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High Court of New Zealand Decisions |
Last Updated: 18 December 2012
THE NAMES OF ALL INVESTORS ARE PERMANENTLY SUPPRESSED.
IN THE HIGH COURT OF NEW ZEALAND TIMARU REGISTRY
CIV-2011-476-000642 [2012] NZHC 3256
IN THE MATTER OF THE CORPORATIONS (INVESTIGATION & MANAGEMENT) ACT 1989
AND IN THE MATTER OF THE STATUTORY MANAGEMENT OF FORRESTERS NOMINEE COMPANY LIMITED AND HUBBARD CHURCHER TRUST MANAGEMENT LIMITED
AND IN THE MATTER OF RICHARD GRANT SIMPSON, TREVOR FRANCIS THORNTON AND GRAEME CARSON MCGLINN AS STATUTORY MANAGERS OF FORRESTERS NOMINEE COMPANY LIMITED AND HUBBARD CHURCHER TRUST MANAGEMENT LIMITED
Hearing: Dealt with on the papers
Judgment: 4 December 2012
FURTHER RESERVED JUDGMENT OF CHISHOLM J
[1] In the judgment delivered on 1 June 2012[1] (the earlier judgment) I provided interim directions on the basis that some of those directions might have to be re- visited.[2] To preserve the situation of some investors who wished to appeal, the statutory managers made application to the Court of Appeal for extension of the time within which to bring an appeal. Following that there was a telephone conference
during which I indicated that I was prepared to re-visit the “clawback” issue.[3]
FORRESTERS NOMINEE COMPANY LTD & HUBBARD CHURCHER TRUST MANAGEMENT LIMITED HC TIM CIV-2011-476-000642 [4 December 2012]
[2] On 20 November counsel filed a joint memorandum in relation to various issues, including “clawback”. That memorandum was supported by a detailed affidavit from one of the statutory managers, Graeme McGlinn, reporting on the steps that had been taken since the earlier judgment was issued and the recommendations of the statutory managers on various issues. Unfortunately these documents were only brought to my attention yesterday.
[3] All counsel and the statutory managers seem to be in agreement about the matters that I will now address.
Direction as to what is meant by cash
[4] At footnote 25 of the earlier judgment I noted that although the possibility as to what is meant by “cash” was raised at the hearing, I was not inclined to provide any directions at that stage because I did not think that they were necessary. However, the door was left open for the matter to be referred back to the Court.
[5] In his affidavit Mr McGlinn has explained the definition of “cash” that has, in conjunction with counsel, been used by the statutory managers.[4] I am grateful to the statutory managers for that explanation. No further directions are required of the Court.
Rate of return
[6] At [113](a)(i) of the earlier judgment there was reference to the variation proposed by the statutory managers to enable the level of return to any particular investor to be properly reflected. In their calculations the statutory managers have adopted the NZX return on an annual basis. This approach, which is supported by
counsel, is endorsed by the Court.
“Clawback”
[7] At [113](b) of the earlier judgment I directed the statutory managers to recover any overpayments that resulted from the interim distribution. At the time the judgment was delivered the overpayments were expected to total around
$1.6 million.
[8] Since that time the statutory managers have refined the distribution model and have found that the final “clawback” level, assuming current market values, is approximately $680,000. Two investors have received large overpayments ($115,794 and $192,521) and another five investors have received between $20,000 and $49,020. The remainder have received relatively low overpayments.
[9] Given this situation the statutory managers recommend that the “clawback” be abandoned on the basis that any attempts to pursue that matter would be uneconomic. This is supported by counsel. They note that the amount in issue is approximately 1.54% of the total value of the fund. They also believe that abandonment of the “clawback” requirement might avoid any appeal to the Court of Appeal which would save costs and reduce stress on investors, many of whom are elderly and already stressed.
[10] Having considered the affidavit and the joint memorandum of counsel I am satisfied that the “clawback” direction should be abandoned. Paragraph [113](b) of the earlier judgment is deleted accordingly.
Starting point for allocation of surplus assets
[11] At [111] of the earlier judgment I raised the possibility of adopting the year
2000 as the starting point for the calculation concerning allocation of surplus assets. Paragraph [113](c) and (d) invited the statutory managers and other parties to provide their response to that suggestion.
[12] Following extensive work on this aspect the statutory managers have concluded that the appropriate starting point is 31 March 2007. That date represents
the last point in time where it appeared that HMF held sufficient assets to meet all the obligations expressed on the investor statements. After this point the statements cannot be reconciled against the actual position of HMF. On a high level analysis the fund was solvent at that time even if individual statements might not have been completely accurate. This starting point is supported by counsel.
[13] Again, I am satisfied that the recommendation of the statutory managers should be adopted. The starting point will be 31 March 2007.
Timetabling
[14] As counsel point out at 23 of their memorandum all parties are keen to ensure that investors receive a payment as soon as possible. Unfortunately, the timeframe mentioned by counsel at 24 cannot be achieved. However, issue of this judgment will at least set the appeal period in motion.
Mrs Hubbard’s costs
[15] In the earlier judgment I expressed an initial impression that Mrs Hubbard’s costs should be paid from the HMF fund but that they should not exceed the costs of counsel appointed to support the pooling approach.[5] Since that time memoranda on that issue have been filed and served by Mr Till QC, Dr Butler and Mr Holderness. I then indicated in the minute of 16 July 2012 that I would not take any further steps on this issue until the appeal to the Court of Appeal was determined.
[16] By memorandum dated 20 November 2012 Dr Butler asks that this matter be resolved now so that any costs that are awarded can be paid out as soon as the appeal period has passed (assuming no appeal is lodged). A timetable for submissions was proposed at paragraph 10 of his memorandum. Unfortunately the proposed timeframe has now been overtaken by events.
[17] I agree that it would be appropriate for the matter to be resolved. On the assumption that Mr Till does not wish to lodge any further memorandum I suggest
that submissions in relation to Mrs Hubbard’s costs from Mr Barton and Mr Whiteside should be filed and served by 10 December 2012 and any response from Dr Butler by 17 December 2012.
Leave
[18] Leave is reserved for any party to apply further should the need arise.
Solicitors:
Anderson Lloyd, P O Box 13831, Christchurch
Wynn Williams, P O Box 4341, Christchurch
Duncan Cotterill & Co, Christchurch,
Russell McVeagh, P O Box 10-214, DX ZX11189, Wellington
N A Till QC, P O Box 252, Christchurch
[1] Forresters Nominee Company Ltd & Hubbard Churcher Trust Management Ltd HC Tim CIV-
2011-476-000642 [1 June 2012].
[2] See [112] and [113] of that judgment.
[3] See the minute issued on 16 July 2012.
[4] See 31. – 34. of the affidavit.
[5] See [117]
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