New Zealand: Voidable transactions in New Zealand – where to from here?

Brief Counsel
Last Updated: 1 April 2016
Article by Michael Arthur, Michael Harper, Daniel Kalderimis, Hamish Foote and James McMillan
Most Popular Article in New Zealand, April 2016

The Court of Appeal's judgment in McIntosh v Fisk, released this month, regarding liquidators' ability to claw back payments made by Ponzi schemes to investors would have gone very differently but for the Supreme Court's landmark ruling last year in Fences & Kerbs on the meaning of "gave value".

The majority expressly noted that, had they not felt bound by the Supreme Court's interpretation, they would have agreed with the minority and required the investor to pay back not just the fictional profits, but also the profits of his capital investment.

We look at the reverberations last year from Fences & Kerbs and speculate on their continuing effect this year.

Case volume

Ten judgments dealing substantively with the claw-back of voidable transactions under section 292 of the Companies Act 1993 were issued last year, three at appellate level.1 The courts found:

  • for the liquidator(s) in five cases - three of which resulted in a full recovery while in the remaining two, the liquidators were allowed to recover only part of the claimed amount, and
  • for the creditor in four cases.

The other case2 was an appeal from two different decisions, one in which the result was for the creditor and the other in which the liquidator achieved partial recovery.

Key principles

Case law developments in 2015 have clarified a number of key concepts in the voidable transactions regime.

"Gave value"

Because in a voidable transactions claim, "value" given by a creditor at the time of the original transaction is sufficient to satisfy the "gave value" limb of the good faith defence in section 296(3)(c), this defence will be available to any creditor that received a payment in good faith without knowledge of insolvency. (See Allied Concrete and Chapman Tripp's commentary on it.)

The broader nature of the defence and its focus on subjective elements increases the burden faced by liquidators who seek to challenge a creditor's lack of knowledge or suspicion of insolvency (see Madsen Reis and Levin v Donovan Drainage).

Peak indebtedness

The start of the "continuing business relationship" is the beginning of the specified period, not the point of "peak indebtedness". (See Timberworld and Chapman Tripp's commentary.)

Continuing business relationship

A continuing business relationship will exist only where payments made between a company and its creditor are for the purpose of securing more than the payment of a pre-existing debt – i.e. payments must be for the purpose of maintaining an ongoing business relationship with anticipation that the creditor will provide further goods or services for credit. (See Galvanising v Fisk.)

Ponzi profits

While investors may be able to invoke the s 296(3) defence up to the amount of their initial investment on the basis that "value" was given to the Ponzi scheme, the High Court found in Fisk v McIntosh that liquidators may be entitled to recover payments representing the purported yield on the investment for which there was no "value" given.

This decision has since been confirmed by the Court of Appeal in McIntosh v Fisk.


Courts have discretion over what orders to make and whether to make any at all under section 295 of the Act. (See Petterson.)

Payments by a third party

Payments made under a direct deed are vulnerable to being clawed back under the regime. (See Sanson v Ebert and Chapman Tripp's commentary.) An appeal of this decision is to be heard in August.

Notice requirements

Defects in a creditor's notice of objection will not necessarily result in the notice's invalidity. A creditor is likely to be given the opportunity to be heard despite a technically defective notice. (See Madsen Reis v Bryant.)


Whether payments to secured creditors are voidable remains a difficult question. A first instance Australian decision, Matthews v The Tap Inn3 found that the appropriate time to assess the value of a creditor's security was at the date of the company's liquidation. On appeal, the South Australian Supreme Court set that decision aside, on the basis that it should not have been decided as a preliminary question. The Court gave no further guidance on the application of the regime to secured creditors. (See The Tap Inn v Matthews)

From a policy perspective, payments made to a secured creditor may come from secured assets. If so, the payments do not prejudice unsecured creditors. It would therefore be artificial to compare the position with the outcome on liquidation, when the secured assets are no longer present.

This matter has not been addressed at appellate level in New Zealand. In 2014, New Zealand's High Court in Grant v BB2 Holdings Limited considered how the voidable transactions regime related to security, resulting in a complex analysis somewhat different to the recent Australian decision.

What's ahead?

We can expect further clarity in the application of the regime to emerge as courts apply the above principles in future voidable transaction cases.

Chapman Tripp will continue to track and report on the treatment of voidable transaction claims by the courts in the post Fences & Kerbs climate.


1 Allied Concrete v Meltzer (2015) 11 NZCLC 98-031, Timberworld v Levin [2015] 3 NZLR 365, Galvanising Ltd v Fisk (2015) 14 TCLR 204, Ruscoe & Anor v McKeown Group Ltd, Fisk v McIntosh (2015) 11 NZCLC 98-033, Madsen Reis v Donovan Drainage and Earth Moving Ltd [2015] NZHC 1081, Madsen Reis v Bryant [2015] NZHC 2267, Zenith Kitchen & Joinery Ltd (in liq), Re Levin v BCS Holding Account Ltd [2015] NZHC 1564, Grant v McKenzie [2015] NZHC 1958, Sanson & Ebert Construction Ltd [2015] NZHC 2402. Various other interlocutory matters and costs decisions relating to the voidable transactions regime are not included in this total.

2 Timberworld v Levin [2015] NZCA 111

3 Matthews v The Tap Inn Pty Ltd [2015] SADC 108

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Michael Arthur
James McMillan
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.