Supreme Court sought for Ross clawback's $80m question

Wellington lawyer Hamish McIntosh is seeking leave to appeal a decision that meant he could keep his initial $500,000 investment in Ross Asset Management but had to return $454,000 of “fictitious profits.”

As a result, liquidators PwC have indicated it will also seek leave to cross-appeal the matter, which could have major ramifications for the nearly $80 million of possible clawback claims liquidators have identified.

Last month, the Court of Appeal dismissed appeals by both Mr McIntosh and PwC after a High Court judge last year ruled the investor could keep his initial investment but had to pay back his “fictitious profits.”

The appeals in what is the first clawback case delayed attempts to claw back about $3.8 million in the first three test cases overall.

Justices Christine French and Rhys Harrison dismissed both parties’ appeals in the Court of Appeal, while Justice Forrest Miller dissented, indicating he would have allowed the liquidator’s appeal while dismissing McIntosh’s, which would have seen him have to pay back the full $954,000.

NBR reported in February liquidators had identified total possible clawback claims worth nearly $80 million, a significant possible return on the Ponzi scheme which has left more than 700 investors owed about $115 million.

The Court of Appeal’s decision, however, shrank the total value of the claims to $32.9 million, against 243 investors.

But today, liquidators PwC say Mr McIntosh applied for leave to appeal the decision to the Supreme Court last Friday.

“As a result of this, the liquidators now intend to apply for leave to cross-appeal on the matter of capital withdrawals.

“If leave to appeal is granted, we will also be making an application for this appeal to be heard with urgency.”

PwC has written to more than 30 other investors it believes it may have claims against, asking for them to enter “standstill agreements” – effectively pausing any litigation but ensuring it does not become time-barred – until the appeal decision is released.

So far, legal proceedings have been started against five investors, while 28 have entered into standstill agreements.

Responses from another 12 were still awaited last month, PwC said.

So far, about $3 million has been recovered in the Ross collapse.