Ratings agency Standard and Poor's says it will appeal against a landmark ruling which will allow 13 local councils to recoup losses they suffered during the 2008 financial crisis.

The New South Wales councils, including Bathurst and Corowa, brought a class action against S&P, investment bank ABN AMRO and Local Government Financial Services (LGFS).

The councils claimed they were misled into losing almost $16 million in the financial crisis, saying S&P led them to buy complex investments called constant proportion debt obligation notes (CDPOs), which the agency had given a AAA rating.

Today's ruling found that rating was misleading and deceptive.

Federal Court Justice Jayne Jagot described the ABN AMRO products as "grotesquely complicated" and said that the LGFS breached its fiduciary duty to the councils by not properly investigating the products.

She said S&P had been "sandbagged" while ABN AMRO "simply bulldozed the rating through".

The three financial agencies have each been ordered to pay one-third of the amount lost by the councils, plus interest.

That means the councils will recoup about $30 million.

Piper Alderman partner Amanda Banton, who represented 12 of the 13 councils taking action, said the decision was a major blow for ratings agencies.

"No longer will rating agencies be able to hide behind disclaimers to absolve themselves from liability," she said in a statement.

But in a statement, S&P says it is disappointed with the court's decision and intends to appeal.

Claimants and their losses: Bathurst Regional Council: $1 million

Bathurst Regional Council: $1 million Cooma Monaro Shire Council: $1.86m

Cooma Monaro Shire Council: $1.86m Corowa Shire Council: $933,225

Corowa Shire Council: $933,225 Deniliquin Council: $466,613

Deniliquin Council: $466,613 Eurobodalla Shire Council: $466,612

Eurobodalla Shire Council: $466,612 Moree Plains Shire Council: $1.9m

Moree Plains Shire Council: $1.9m Murray Shire Council: $933,225

Murray Shire Council: $933,225 Narrandera Shire Council: $1.86m

Narrandera Shire Council: $1.86m Narromine Shire Council: $466,612

Narromine Shire Council: $466,612 Oberon Council: $933,225

Oberon Council: $933,225 Orange City Council: $1.4m

Orange City Council: $1.4m Parkes Shire Council: $2.8m

Parkes Shire Council: $2.8m City of Ryde: $933,225

"We reject any suggestion our opinions were inappropriate, and we will appeal the Australian ruling, which relates to a specific CPDO rating," the statement read.

Landmark ruling

Class action funder IMF Australia says the ruling is likely to have global ramifications, particularly in Europe where more than $2 billion worth of CDPOs were issued.

"This has been a long time coming," IMF executive director John Walker told The World Today.

"It not only involves or assists people in New South Wales, it also potentially can be relied upon by people around the world.

"It fundamentally arose by rating agencies and investment banks looking after their own interests and potentially being a material cause of the global financial crisis. I don't say that lightly.

"So much of these synthetic derivatives created huge credit risks outside regulated markets that were really outside the control of our regulators."

He says his organisation is looking into funding further litigation in Australia, New Zealand, The Netherlands and the UK.

"Here we have Standard and Poor's, which is a live breathing ratings agency that has a business that everybody in the financial markets relies upon. And we're looking to sue Standard and Poor's in those four jurisdictions," he said.

City of Ryde spokesman Roy Newsome says he is delighted with the ruling.

"Parties that we relied upon for their advice and their due diligence obviously didn't prove to be correct," he said.

Les Finn from Parkes Shire Council says they can now move forward.

"We'll be able to shift our focus now onto getting some services back on the ground, rather than servicing debt," he said.

The ruling follows another in September against the now collapsed Lehman Brothers, which was found to have breached legal duties when it sold toxic derivatives to a group of charities, councils and church groups who collectively lost about $250 million.