Fisk v McIntosh - [2015] NZHC 1403

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV-2012-485-2591 [2015] NZHC 1403

BETWEEN
JOHN HOWARD FISK and DAVID JOHN BRIDGMAN

Applicants

AND

HAMISH McINTOSH Respondent

Hearing: 23 March 2015

Counsel:

M G Colson and R L Pinny for Applicants
J B M Smith QC and J L W Wass for Respondent

Judgment:

22 June 2015

RESERVED JUDGMENT OF MACKENZIE J

I direct that the delivery time of this judgment is
12.30 pm on the 22nd day of June 2015

Solicitors: Bell Gully, Wellington, for Applicants
Gibson Sheat, Wellington, for Respondent

FISK v HAMISH McINTOSH [2015] NZHC 1403 [22 June 2015]

Table of contents

A Ponzi scheme [1] The respondent’s investment, and repayment [12] The Liquidators’ claims [19] RAM’s insolvency [24] The statutory provisions [28] The preconditions to an order [31] (a) Disposition of property, or transaction [32] (b) By a debtor, or a company [35] (c) Insolvent at the time of payment [36] (d) Intention to prejudice a creditor [52] (e) Enabling the respondent to receive more than in a liquidation [56] (f) Reasonably equivalent value [58] (g) Conclusion on the preconditions [59] The defences [60] (a) The statutory provisions [60] (b) In good faith and without knowledge or suspicion [62] (c) Value, or valuable consideration [64] (i) The original investment [66]
(ii) The use of money [75] (iii) The promise to pay management fees [80] (iv) The discharge of the debt on repayment [81] (v) Equivalence of value [84] (vi) Conclusions on valuable consideration and value [93]

(d) Alteration of position [97] (e) Reasonable belief in the validity of the payments [136] Result [150]

A Ponzi scheme

[1] David Ross operated an apparently successful investment business through Ross Asset Management Limited (RAM) and a number of related companies (which I refer to as the Ross Group). The business purportedly involved investing clients’ money in shares and other investments. Mr Ross was the sole director of all of the Ross Group companies with sole responsibility for all funds management and investment decisions on behalf of clients or by RAM. He was the person who liaised with investors to attract new contributions and to inform them of the investments purportedly made, and the returns on those investments. He was supported by two

administrative assistants. Investors were given quarterly investment statements which reported healthy returns on their investments. The business grew to the extent that by late 2012 the investors’ statements showed total funds held for all investors of over $450 million.

[2] But this was all a facade. The applicants (the liquidators) were appointed receivers, then liquidators, of the Ross Group in November and December 2012. It became clear to them almost immediately that most of the assets supposedly held for investors did not exist. Investors’ funds were not invested in the securities which were reported to them. They did not make the returns shown in their investor statements. Instead, Mr Ross was operating a Ponzi scheme under which investor funds were misappropriated and applied for other purposes. Those purposes…

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 McIntosh

Details

AGLC: Fisk v McIntosh [2015] NZHC 1403
Case: [2015] NZHC 1403
Decision Date: 22 June 2015

CaseChat Overview and Summary

The liquidators of Ross Asset Management Limited (RAM) sought to recover payments made to the respondent, Hamish McIntosh, from RAM’s liquidation fund. The respondent had invested $500,000 with RAM in 2007, and was repaid $954,047.62 in November 2011. The liquidators argued that RAM had been insolvent at the time of the payments and that the payments were made with intent to prejudice creditors, without receiving reasonably equivalent value in exchange. The respondent argued that he had received the payments for valuable consideration, in good faith, without knowledge of the insolvency of RAM. The Court held that the respondent had received $500,000 of the payments for valuable consideration, and the corresponding payments could not be set aside. The Court held that the respondent had not altered his position in a way that would prevent the recovery of the remaining $454,047.62, and that no reasonable person in the respondent’s position could have believed the payments to be valid and would not be set aside. The Court ordered the respondent to repay that sum to the liquidators.

Orders