McIntosh v Fisk

IN THE SUPREME COURT OF NEW ZEALAND

SC 39/2016
[2017] NZSC 78

BETWEEN	HAMISH MCINTOSH Appellant
AND	JOHN HOWARD ROSS FISK AND DAVID JOHN BRIDGMAN Respondents

Hearing:	27 July 2016 (Further submissions received 31 October 2016)
Court:	William Young, Glazebrook, Arnold, OʼRegan and Ellen France JJ
Counsel:	Appellant in person M G Colson and L W Brazier for Respondents
Judgment:	26 May 2017

JUDGMENT OF THE COURT

A The appeal and cross‑appeal are dismissed.

BThe appellant is to pay costs of $15,000 to the respondents together with reasonable disbursements.

____________________________________________________________________

REASONS

Para No.
Arnold, O’Regan and Ellen France JJ	[1]
William Young J	[203]
Glazebrook J	[227]

ARNOLD, O’REGAN AND ELLEN FRANCE JJ
(Given by O’Regan and Ellen France JJ)

Table of Contents

Para No.
Ponzi scheme	[1]
Factual background	[2]
The proceedings	[9]
The liquidators’ claims	[13]
Equitable claim?	[15]
Property Law Act claim	[19]
Disposition	[24]
Disposition of property	[25]
RAM was a debtor	[27]
RAM was insolvent at the time	[30]
With intent to prejudice a creditor	[32]
Non-receipt of reasonably equivalent value	[40]
Requirements for Property Law Act claim met	[41]
Defences to Property Law Act claim: s 349	[42]
Companies Act claims	[47]
Transaction	[51]
Insolvent transaction	[61]
Requirements for Companies Act claim met	[65]
Defences to Companies Act claim	[66]
Section 297 of the Companies Act	[69]
Defences	[70]
Value defences	[74]
Allied Concrete	[81]
The appellant’s case on value	[85]
Initial “investment” of $500,000	[88]
Management fees	[116]
Use of money	[117]
Discharge by performance or accord and satisfaction	[121]
$500,000 was real and substantial value for $954,047	[130]
Conclusion on value defences	[136]
The change of position defence – Companies Act	[137]
The applicable principles	[138]
The sequence of events	[143]
The approach in the High Court and in the Court of Appeal	[156]
The arguments before this Court	[163]
Action in reliance?	[167]
Detriment?	[184]
Application of Property Law Act change of position defence	[192]
Approach to s 349(2)(b)	[194]
This case	[197]
Result and costs	[199]

Ponzi scheme

This appeal requires us to resolve issues arising from the collapse of a group of companies run by Mr David Ross as a Ponzi scheme. The principal operating company was Ross Asset Management Ltd (RAM). Prior to its collapse, RAM made a payment to the appellant, Mr McIntosh. The respondents, the liquidators of RAM, sought to claw back that payment. Whether they are entitled to do so depends on how the provisions of both the Companies Act 1993 and the Property Law Act 2007 dealing with the setting aside of dispositions by an insolvent company apply to the unusual facts of the case.

Factual background

The appellant entered into a funds management arrangement with RAM in April 2007. The contract between RAM and the appellant provided that the appellant appointed RAM as his agent to manage his investment portfolio. He paid $500,000 to RAM in 2007, having borrowed that sum from his bank. The contract provided that RAM would hold the funds in a separate account in the name of the appellant and that securities purchased from the fund would be held by an associate company of RAM, Dagger Nominees Limited (Dagger), as nominee.[1]
[1]The terms of the contract are discussed in greater detail in the decision of MacKenzie J in the present case: Fisk v McIntosh [2015] NZHC 1403, (2015) 11 NZCLC ¶98-033 at [3]–[8] [McIntosh (HC)].
Unfortunately for the appellant and RAM’s other investors, RAM did not comply with the terms of its management contracts with its clients, but rather operated a Ponzi scheme. The term “investor” is used for convenience to describe those who entered into management contracts with RAM though, for reasons discussed below, the legal relationship did not involve them investing in securities issued by RAM. When investors paid money or transferred securities to RAM for management under the terms of their individual management contracts, RAM did not hold the money or securities on trust and did not arrange for Dagger to hold securities it acquired as nominee. Rather it misappropriated the funds or securities. In the case of the appellant, the $500,000 he paid to RAM was misappropriated within days of his making the investment and became part of a co‑mingled pool of cash and securities held by RAM and associated entities.[2] RAM paid money from this pool to other investors who wished to cash up their investments, and also paid various operating expenses of RAM, including personal drawings of its principal, David Ross. Funds received from new investors were treated in the same way as the appellant’s investment.
[2]If the misappropriation had occurred at a later time, after a period of investment of the appellant’s money in accordance with the management contract, the appellant’s claim on the co‑mingled fund and his claim as a creditor of RAM would have been for an amount reflecting the investment performance during that period – which could have been greater than, or less than, the $500,000 he invested.
RAM perpetuated the fraudulent Ponzi scheme by reporting to its clients in terms which led them to believe that investments had been made in securities in accordance with the management contract. These quarterly reports listed individual securities with details that matched what was occurring in the market for the relevant securities. But all the transactions recorded in these reports were fictitious and the securities were said to be held by an entity known as “Bevis Marks”, which was, in fact, non-existent. As other investors were, the appellant was led to believe that his portfolio was increasing in value and yielding an attractive rate of return.[3] The reports also referred to the deduction of management fees and transaction fees payable to RAM, but the liquidators’ evidence was that, with some trivial exceptions, no actual deductions of these fees occurred.
[3]Based on the (fictional) reports the appellant received, his portfolio yielded a gross return of 19 per cent per annum (15 per cent per annum after deduction of fees) over the term of the management contract.
The scale of the fraud perpetuated by RAM was considerable and many investors have suffered significant losses.
In September 2011, the appellant decided to cash up his portfolio and withdraw the amount which, according to the fictitious reports he had received from RAM, totalled $954,047. The $454,047 in excess of the original investment of $500,000 was the amount said to have been earned on the appellant’s portfolio in the four and a half years from the time of his investment.[4] The reality was that none of the securities listed in the reports received by the appellant actually existed and the money paid to the appellant was not derived from the sale of securities held on his behalf, as he had been led to believe.[5]
[4]The precise amounts were $954,047.62 and $454,047.62 respectively, but we have rounded the figures down for simplicity.
[5]McIntosh (HC), above n 1, at [17].
In November 2011, RAM made six payments to the appellant totalling $954,047, in accordance with the notice he had given under the management contract to withdraw the funds under management in his portfolio.[6]
[6]Although the $954,047 was paid to the appellant in six payments totalling that figure, we will for convenience refer to this as a single payment or disposition. Though there was some limited discussion on this point in the Courts below, we do not consider anything to turn on the number of payments.
In December 2012, RAM was placed in liquidation at the order of the High Court and the respondents were appointed as its liquidators (they had earlier been appointed receivers). Their investigations revealed the scale of the fraud perpetuated by RAM on its clients.

