responsible for $4.8 million of losses because Fitzsimons was not authorised to be a sole signatory to Pioneer's accounts.
In October 2012 Associate Judge Rob Osborne ruled their claim against ASB had a low chance of success, and if it was to be taken, security for costs of $65,000 had to be paid.
This morning Sheila McCabe, acting for Elvidge and Gifford, told the court the $65,000 was not paid within the timeframe required, but the 2012 ruling by Judge Osborne should be struck out.
McCabe said new evidence had come to light that she said showed the mandate ASB relied on in its defence - signed in October 2003 giving Fitzsimons and Gifford individual cheque-signing rights - had been superseded by the time Fitzsimons' fraud occurred.
McCabe said this new evidence showed the mandate for Pioneer's accounts changed several times, including alterations to signatories, and deficiencies in the banks' management "allowed that fraud to occur".
McCabe alleged ASB had withheld this evidence from previous hearings chronicling disputes with the pair.
"The bank has prevented the court from looking critically at what the bank did," she said.
Murray Tingey, acting for the bank, objected to this line of argument and said it had not been signalled in submissions and bank officials had not been subject to cross-examination.
"The reason I'm concerned is as you're aware there is the press present, and these are serious allegations to make," Tingey said.
Associate Judge Roger Bell said he would allow Tingey to speak in reply to these allegations once McCabe had finished her submissions this afternoon.
The hearing, scheduled for two days, is due to conclude today.
- Fairfax Media