Supreme Court to determine Ross Asset Management investor's appeal against ruling to repay profits but not principal to the liquidator

The Supreme Court has granted leave to an investor in Ross Asset Management (RAM) to appeal the Court of Appeal's decision ordering him to repay the (fictitious) profits, but not his original investment, to the liquidators of RAM (McIntosh v Fisk [2016 NZSC 58]). The Court of Appeal ruled that as the investor had 'given value' to RAM by his original investment of $500k, he could retain it, but not the 'profits' derived from RAM's 'Ponzi' scheme, for which he had provided no value, within the meaning of s.296(3) of the Companies Act 1993. The liquidator has cross-appealed against the Court's finding that the investor could retain his original investment, which RAM had repaid him (with fictitious profits of $454k) before it went into liquidation. The appeal will no doubt be of importance not only to future recoveries in the liquidation of RAM, but also to the basis on which creditors can resist claims by liquidators to recover payments by proving they gave value for the payments, pursuant to s.296(3).