The proceedings

In July 2013 the liquidators gave a notice of demand to the appellant seeking repayment of all of the $954,047 he received from RAM. In July 2014, they made an application to set aside the payments made to the appellant either under s 292 of the Companies Act or s 348 of the Property Law Act or for an order under s 297 of the Companies Act seeking to recoup the amount by which the payment the appellant received from RAM exceeded the value the appellant gave.The appellant resisted this on the basis that he had a defence under s 296(3) of the Companies Act or s 349 of the Property Law Act.
In the High Court MacKenzie J found that the appellant had made out his defence in relation to the $500,000 he initially invested with RAM, but not in relation to the $454,047 of fictitious profits.[7] He ordered the appellant to pay $454,047 to the liquidators.
[7]McIntosh (HC), above n 1.
The appellant appealed to the Court of Appeal against the High Court decision and the liquidators cross‑appealed. By a majority, the Court of Appeal upheld the High Court decision.[8] Miller J dissented: he would have allowed the liquidators cross-appeal and ordered the appellant to pay to the liquidators the full $954,047.[9]
[8]McIntosh v Fisk [2016] NZCA 74, [2016] 2 NZLR 783 (Harrison, French and Miller JJ) [McIntosh (CA)].
[9]At [112].
The appellant sought leave to appeal against the Court of Appeal decision, and the liquidators sought leave to cross-appeal. This Court gave leave to appeal and cross‑appeal, the approved questions being:[10]
(a)Whether an order should have been made setting aside all or part of the payment made by [RAM] to [the appellant] and requiring [the appellant] to pay the relevant amount to the respondents.
(b)If so, whether the order should have been to set aside the payment of all of the $954,047 paid to [the appellant] or $454,047, being the difference between the amount paid to [the appellant] and the $500,000 he invested with RAM.

The liquidators’ claims

[10]McIntosh v Fisk [2016] NZSC 58.

As noted earlier, the liquidators’ claims were made on three separate bases, relying on:
(a)pt 6, subpt 6 of the Property Law Act (ss 344–350);
(b)the voidable transactions provisions of the Companies Act
(ss 292–296); and
(c)s 297 of the Companies Act, dealing with transactions at an undervalue.
We will deal with these in the above order.

Equitable claim?

After the hearing, we sought further submissions from the appellant and counsel for the liquidators as to whether ss 292–296 of the Companies Act were engaged on the facts of this case, or whether action for recovery of money paid to the appellant needed to be a claim in equity.[11] We received helpful submissions in response. We will address them to the extent it is necessary to do so later in this judgment.
[11]McIntosh v Fisk SC 39/2016, 26 August 2016.
The reason we asked for those submissions was that the relationship between RAM and the defrauded investors was not an orthodox debtor/creditor relationship. The appellant’s position illustrates this. As already noted, the appellant did not deposit or lend money to RAM or subscribe for securities issued by RAM. Rather, he appointed RAM as investment manager of his investment funds, but he remained the beneficial owner of the funds that he paid to RAM. RAM therefore was, when it received the funds, a bare trustee of those funds. If RAM had complied with the management agreement, the appellant would have been at all times the beneficial owner of the securities purchased on his behalf (held by Dagger as his nominee) and any proceeds or profits from those securities. There was no intention that there would be a debtor/creditor relationship between RAM and the appellant or that RAM would ever have a beneficial entitlement to the money paid to it by the appellant or the securities acquired with that money.
When the Ponzi scheme was uncovered and RAM was placed in receivership, the defrauded investors were left only with a pro rata claim to the securities and money held by RAM as investment manager for those investors.[12] The evidence of one of the liquidators, Mr Fisk, is that RAM ran a single bank account and that it had no assets of its own. So the pool of co‑mingled trust assets represented the only assets available to the defrauded investors and there was no separate pool of assets that could have been accessible to any non-investor creditors.
[12]See Foskett v McKeown [2001] 1 AC 102 (HL) at 109 per Lord Browne‑Wilkinson and at 132 per Lord Millett.
When the misappropriation by RAM occurred, the appellant had a claim against RAM for the restoration of the funds misappropriated by RAM. This made him a creditor of RAM, able to prove in RAM’s liquidation, though he was unaware of this until after the liquidation commenced. If he had been aware of the misappropriation, he presumably would also have claimed equitable compensation.

Property Law Act claim

The liquidators’ Property Law Act claim application is made pursuant to s 347(1)(b) of that Act, which permits a liquidator to apply for an order under s 348. In the present case the liquidators applied for an order under s 348(2) to vest the property subject of the disposition to the appellant (the $954,047) in RAM or to require the appellant to pay reasonable compensation to RAM.
In his submissions filed after the hearing, the appellant argued that the Property Law Act regime does not apply in the present case because it is concerned only with creditors, not those who have claims to an intermingled trust fund. He referred to the statement of the purpose of pt 6 subpt 6 in s 344, which refers to the purpose being to enable that property acquired or received through prejudicial dispositions “be restored for the benefit of creditors”. He argued that any amounts required to be repaid to the liquidators in the present case would become part of the mingled trust fund and not available to creditors generally. We do not consider that this reference to creditors in the statement of purpose should be seen as overriding the detailed requirements of the provisions of subpt 6. We will therefore proceed to analyse those provisions before reverting to this argument.
Under s 347(1) those who may apply for an order setting aside dispositions made by a debtor include the liquidator of a company in liquidation. There is no doubt therefore that the respondents had standing to apply for orders under s 348.
Section 346 makes it clear that only a limited class of dispositions can be the subject of orders under subpt 6. In the present case, the liquidators say that the requirements of this provision are met because the disposition (the payment to the appellant) was made by RAM which was insolvent at the time the payment was made (s 346(1)(a)) and was made with intent to prejudice a creditor or without receiving reasonably equivalent value in exchange (s 346(1)(b)).
In order to evaluate the liquidators’ claims under the Property Law Act, it is necessary to determine whether the following requirements were met:
(a)the payment by RAM to the appellant was a “disposition”;
(b)the disposition was a disposition of “property”;
(c)RAM was a debtor at the time it made the payment;
(d)RAM was insolvent at the time it made the payment; and
(e)either:
(i)the payment was made with intent to prejudice a creditor; or
(ii)RAM did not receive reasonably equivalent value in exchange for the payment.

