Minimising winners to give more to losers: An analysis of New Zealand's voidable transaction regime in light of Fisk v McIntosh

Abstract

Fisk v McIntosh brings light to pertinent issues within New Zealand’s voidable transaction regime, an integral component of the country’s insolvency law framework. The case concerns a payment received by an innocent investor upon exiting a Ponzi scheme. The scheme’s liquidator has claimed the entirety of the payment as a voidable transaction under the Companies Act 1993. The High Court and Court of Appeal held that the sum of the original investment can be retained, but any profits must be returned. This paper analyses the Courts’ interpretation of the defence provision under the voidable transaction regime and discusses the true meaning of “value” under the Act. The tension between upholding commercial confidence and treating unsecured creditors equally is highlighted. It is argued 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, for which they provided real and substantial value.