Losing Sight of Certainty: An Analysis of New Zealand's Voidable Transaction Regime in Light of Fisk v. McIntosh

33 Pages Posted: 8 Nov 2016

See all articles by Nina Opacic

Nina Opacic

Victoria University of Wellington, Faculty of Law, Student/Alumni

Trish Keeper

Victoria University of Wellington

Date Written: November 8, 2016

Abstract

The Fisk v. McIntosh decision concerns a payment received by an arms-length investor upon exiting a Ponzi scheme. The scheme’s liquidators have claimed the entirety of the payment of $954,047 as a voidable transaction under the Companies Act 1993. The High Court and the Court of Appeal held that the original deposit of $500,000 can be retained by the investor, but as the investor did not give value for the balance, that part of the payment must be returned. This article analyses the interpretation of ‘value’ in s 296(3) of the Act by both the High Court and the Court of Appeal and argues that both Courts took into account public policy and other factors that are not supported by a strict interpretation of the provision and existing jurisprudence. It argues that if an equivalence test is read into the defence, this will result in the courts being required to undertake time consuming and fruitless assessments of quantum. It also argues that courts must give priority to commercial confidence and fairness to individual creditors over a remorseless application of parity-based logic wherever a payment has a preferential effect. It concludes that in order to maintain clarity in New Zealand’s company law and ensure its purpose is upheld, creditors should remain entitled to keep payments received in good faith, with no suspicion of insolvency and for which they provided real and substantial value.

Keywords: Fisk v McIntosh, Companies Act, voidable transaction, liquidation, Ponzi

JEL Classification: K00, K10, K19, K39, G33

Suggested Citation

Opacic, Nina and Keeper, Trish, Losing Sight of Certainty: An Analysis of New Zealand's Voidable Transaction Regime in Light of Fisk v. McIntosh (November 8, 2016). Available at SSRN: https://ssrn.com/abstract=2866245 or http://dx.doi.org/10.2139/ssrn.2866245

Nina Opacic (Contact Author)

Victoria University of Wellington, Faculty of Law, Student/Alumni ( email )

PO Box 600
Wellington, Victoria 6140
New Zealand

Trish Keeper

Victoria University of Wellington ( email )

P.O. Box 600
Wellington, 6140
New Zealand

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