Disposition

The term “disposition” is defined in s 345(2)(a) as including a “payment”. There is no doubt that RAM made a payment to the appellant in this case.

Disposition of property

Section 346(1) applies only to dispositions of “property”. The definition of “property” in s 4 of the Property Law Act includes “any estate or interest in property”. There is no doubt that RAM had at least legal title to the money paid to the appellant, which satisfies the requirement that the disposition (payment) be “of property”.
There is nothing in the definition of disposition in s 345(2) that requires that the payment must be a payment of money that actually belongs to the payer. The fact that RAM did not have beneficial title to the money it paid to the appellant does not, therefore, mean that there was no disposition for the purposes of s 345(2).[13]

RAM was a debtor

[13]As found by MacKenzie J: McIntosh (HC), above n 1, at [32]–[34], citing Anzani Investments Ltd v Official Assignee [2008] NZCA 144. This point is of greater moment in the application of the provisions of the Companies Act: see below at [54]–[59].

Section 346(1)(a) requires that the payment be by “a debtor” to whom s 346(2) applies. In this case the aspect of s 346(2) which applies is s 346(2)(a) which refers to a debtor that “was insolvent at the time”. MacKenzie J found that the “debtor” requirement was fulfilled as long as the payer was a debtor in relation to the insolvency requirement.[14] This was not challenged in the Court of Appeal.[15]
[14]McIntosh (HC), above n 1, at [35]. See also below at [30]–[31].
[15]McIntosh (CA), above n 8, at [12].
We do not think there is any doubt that RAM was a “debtor” when it made the payment to the appellant. The term “debtor” is not defined in the Property Law Act. However, “creditor” is defined as including a person who is a creditor within the meaning of s 240 of the Companies Act.[16] Section 240 defines creditor as a person who would be entitled to claim in a liquidation in accordance with s 303 of the Companies Act that a debt is owing to him or her. Section 303, in turn, provides that a claim that may be admitted against the company in liquidation includes “a debt or liability, present or future, certain or contingent, whether it is an ascertained debt or a liability for damages”.
[16]Property Law Act 2007, s 4.
It is clear that the investors whose money was misappropriated by RAM had claims against RAM for recovery of the amounts misappropriated by RAM. This amounted to a debt to each investor.[17] So we are satisfied that the payment made by RAM to the appellant was made by a debtor as required by s 346(1)(a).

RAM was insolvent at the time

[17]McIntosh (HC), above n 1, at [50].

MacKenzie J found that RAM was insolvent at the time it made the payments to the appellant. As RAM was obviously not able to pay the sums owed to its investors, it was insolvent.[18] Again, this was not challenged in the Court of Appeal.[19]
[18]At [51]. See also the solvency test set out in s 4(1) of the Companies Act.
[19]McIntosh (CA), above n 8, at [12].
There was no serious challenge to this aspect in this Court either. We are satisfied that MacKenzie J’s analysis was correct. In addition, it is clear from the evidence that RAM was insolvent even if the position of investors was put to one side, because its income was substantially less than its outgoings during the relevant period and it was clearly unable to pay its debts in relation to the costs of operating its business from its own resources.

With intent to prejudice a creditor

Section 346(1)(b) provides that subpt 6 applies to dispositions that are made “with intent to prejudice a creditor … or without receiving reasonably equivalent value in exchange”.
Section 345(1) provides further explanation of the phrase “with intent to prejudice a creditor” in s 346(1)(b). Section 345(1) relevantly provides:
For the purposes of this subpart,―
(a)a disposition of property prejudices a creditor if it hinders, delays or defeats the creditor in the exercise of any right of recourse of the creditor in respect of the property; and
(b)a disposition of property is not made with intent to prejudice a creditor if it is made with the intention only of preferring one creditor over another …

MacKenzie J found that the payments made by RAM to the appellant were made with intent to defeat RAM’s creditors.[20] This was not challenged in the Court of Appeal.[21] It was initially not challenged in this Court either, but after the Court sought further submissions, the appellant submitted that this requirement was not met.
[20]McIntosh (HC), above n 1, at [52]–[55].
[21]McIntosh (CA), above n 8, at [12].
MacKenzie J found that the requirement that the disposition was made with intent to prejudice a creditor was met if it was shown that there was an intention on the part of RAM to hinder, delay or defeat RAM’s creditors and that RAM had accordingly acted dishonestly.[22] He said if the circumstances were such that the debtor (here, RAM) must have known that in alienating property (here, paying the appellant), and thereby hindering, delaying or defeating creditors’ recourse to that property, he or she was exposing them to a significantly enhanced risk of not recovering the amounts owed to them, the debtor must be taken to have intended this consequence, even if that was not the debtor’s wish. He said that the principal of RAM, Mr Ross, must have known that whenever he made a payment to an investor he was thereby exposing other investors to a significantly enhanced risk of not recovering their funds.[23]
[22]McIntosh (HC), above n 1, at [53], citing Regal Castings Ltd v Lightbody [2008] NZSC 87, [2009] 2 NZLR 433 at [54].
[23]At [55].
We agree with MacKenzie J’s analysis. As counsel for the liquidators, Mr Colson, argued, the analysis must be made on the basis that each investor was a creditor, for the reasons given earlier.[24] Unsecured creditors do not have recourse in respect of particular property of a company, but rather to the overall resources of the debtor that remain available for the creditors as a whole. The reality in the present case was that every time a payment was made to an investor of an amount that was greater than the investor’s pro rata share of the co‑mingled trust fund, the position of the remaining investors/creditors was worsened. That is the inevitable consequence of the operation of a Ponzi scheme and must have been apparent to Mr Ross, and through him RAM, as the operator of the scheme.
[24]See above at [18].
In his submissions filed after the hearing, the appellant argued that the reference to defeating a creditor in the exercise of any right of recourse in respect of the property limited the ambit of this provision to those claiming in the general pool of assets of RAM. He said the provision was not appropriately applied in situations where the investors’ claims would be made against a mingled pool of trust assets rather than the assets of RAM itself. As payments were made to investors out of the mingled trust fund, it could not be said that such a payment reduced the ability of investors in their capacity as creditors to claim against RAM’s own assets since that asset pool (such as it was) was not affected by the payment.
While we agree that the wording of subpt 6 is more easily applied to the orthodox debtor/creditor situation, we do not consider the facts of the present case fall outside the scope of this provision. This is because the investors, as well as having a beneficial interest in the co‑mingled trust assets, are also creditors. They would have claims upon both the assets of RAM itself (if there were any) as well as on the co‑mingled trust fund. To the extent that the co-mingled trust fund becomes more able to meet the claim, the claim against the assets of RAM itself would diminish commensurately. Thus, a payment made to one investor of more than that investor’s share of the co‑mingled trust fund commensurately reduces the amount in the pool available to other investors as creditors and, at least theoretically, increases the amount that other investors must claim from any assets beneficially owned by RAM itself. The remaining investors, who are also creditors, are prejudiced.
As an alternative argument, the appellant argued in his post-hearing submissions that if creditors were prejudiced, this was only because a disposition had been made with the intention of preferring one creditor over another, and therefore s 345(1)(b) applied. We do not accept that preferring one creditor over another was the only intent of the making of the payment to the appellant in this case. Another intent, and a much more important intent, was the continued concealment of the existence of the Ponzi scheme, thereby deferring the inevitable detection of the existence of the scheme. Accordingly s 345(1)(b) does not apply in this case.

