Mcintosh v Fisk

• Jurisdiction: New Zealand
• Judge: Harrison,Miller,Cooper JJ
• Judgment Date: 16 June 2015
• Neutral Citation: [2015] NZCA 247
• Docket Number: CA250/2015
• Court: Court of Appeal
• Date: 16 June 2015

BETWEEN

Hamish Mcintosh

Appellant

and

John Howard Ross Fisk and David John Bridgman As Liquidators Of Ross Asset Management Ltd (In Liquidation)

Respondents

[2015] NZCA 247

Court:

Harrison, Miller and Cooper JJ

CA250/2015

IN THE COURT OF APPEAL OF NEW ZEALAND

Appeal against a refusal by the High Court (HC) of an application for permanent name suppression — the appellant was a barrister who had until recently been a partner in a national law firm and had recently set up practice as a barrister — appellant was an investor in an asset management company — it was subsequently discovered that the company had been operating a Ponzi Scheme whereby funds from new or existing investors were used to pay out investors who wanted to withdraw funds — liquidators were suing for the return of money paid to the appellant when he withdrew his investment — whether suppression should be granted because of the risks of publication to the appellants new professional venture as a barrister — whether suppression should be granted to protect details of his personal financial circumstances.

Counsel:

J B M Smith QC and J L W Wass for Appellant

J H Stevens for Respondents

• A The appeal is dismissed.

• B The appellant must pay the respondents' costs for a standard appeal on a band A basis together with usual disbursements.

JUDGMENT OF THE COURT

REASONS OF THE COURT

(Given by Harrison J)

Introduction

1 The principle of open justice requires that all aspects of proceedings, both civil and criminal, are conducted in public. It extends to the identification of parties to litigation. Accordingly, a litigant seeking confidentiality in the nature of a name suppression order must show the interests of justice displace the presumption favouring publication. 1 The threshold is high because any suppression order necessarily derogates from the principle of open justice and the right to freedom of expression. 2

2 The issue in this appeal is whether MacKenzie J erred in declining an application by the appellant, Hamish McIntosh, for permanent suppression of name on the ground that he had failed to establish that the adverse consequences of publication displaced the open justice principle. 3

Background

3 Mr McIntosh is a barrister sole practicing in Wellington. He was until recently a partner in a national law firm. The respondents, John Fisk and David Bridgman, are the liquidators of Ross Asset Management Ltd (RAM).

4 As its name suggests, RAM held itself out as an asset management company, purportedly managing funds for the investing public. Mr McIntosh was one such investor.

5 David Ross, formerly a Wellington accountant, owned and operated RAM. The company failed in December 2012, immediately following the disclosure of Mr Ross' serial misappropriation of its funds. He was operating what it is known as a Ponzi scheme. Funds from new or existing RAM investors were used to pay out investors who wanted to withdraw funds. Estimated losses suffered by RAM investors as a result of Mr Ross' dishonesty exceed $100 million.

6 Mr McIntosh says he was an innocent beneficiary of the Ponzi operation. In April 2007 he invested $500,000 with RAM, all of which was borrowed from a major bank. In late 2011 he gave notice of withdrawal of his investment. The following month RAM repaid him $954,047.64; the surplus of $454,047.62 over his capital investment represented fictitious profits. Unknown to Mr McIntosh, the funds used to repay him came from new investments or the sale of shares held for other parties.

7 In July 2014 the liquidators issued separate proceedings against Mr McIntosh and two other former RAM investors on the same legal basis, alleging that RAM's repayments were voidable transactions 4 or prejudicial dispositions. 5 The liquidators sought to set the transactions aside and recover the amount repaid.

8 Mr McIntosh does not challenge the factual foundation for the liquidators' claim. His defence, however, is that he gave value and, more particularly, changed his financial position in reliance on the repayments which he received in good faith. 6 He applied the repayment to discharge his bank debt. He has also incurred new financial obligations.

9 MacKenzie J heard the liquidators' substantive claim against Mr McIntosh earlier this year. His judgment is now written but he has decided to withhold delivery until resolution of issues arising from Mr McIntosh's application for name suppression. 7 On 19 August 2014 Williams J had granted him interim suppression. 8 On 17 April 2015 MacKenzie J heard the application for permanent suppression and on 24 April 2015 delivered the judgment under appeal. The Judge ordered, nevertheless, that the interim suppression order was to remain in force until delivery of his substantive judgment.

10 MacKenzie J carefully addressed all the grounds advanced by Mr Smith QC in support of Mr McIntosh's application. However, while expressing sympathy for

his position, the Judge was not satisfied that Mr McIntosh's grounds for seeking suppression were sufficient to displace the open justice principle

Appeal

11 On appeal, Mr Smith QC submitted that Mackenzie J erred in principle in a number of respects. Counsel emphasised particularly the risks of publication to Mr McIntosh's new professional venture as a barrister. He has recently set up his own premises with attendant expense, which has been funded by borrowings. He is concerned because his prospects of establishing a sound professional practice rely on maintaining three essential attributes – ability, goodwill and reputation. As Mr Smith accepts, Mr McIntosh's ability is his principal asset and it is immune from any risk associated with publicity. But, he says, goodwill and reputation are fragile commodities; and both will be at real risk from publicity about this litigation and Mr McIntosh's investment in RAM.

12 In support of the appeal Mr Smith also provided us with a close comparative analysis of the circumstances of Mr McIntosh's application with other cases. However, limited if any assistance is available from that approach. Once the relevant principles are identified, the inquiry becomes a very fact specific judicial evaluation, as this case illustrates. 9

Decision

Relevant factors

(a) Investment decision

13 It is necessary to dissect, if only briefly, the components of Mr Smith's submission that this case presents an unusual concentration of factors, to isolate what will be the prejudice resulting from publication. Disclosure that Mr McIntosh invested in RAM cannot of itself give rise to an appreciable risk. Like other members of the public, he borrowed in good faith to invest a substantial amount with what he understood to be a reputable and successful funds manager. He cannot be

criticised for that decision. While Mr Smith emphasises Mr McIntosh's expectation of confidentiality when investing, that is an incident of most personal investment decisions, insufficient in itself to warrant suppression in the circumstances of this case.

(b) Liquidators' claim

14 Any appreciable risk to Mr McIntosh could only arise from two related events consequent upon RAM's failure. The first is the liquidators' claim to claw back Mr McIntosh's investment and profits. We acknowledge that Mr McIntosh did not expect this consequence when making and later withdrawing his investment. However, litigation is frequently unforeseen, and is an ordinary (even if unwelcome) incident of commercial activity. Mr McIntosh's decision to defend the liquidators' claim cannot be the subject of any public opprobrium. He has an arguable defence open to him in law that he gave value and has also changed his financial position. Whether those defences prevail is for MacKenzie J to determine.

15 Like MacKenzie J, 10 confirmed by Ms Stevens in this Court, we record the liquidators' acknowledgement that Mr McIntosh acted in good faith when requesting repayment of his RAM investment in 2011. He had no reason whatsoever to suspect Mr Ross' honesty or, more importantly, that the funds used to redeem his investment and pay profits would originate from other RAM investors. His reason was commercially rational – he wished to retire debt and apply the funds for other purposes. His decision to request repayment cannot be faulted.

16 Accordingly, this factor can be discounted.

(c) Mr McIntosh's defence

17 The second relevant event is the existence of Mr McIntosh's defence or, more...