Fisk v Holden - [2019] NZHC 55

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV 2015-485-876

[2019] NZHC 55

BETWEEN
JOHN HOWARD ROSS FISK AND

DAVID JOHN BRIDGEMAN, as liquidators of Ross Asset Management Limited (in

liquidation) Plaintiffs

AND

ALISTER STUART HOLDEN AND

MURRAY WILLIAM BRIDGE, as trustees of the Bruce Charles Morris Estate

First Defendants

AND

ALISTER STUART HOLDEN AND

MURRAY WILLIAM BRIDGE, as trustees of a trust for Jonathan Morris

Second Defendants

AND

DAVID JOHN CHAPMAN AND

MATTHEW UNDERWOOD, as former trustees of the Jonathan Morris Trust

Third Defendants

AND

DAVID JOHN CHAPMAN AND KYC TRUSTEES (JMT) LIMITED, as

current trustees of the Jonathan Morris Trust Fourth Defendants

AND

JONATHAN MORRIS

Fifth Defendant

Hearing: 8–9 October 2018

Counsel:

R Pinny and M Colson for Plaintiffs

J Morrison for First and Second Defendants

P S J Withnall for Third, Fourth and Fifth Defendants

Judgment:

4 February 2019

JOHN HOWARD ROSS FISK AND DAVID JOHN BRIDGEMAN, as liquidators of Ross Asset Management Limited (in liquidation) v ALISTER STUART HOLDEN AND MURRAY WILLIAM BRIDGE, as trustees of the Bruce Charles Morris Estate [2019] NZHC 55 [4 February 2019]

JUDGMENT OF ELLIS J

[1] The late Mr Bruce Morris (Mr Morris) was an investor in Ross Asset Management Limited (RAM). As is by now well known, RAM was essentially a Ponzi scheme. It collapsed in 2012 and liquidators were appointed.1 The architect of the scheme, Mr David Ross, is now serving a term of imprisonment.

[2] Many RAM investors have lost almost everything. But others, who had the good fortune to have withdrawn their “investments” earlier, received amounts well in excess of their original capital input. RAM was able to fund the payment of such excess amounts principally because of the capital amounts that continued to be deposited into the scheme by later, unwitting, investors.

[3] In 2017, the Supreme Court in McIntosh v Fisk confirmed that (in principle)2 the liquidators have the ability to “claw back” at least some of these excess amounts under the Companies Act 1993 (the CA) and/or the Property Law Act 2007 (the PLA).3 At that time, the liquidators had some 160 other “claw back” claims pending, including the present. All but ten of those have now been resolved without further judicial intervention.4

Background

[4] Mr Morris died in 2005, well before RAM’s collapse. His RAM investment formed part of his estate, which was to be divided equally between his three children, each of whom was entitled to distribution of his or her share upon reaching the age of
25.5 At the time of Mr Morris’ death the older two had reached that age but the
youngest, Jonathan (Joe), was still a minor.6

1      Ross Asset Management’s (RAM) liquidators are the plaintiffs in these proceedings, Messrs Fisk and Bridgman.
2      By which I mean, subject to any available statutory defences.
3      McIntosh v Fisk [2017] NZSC 78, [2017] 1 NZLR 863 [Fisk SC decision]. In the present case, the liquidators…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Fisk v Holden

Details

AGLC: Fisk v Holden [2019] NZHC 55
Case: [2019] NZHC 55
Decision Date: 4 February 2019

CaseChat Overview and Summary

In Fisk v Holden, the liquidators of Ross Asset Management Limited sought to recover funds paid to trustees of the estate of the late Bruce Charles Morris, who had invested in the company before it collapsed as a Ponzi scheme. The Court was required to decide whether the disposition of property in question was prejudicial and whether the trustees could rely on a statutory defence. The Court found that the payment made by Ross Asset Management Limited to the executors of Mr Morris's estate in 2009 was a prejudicial disposition under the Property Law Act 2007. The Court also found that the trustees received those putative profits through the executors. The trustees' defence under section 349(1)(a) of the Act, which allows for a defence if the property was acquired for valuable consideration and in good faith without knowledge of the prejudicial disposition, failed because there was no evidence that the settlement payment made by the executors to the trustees was for valuable consideration. The Court ordered the trustees to pay compensation in the sum of $258,910.73, plus interest at the rate of five per cent per annum from 17 December 2012. The Court also considered the executors' cross-claim for indemnity for costs incurred in defending the proceedings and found that the executors were entitled to be indemnified for the reasonable costs they had incurred in the administration of the trust.

Orders