Non-receipt of reasonably equivalent value

The alternative requirement under s 346(1)(b) is that the disposition was made “without receiving reasonably equivalent value in exchange”. It is not strictly necessary to deal with this, having found the requirement of s 346(1)(b) is already met. The question of value is at the centre of the appeal, but it is more convenient to deal with it in the context of the defences advanced by the appellant to both the Property Law Act and Companies Act claims.[25]

Requirements for Property Law Act claim met

[25]See below at [70] and following.

For these reasons we find that the requirements of subpt 6 of the Property Law Act are met. The requirements for the making of an order under s 348 requiring the appellant to pay to the liquidators the amount he received from RAM are established, subject only to the defences provided for in s 349.

Defences to Property Law Act claim: s 349

Section 349 provides as follows:
349 Protection of persons receiving property under disposition
(1)A court must not make an order under section 348 against a person who acquired property in respect of which a court could otherwise make the order and who proves that—
(a)the person acquired the property for valuable consideration and in good faith without knowledge of the fact that it had been the subject of a disposition to which this subpart applies; or
(b)the person acquired the property through a person who acquired it in the circumstances specified in paragraph (a).
(2)A court may decline to make an order under section 348, or may make an order under section 348 with limited effect or subject to any conditions it thinks fit, against a person who received property in respect of which a court could otherwise make the order and who proves that—
(a)the person received the property in good faith and without knowledge of the fact that it had been the subject of a disposition to which this subpart applies; and
(b)the person’s circumstances have so changed since the receipt of the property that it is unjust to order that the property be restored, or reasonable compensation be paid, in either case in part or in full.
The effect of s 349(1) in the circumstances of this case is that an order should not be made against the appellant if the appellant proves that he acquired the property (received the payment from RAM) “for valuable consideration and in good faith without knowledge of the fact that it had been the subject of a disposition to which [subpt 6] applies”.
The effect of s 349(2) in the circumstances of this case is that the Court may decline to make an order under s 348 if the appellant proves that he received the property (the payment from RAM) in good faith and without knowledge that it was the subject of a disposition to which subpt 6 applies and the circumstances “have so changed since the receipt of the [payment] that it is unjust to [make an order under s 348]”.
It is common ground that the appellant received the payment from RAM in good faith and without knowledge of the fact that it had been the subject of a disposition that was liable to be set aside. So the application of s 349(1) turns on whether the appellant “acquired the property [the money paid to him by RAM] for valuable consideration”. The application of s 349(2) turns on whether he has changed his position since receipt of the payment in a way that would make it unjust to make an order under s 348.
Most of the argument in the appeal concerned the applicability of these two defences, namely the “value defence” in s 349(1) and the “change of position defence” in s 349(2). They are similar in nature to the defences provided for claims made under the Companies Act, and it is convenient to first establish whether the liquidators have established the basis for claims under ss 292–296 of the Companies Act, before dealing with the value defence and the change of position defence.[26]

Companies Act claims

[26]See below at [70] and following.

Having found that the basis for an order under s 348 of the Property Law Act is made out, it is not strictly necessary to establish whether there is also a basis for an order under the Companies Act. However, we will briefly deal with the Companies Act claim for completeness.
The liquidators claim that the payment made to the appellant was an insolvent transaction that was voidable under s 292(1). That provision applies if the insolvent transaction is entered into within the specified period (two years before the date of the liquidation).[27] Under the section, the liquidators must establish that the payment made to the appellant:
(a)is a transaction;
(b)is an insolvent transaction; and
(c)was made within the specified period.
[27]Companies Act, s 292(5).
There is no doubt that RAM made the payment in question to the appellant within the specified period. So we need concern ourselves only with the factors at (a) and (b) above.
If the transaction was voidable under s 292, then the liquidator may apply to have the transaction set aside under s 294. If the transaction is set aside under s 294, the Court can make orders under s 295, including an order that a person pay to the company an amount equal to some or all of the money that the company has paid under the transaction.[28]

Transaction

[28]Section 295(a).

