Decision on bank's bid for security reserved

A judge has reserved a decision in ASB Bank's bid for security against costs to defend a claim by investors who lost everything in the collapse of a Napier insurance company wrecked by a manager for whom the bank cashed a fraudulent $2 million cheque.

Despite the financial devastation suffered by long-standing legal and business identities Rob Elvidge, John Gifford and their families, the bank wants Associate Judge Rob Osborne to order the posting of a $120,000 security for the case to be allowed to go ahead.

Both men lost their homes in forced sales after manager Blair Fitzsimons stole more than $3 million from their company, Pioneer Insurance, in a shattering fraud more than five years ago, committed, it was claimed, as Fitzsimons tried to prop up his own failing rental vehicle firm.

Fitzsimons' admitted the frauds, and later served more than two years of a four-and-a-half year prison term imposed in October 2008.

But his former employers believe it would not have happened had ASB not given Fitzsimons access to a supposedly secure account, to which he did not have signing authority, and that by negligence and the failure of duty of care the bank is culpable for losses.

The action is of a type particularly designed to avoid the explosion of costs because of vexatious litigation or other claims which have no hope of success in court, but both men say their case is far from vexatious, and they have every prospect of a decision against the bank, however long it takes.

Associate Judge Osborne needed to examine those issues, and consider whether such an order might stop the case going to trial.

Fitzsimons was only ordered to pay back $250,000 in reparation, but told a court after being paroled in mid-2011 that despite expecting to earn $78,000 a year in a new job he could only afford to pay $100 a week.