In the High Court, MacKenzie J found that the payment was a transaction, for the same reasons as he found it was a disposition for the purposes of the Property Law Act claim.[29]
[29]McIntosh (HC), above n 1, at [32].
The term “transaction” is defined in s 292(3) as follows:
(3)In this section, transaction means any of the following steps by the company:
(a) conveying or transferring the company’s property:
(b) creating a charge over the company’s property:
(c) incurring an obligation:
(d) undergoing an execution process:
(e) paying money (including paying money in accordance with a judgment or an order of a court):
(f) anything done or omitted to be done for the purpose of entering into the transaction or giving effect to it.
As is apparent from the description of the factual background, the payment made by RAM to the appellant was not a payment made from RAM’s own money. Rather, it was money that was part of the fund of misappropriated trust money that was held on trust for all defrauded investors rateably.[30]
[30] See above at [16]–[18].
The definition of transaction includes the step of “paying money” (s 292(3)(e)). Unlike the steps described in s 292(3)(a) and (b), there is no requirement that the money that is paid is the company’s own money. Mr Colson emphasised this distinction, which, he said, indicated that there was no requirement that the liquidators prove that the money paid to the appellant by RAM was RAM’s own money.
MacKenzie J accepted this analysis, relying on the decision of the Court of Appeal in Anzani Investments Ltd v Official Assignee.[31] There was no challenge to MacKenzie J’s finding in the Court of Appeal.[32] The facts of Anzani are quite different from those of the present case and it was decided in relation to s 292 as it was prior to the amendment in 2006 that led to the current version of the section.[33] But the essential point it makes is that the requirement that a payment is made “by the company” does not import any requirement that the payment comprise only the company’s own money. Even if this were not so, it is arguable that the payment of money by RAM would fall within s 292(3)(a) as a transfer of property by RAM, given the wide definition of property in s 2(1) of the Companies Act, which includes “rights, interests, and claims of every kind in relation to property”.
[31]McIntosh (HC), above n 1, at [33]; referring to Anzani, above n 13.
[32]McIntosh (CA), above n 8, at [12].
[33]Companies Amendment Act 2006, s 27(2).
The Court of Appeal’s conclusion in Anzani was a matter of simple statutory interpretation, taking into account the fact that some of the paragraphs in the definition of “transaction” specifically referred to property “of the company”, while the paragraph relating to the payment of money did not.[34] We agree with MacKenzie J in the present case and the Court of Appeal in Anzani that a payment of money by a company, whether of the company’s own money or not, is a “transaction” within the meaning of the definition in s 292(3).
[34]Anzani, above n 13, at [24].
There are also good policy reasons why payment of money that does not belong to the company should still come within the ambit of s 292. If RAM had used money that it had stolen or that was subject to a trust to pay a trade creditor, it is hard to see why the trade creditor would be immune from a claw back proceeding simply because the source of the money used to pay him or her was stolen money or money subject to a trust.
In his submissions made after the hearing, the appellant argued that the payment made to him by RAM was not the payment of money for the purposes of s 292. In support of that submission, he argued that the trustee/beneficiary relationship entered into by investors with RAM was intentional, and was not a debtor/creditor relationship. He said any payment by a company of trust funds must be seen as outside the Companies Act liquidation provisions, including s 292. As trust money does not fall within the insolvent estate of the company, payment from the trust cannot be clawed back.[35] To come within s 292, the money paid by the company must be the company’s own money.
[35]The appellant said this could be derived from Jennings Roadfreight Ltd (in liq) v Commissioner of Inland Revenue [2014] NZSC 160, [2015] 1 NZLR 573 at [55] and [61]. We do not agree: Jennings was considering a payment of trust money to the only beneficiary of the trust (effectively, therefore, the payee’s own money), not a payment from a co-mingled fund in which numerous others had an interest.
We agree with the appellant that the relationship (both intended and actual) between the appellant (and other investors) and RAM was initially only a trustee/beneficiary relationship. But the misappropriation by RAM of the money paid to it by the appellant made him a creditor of RAM, as well as giving him an interest in the co‑mingled trust fund, meaning there was both a debtor/creditor relationship as well as a trustee/beneficiary relationship. We disagree with the appellant’s submission that s 292 does not apply to a payment by a company unless it is a payment of the company’s own money. If that requirement had been intended, s 292(3)(e) would have included the words “of the company”, as s 292(3)(a) does. The fact that the payment by RAM was sourced from the co‑mingled trust fund does not mean the payment made by RAM was not the payment of money.[36]
[36]Another reason given by the appellant for this submission was that the recipient of a payment of money that is not the company’s own property may be left without a defence under s 296(3) unless his restrictive interpretation of “pay money” were adopted. As discussed below
There is no dispute that, if a payment was made (as we find it was), it was made by RAM, so it was the payment of money by the company. That means the payment by RAM to the appellant was a transaction under s 292(3)(e).

Insolvent transaction

The term “insolvent transaction” is defined in s 292(2) as follows:
(2) An insolvent transaction is a transaction by a company that—
(a) is entered into at a time when the company is unable to pay its due debts; and
(b) enables another person to receive more towards satisfaction of a debt owed by the company than the person would receive, or would be likely to receive, in the company’s liquidation.
We are satisfied that the requirements of s 292(2)(a) are met for the reason given earlier.[37] The transaction in this case (the payment to the appellant) was made when RAM was unable to pay its due debts.
[37]Above at [30]–[31].
We are also satisfied that s 292(2)(b) is satisfied for the reasons given earlier in relation to s 346(1)(b) of the Property Law Act.[38] The position is even clearer in relation to s 292(2)(b), which requires only that the recipient received more than he or she would have received in the liquidation. That is undoubtedly the case in relation to the appellant.
[38]Above at [36].
As already noted, there was no challenge to the finding that the payment was an insolvent transaction in the Court of Appeal.[39]

Requirements for Companies Act claim met

[39]McIntosh (CA), above n 8, at [12].

Subject to any defences that may be available, the liquidators have established that the payment made to the appellant is voidable in terms of s 292.

Defences to Companies Act claim

Section 296(3) of the Companies Act provides:
296Additional provisions relating to setting aside transactions and charges
…
(3)A court must not order the recovery of property of a company (or its equivalent value) by a liquidator, whether under this Act, any other enactment, or in law or in equity, if the person from whom recovery is sought (A) proves that when A received the property—
(a)A acted in good faith; and
(b)a reasonable person in A’s position would not have suspected, and A did not have reasonable grounds for suspecting, that the company was, or would become, insolvent; and
(c)A gave value for the property or altered A’s position in the reasonably held belief that the transfer of the property to A was valid and would not be set aside.
In the present case, there is no dispute that the appellant acted in good faith and that there was no reason for him to suspect that the payment made to him by RAM was an insolvent payment. So the requirements of s 296(3)(a) and (b) are met. The issues requiring determination are whether he gave value or altered his position in the manner contemplated by s 296(3)(c).
Section 296(3) is substantially the same as its Australian counterpart, s 588FG(2) of the Corporations Act 2001 (Cth). The legislative history of s 296(3) is summarised in this Court’s decision in Allied Concrete Ltd v Meltzer.[40]

Section 297 of the Companies Act

[40]Allied Concrete Ltd v Meltzer [2015] NZSC 7, [2016] 1 NZLR 141 at [139]–[143] per Arnold J.

This provision did not occupy the attention of the lower Courts or this Court, though it is still relied on by the liquidators. For reasons that will become apparent, we do not consider it necessary to deal with it.

Defences

Having determined that the liquidators have established the basis on which the payment made to the appellant may be set aside either under the Property Law Act or the Companies Act, we now turn to the defences that the appellant says are available to him. We will deal with these under the headings of value defences and change of position defences.
The appellant argued that he needed only establish a defence under s 296(3) in order to resist both the Companies Act and Property Law Act claims. This is because s 296(3) of the Companies Act provides a defence not only against claims under the Companies Act, but also under “any other enactment, or in law or in equity”. He says the reference to “any other enactment” includes the Property Law Act. If he is correct, there would be a strange doubling up between the Companies Act and the Property Law Act in cases where a Property Law Act claim is made by a liquidator. This would be of no moment in relation to the value defences, as the “gave value” defence in s 296(3)(c) of the Companies Act is not materially different from the “valuable consideration” defence in s 349(1) of the Property Law Act, so it is hard to see there ever being a different outcome under the two sections. But it is potentially significant in relation to the change of position defences. Under s 296(3) of the Companies Act, the change of position defence is a complete answer to the claim. However, under s 349(2) of the Property Law Act, establishing a change of position does not necessarily provide an answer: rather, it gives the Court a discretion not to make an order under s 348.

The liquidators argued that pt 6 subpt 6 of the Property Law Act operates independently of the Companies Act provisions. They pointed to a number of factors supporting that view. First, the Law Commission report that preceded the enactment of the Property Law Act said it was intended to be a standalone procedure, operating independently from the Companies Act and the Insolvency Act 1993.[41] Secondly, if s 296(3) of the Companies Act applied in relation to orders under s 348 of the Property Law Act, there would be no need for s 349 of that Act, at least where the application for orders under s 348 was made by a liquidator. Thirdly, s 347(3) of the Property Law Act requires the liquidator seeking an order under subpt 6 to serve on the person from whom recovery is sought “a notice communicating the effect of sections 348 and 349”. It could be expected that this notice would also be required to communicate the effect of s 296(3) of the Companies Act if it was intended that s 296(3) could also apply. Lastly, there is no good reason for duplicate defences to apply to claims under subpt 6.
[41]Law Commission A New Property Law Act (NZLC R29, 1994) at [52] and [323].
We think it is unlikely that Parliament intended that s 296(3) of the Companies Act would provide a defence to both a Companies Act claim and a Property Law Act claim. However, for reasons that will become apparent, it is not necessary for us to resolve the point. What is clear, however, is that there is a considerable degree of overlap between s 349 of the Property Law Act and s 296(3) of the Companies Act. We propose to deal first with the value defences under both s 296(3) and s 349 and then the change of position defences under those sections.

Value defences

We have found that the payment of money by RAM to the appellant was a transaction in terms of s 292(3), even though the money paid was not beneficially owned by RAM.[42] That is because s 292(3)(e) refers to “paying money” without any specification of a requirement that that money be the property of the company.
[42]See above at [51]–[60].
The apparent intention of the drafter of s 296(3) is that the defences provided for in that provision are available in relation to any insolvent transaction in terms of s 292. However, a literal interpretation of s 296(3), which is related to orders for “the recovery of property of a company”, would suggest that the defences would only apply to transactions in s 292(3)(a) “conveying or transferring the company’s property”, which is the only type of transaction in the definition which refers to a transfer of company property.
It is clear from Allied Concrete that the defences apply to insolvent transactions involving a payment of money by the company to a creditor.[43] But the money paid in the cases under consideration in Allied Concrete was money belonging to the company concerned, and therefore came within the scope of the term “property of the company” in s 296(3). In contrast to that, the payment made by RAM to the appellant in this case was made from a co-mingled trust fund. RAM had legal title to the money, but the beneficial interest was held by the defrauded investors on a pro rata basis.
[43]Allied Concrete, above n 40.
A literal interpretation of s 296(3), limiting its ambit to transactions relating to property (including money) that was beneficially owned by the company making the conveyance, transfer or payment would create an anomaly, under which a person who receives money in an insolvent transaction as defined in s 292(2) would have no defences under s 296.[44] This case would be an example of that anomaly.
[44]See the discussion above at [51]–[60].
We do not believe that could be Parliament’s intention and both parties to the present appeal agreed that s 296(3) should be construed so as to apply to a claw back claim in relation to any type of insolvent transaction described in s 292. It seems illogical that the defences under s 296(3) would not be available to a particular category of payments made rather than to all transactions covered by s 292.[45]
[45]The equivalent Australian provision, s 588FG(2) of the Corporations Act 2001 (Cth), makes it clear that the give value and change of position defences apply to all insolvent transactions. It does not use the term “company property” and simply states that the court must not make an order under the equivalent of s 292 if either defence is made out.
Even if we are wrong about that, we would be prepared to construe the reference in s 296(3) to “property of the company” to include money in which the company has an interest (such as in the present case where RAM had legal, but not beneficial, title to the money paid to the appellant). The term property is defined in s 2 of the Companies Act as including “rights, interests and claims of every kind in relation to property however they arise”. We see that as sufficiently broad to cover the legal interest held by RAM in the money it paid to the appellant.[46]
[46]See above at [25] in relation to a similar definition of property in s 4 of the Property Law Act.
We find that the s 296 defences are available to the appellant if he can establish that he comes within s 296(3)(c).

Allied Concrete

Before turning to the arguments made in relation to this issue, we summarise briefly the decision of this Court in Allied Concrete, which dealt with the interpretation of s 296(3)(c) of the Companies Act, in particular, the meaning of the term “give value” in that provision.[47] It was accepted by the parties to this appeal that the concept of “valuable consideration” in s 349(1)(a) and “gave value” in s 296(3)(c) of the Companies Act are closely aligned.[48]
[47]Allied Concrete, above n 40.
[48]As the majority found in Allied Concrete at [76]–[77].
Allied Concrete dealt with the common situation arising in claims under s 292, namely a trade creditor that had provided goods or services for which the company had paid some time later. The Court of Appeal in one of the decisions under appeal in Allied Concrete had said that the defence under s 296(3) required that the giving of value occurred at the time the payment was received.[49] This Court said there was no such requirement. Three of the Judges, McGrath, Glazebrook and Arnold JJ, said that the phrase “gave value” in s 296(3) can include value given when the debt was initially incurred or value arising from the reduction or extinguishment of a liability to the creditor incurred by the debtor company as a result of an earlier transaction.[50] They found that value needed to be “real and substantial”, and not simply value sufficient to constitute consideration in contract terms.[51]
[49]Farrell v Fences & Kerbs Ltd [2013] NZCA 91, [2013] 3 NZLR 82 at [86].
[50]Allied Concrete, above n 40, at [105].
[51]At [76].
In his judgment, William Young J contrasted two possible approaches to determining where value was given.[52] He described the first as the “antecedent transaction hypothesis”, which involved a focus on the antecedent supply on credit of goods and services. This was essentially the approach adopted by McGrath, Glazebrook and Arnold JJ. The second he described as the “discharge hypothesis”, involving a focus on the later discharge by payment of the associated debt. He and the Chief Justice favoured the latter.
[52]At [177].
As noted earlier,[53] and by both the High Court[54] and Court of Appeal,[55] the facts of the present case differ substantially from the standard trade creditor situation that the Court faced in Allied Concrete. Nevertheless, it is clear from Allied Concrete that if the appellant gave value or provided valuable consideration at the time he entered into the investment management agreement with RAM, this would remain value or valuable consideration for a later repayment of the amount invested. In other words, the time delay between the initial investment and the repayment would not matter.

The appellant’s case on value

[53]Above at [16] and [76].

[54]McIntosh (HC), above n 1, at [72].

[55]McIntosh (CA), above n 8, at [20] and [36].

The appellant argues that he provided real and substantial valuable consideration for the payment of $954,047 that he received from RAM as follows:
(a)the payment of $500,000 that he made to RAM in April 2007 (which was followed soon after by the misappropriation of that money by RAM);
(b)the management fees notionally deducted by RAM (or the opportunity for RAM to earn such fees);
(c)his providing RAM possession of and legal title to those funds, which allowed RAM to have use of those funds for over four years;
(d)the discharge of RAM’s obligations to him when he received the payment of $954,047 in November 2011 either by way of performance or by way of accord and satisfaction.
The appellant says that each of these constitutes sufficient valuable consideration to satisfy the requirements of s 349 or, alternatively, that they do so in combination.
We will consider each in turn.

Initial “investment” of $500,000

The appellant argues that his payment of $500,000 to RAM was the giving of value for that sum in April 2007 and that this was real and substantial value sufficient to amount to valuable consideration for the payment to him of $954,047 some four and a half years later.
If the appellant had invested in RAM, either by the depositing of money with RAM or otherwise subscribing for securities issued by RAM, “investment” would be a proper description. But this is not what the appellant did in this case. As noted earlier, he appointed RAM as investment manager and gave it possession of and legal title to $500,000. But he never parted with the beneficial ownership of the $500,000 and, if his management contract with RAM had been adhered to, the $500,000 (or the securities purchased with it) would have remained in his sole beneficial ownership throughout. In those circumstances, we do not accept the appellant’s submission that he invested $500,000 with RAM and thereby gave value of $500,000 to RAM.
The appellant made a strong plea to the Court to treat the case as a routine
arms‑length transaction having similar characteristics to the trade creditor transactions at issue in Allied Concrete. While we accept that the transaction between the appellant and RAM was an arms‑length transaction and that the appellant had no reason to suspect that a Ponzi scheme was in operation, we do not accept that the legal framework within which the appellant’s relationship with RAM was conducted is similar to the trade creditor situation. In short, the appellant entered into a management contract which was not intended to make him a creditor of RAM at all. The fact that the transaction was arms‑length does not, therefore, have any significance in the analysis of the relationship between the appellant and RAM.
The appellant also argued that, since he provided $500,000 to RAM, this was self‑evidently the giving of value. Thus, he argued, in the absence of any mutual wrongdoing, bad faith or knowledge on his part, that should be the end of the inquiry into the issue of valuable consideration. Again, we see this as omitting from consideration the crucial element, namely that the appellant never intended to provide, and did not provide to RAM, more than a bare legal title to the $500,000, retaining beneficial ownership himself.
The appellant argued that the fact that the $500,000 was to be held on trust should not be controlling because the bare trust was an incident of a wider commercial transaction involving agency. For that proposition he relied on the decision of the Supreme Court of the United Kingdom in AIB Group (UK) plc v Mark Redler & Co Solicitors.[56] The appellant argued that the bare trust arrangement in the present case was incidental to the commercial relationship and that it would be artificial to look at the trust in isolation from the obligations for which it was brought into being. Thus, he argued, for the purposes of the analysis of “valuable consideration”, the existence of the bare trust should be disregarded.
[56]AIB Group (UK) plc v Mark Redler & Co Solicitors [2014] UKSC 58, [2015] AC 1503 at [70] per Lord Toulson. There has been some academic criticism of this decision: we do not need to engage with that criticism because we are satisfied, for the reasons below at [93], that it does not apply to the factual situation in this case.
We do not see the observation from AIB as applying to the present situation for two reasons. First, the trust arrangement in AIB was an incidental aspect of a wider commercial transaction. In the present case, the whole commercial relationship between the appellant and RAM was established on the basis that the appellant would never part with the beneficial ownership of the money he placed under the management of RAM and the securities purchased with that money. The trust arrangement was not, therefore, incidental to the commercial relationship, but essentially defined it. Second, it is clear from AIB that the fundamental principles of equity apply to all trusts, whether “traditional” trusts or trusts that are incidental to commercial relationships. So, even if the bare trust in this case were in the latter category, there would be no proper basis in this case to ignore the separation of legal and beneficial title, which is a core element of all trusts.
The High Court found that, in light of the bare trust arrangement evidenced by the management agreement, no valuable consideration was given when the payment was made by the appellant to RAM.[57] For the reasons given above, we agree with that analysis.
[57]McIntosh (HC), above n 1, at [66].
After the money paid by the appellant to RAM was misappropriated by RAM, the situation changed. Both the High Court and Court of Appeal considered that, at this point, valuable consideration was taken by RAM. In the High Court, MacKenzie J said that when the misappropriation occurred the funds were applied by RAM for its own purposes, which meant that the appellant was deprived of the amount of the original investment and RAM was able to use it for its own purposes.[58] He found that the valuable consideration requirement was met when RAM appropriated to itself the appellant’s money, thus meeting the requirement in s 349 to the extent of the original investment of $500,000.[59]
[58]At [67].
[59]At [74].
The Court of Appeal majority, Harrison and French JJ, upheld that finding by MacKenzie J. They referred to the misappropriation by RAM as RAM “treating the money as its own”.[60] They considered that the legal principles adopted in Allied Concrete applied to the situation.[61] They said it did not matter whether the antecedent debt or discharge approach was applied.[62]
[60]McIntosh (CA), above n 8, at [32].
[61]At [36].
[62]At [32].
Under the antecedent debt approach, the creation of a debt owed by RAM to the appellant was decisive: this involved the giving of value by the appellant even if that was not what he intended to do.[63] Under the discharge approach, RAM’s payment to the appellant discharged the readily quantifiable element of RAM’s obligation to the appellant.[64]
[63]At [33].
[64]At [34].
In his submissions in this Court, Mr Colson stressed that the effect of the misappropriation was that RAM was administering a diminishing pool of trust assets on behalf of those who had contributed to the pool. RAM remained the trustee throughout and unsecured creditors would not have had any claim on these assets. This, he argued, meant that RAM did not acquire any value in the funds paid to it by investors. He said it would defeat the policy objectives of the Companies Act (and the Property Law Act) if a person could rely on the value/valuable consideration defence even if the value in question has not been acquired by the company so that it was not available to the creditors in the liquidation.
We agree with the Court of Appeal that the misappropriation led to the appellant becoming a creditor of RAM, because of his claim for the return of the misappropriated funds. However, his funds did not become part of the pool of assets available to unsecured creditors of RAM. So we agree with the liquidators that, when the misappropriation occurred, no value or valuable consideration was provided to RAM in the sense of money that became available to creditors of RAM. RAM remained a trustee at all times: initially it was a bare trustee in accordance with the management contract and after the misappropriation it was the trustee of a co‑mingled fund for the benefit of all victims of the misappropriation.
However, we see this case as falling on the borderline of insolvency law and trust law. While the appellant did not provide valuable consideration to RAM in the sense just mentioned, he did transfer $500,000 to RAM and, as a result of RAM’s actions at the time of its receipt of that sum, RAM became indebted to him for that amount. We consider that, in the circumstances of this case, it would be unfair to refuse to recognise that $500,000 as value simply because the legal consequence of the misappropriation of the funds meant that his money became part of the co‑mingled trust fund, rather than money available to unsecured creditors. That would effectively put the appellant in the position where the claw back regimes in the Companies Act and Property Law Act apply to him (even though the value he gave did not become money which was available to RAM’s unsecured creditors) but the value defences in both Acts do not (for the very reason that the value he gave did not become money available to unsecured creditors).
In effect, the appellant had claims on both the unsecured asset pool of RAM (to the extent that this existed) and the co‑mingled trust fund, because he was an unsecured creditor as well as being a pro rata beneficiary of the co‑mingled trust fund. Although his $500,000 did not become part of the assets of RAM available in the liquidation, it did become part of the co‑mingled trust fund against which he has a claim and from which the payment he received in November 2011 originated. We consider, therefore, that the concept of valuable consideration and value needs to be adapted to the unique facts of this case and that value should be recognised even if the value was derived by the co‑mingled trust fund under the control of RAM rather than the unsecured asset pool available to the general body of creditors of RAM. The reality is that the only creditors of RAM of any substance are investors in the same situation as the appellant, who have claims on both the co‑mingled trust fund and the unsecured creditor pool. The appellant’s payment of $500,000 to RAM provided value to the pool available to those investors/creditors, albeit that the pool into which it went was the co‑mingled trust fund not the unsecured creditor pool.
As the appellant stressed in argument, s 296(3)(c) simply says “gave value for the property”, without specifying that the value had to be given to the company so that it became part of the company’s estate in the liquidation. While it can be expected that in the normal run of cases value would in fact be given in that manner, we see the words of the section as sufficiently flexible to be applicable to the unusual situation that arose in this case.
That still leaves another question to be determined: whether, objectively, payment of money to the operator of a Ponzi scheme can constitute value, given that the effect of the payment is simply the perpetuation of the Ponzi scheme and the deferral of the inevitable detection of the scheme and crystallisation of the losses of the victims of the misappropriation.
In his dissenting judgment in the Court of Appeal, Miller J considered that, even on the assumption that the appellant’s payment was made to RAM then became RAM’s property, it still delivered no value or valuable consideration. As he put it: “the introduction of new money creates no value but merely delays and worsens the inevitable ruin”.[65]
[65]McIntosh (CA), above n 8, at [107].

Conclusion on cross-appeal

[237]See above at [245]–[247].

For the above reasons, I do not consider that Mr McIntosh gave value of $500,000, either at the time of the original investment or at the time it was misappropriated.[238]

Conclusion

[238]I do not need to decide whether each of the reasons to distinguish Allied on its own would have led me to that conclusion because in combination they certainly do so. I also note that I do not disagree with Miller J’s discussion of the US cases (see CA decision, above n 167,

I agree with the judgment of the majority that the requirements of s 348 of the Property Law Act and s 292 of the Companies Act are met. I am also in agreement that the change of position defences do not apply. However, in my view, the entirety of the $954,047 ought to be repaid by Mr McIntosh as no value was given. I would thus have allowed the cross-appeal and dismissed the appeal.[239]
[239]I agree with the point made in Mr McIntosh’s additional submissions that it is too late for the liquidators to rely on Re Diplock (Diplock v Wintle) [1948] Ch 465 (CA) (affirmed by the House of Lords in Ministry of Health v Simpson [1951] AC 251) in the current proceedings. However the likely result of my approach in this case (pari passu sharing after the return of all the RAM payments) is consistent with the result in that case. Pari passu sharing between defrauded investors is also consistent with Barlow Clowes International Ltd (in liq) v Vaughan [1992] 4 All ER 22 (CA) and Re International Investment Unit Trust, above n 187, although these cases did not involve any claw back payments.

Solicitors:
Bell Gully, Wellington for Respondents

at [75]–[80], this potential anomaly does not arise on our interpretation of s 296(3).

and [59]–[60]. I do note the recent case of Akers v Samba Financial Group [2017] UKSC 6, [2017] 2 WLR 713. Given the differences between the United Kingdom legislation and our legislation, I am satisfied that the reasoning in that case does not apply to the current proceedings. I also agree with William Young J (above at [208]) that the issues in this case must be addressed in terms of policy.

at [110]–[111]) but, given the different legislative and factual situations these cases were addressing, I do not find it necessary to rely on them.

[2017] NZSC 78

26 May 2017