FORRESTERS NOMINEE COMPANY LTD & HUBBARD CHURCHER TRUST MANAGEMENT LTD HC TIM CIV-2011-476-000642

FORRESTERS NOMINEE COMPANY LTD & HUBBARD CHURCHER TRUST MANAGEMENT LTD HC TIM CIV-2011-476-000642

Tracing-eligible assets will be isolated; because investor statements and records were unreliable, allocations were often retrospective and funds were mixed, the Court rejected the PIP bespoke-allocation approach and directed interim distribution by a pooling method (the second pooling method advanced by Mrs Hubbard: return capital to investors with positive net cash in, then distribute surplus by a time-weighted compound interest formula), as it best balances fairness, reflects investor expectations, and is practicable and cost-effective.

Citation
openlaw-e4392088_cc22_46d1_a908_72074d2559ca.pdf
Parties
Statutory Managers of Forresters Nominee Company Limited and Hubbard Churcher Trust Management Limited (applicants): Richard Grant Simpson; Trevor Francis Thornton; Graeme Carson McGlinn; Investors: HMF investors; Interested Party/respondent: Mrs Hubbard and Estate of Allan Hubbard; Amicus Curiae: N A Till QC
Court
High Court
Jurisdiction
New Zealand
Judgment Date
1 June 2012
Procedural Posture
Application Under S58 Corporations (investigation & Management) Act 1989 for Directions as to Distribution of Assets / Interim Directions/reserved Judgment (directions Issued)
Outcome
Interim directions issued: PIP rejected; adopt modified second pooling method (return capital then distribute surplus by time-weighted compound interest) subject to refinements; traced assets isolated; leave reserved for further applications; costs to be paid from HMF with specified allowances.
Legal Topics
Distribution of Pooled Assets, Pari Passu Distribution, Tracing of Assets, Investor Expectations, Reconciliation of Investor Statements, Pooling Vs Bespoke Portfolio Allocation
Statutory Management Corporate Law Trusts and Equity Asset Tracing Insolvency Related Distribution Distribution of Pooled Assets Pari Passu Distribution Tracing of Assets +3 more

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Parties

Richard Grant Simpson; Trevor Francis Thornton; Graeme Carson McGlinn

Statutory Managers of Forresters Nominee Company Limited and Hubbard Churcher Trust Management Limited (applicants)

HMF investors

Investors

Mrs Hubbard and Estate of Allan Hubbard

Interested Party/respondent

N A Till QC

Amicus Curiae

Procedural Posture

Application Under S58 Corporations (investigation & Management) Act 1989 for Directions as to Distribution of Assets / Interim Directions/reserved Judgment (directions Issued)

Legal Issues

  1. 1 What is the appropriate method to distribute HMF assets between investors?
  2. 2 Whether assets can be traced to individual investors
  3. 3 Whether HMF operated as pooled fund or bespoke personal portfolios

Ratio Decidendi

Tracing-eligible assets will be isolated; because investor statements and records were unreliable, allocations were often retrospective and funds were mixed, the Court rejected the PIP bespoke-allocation approach and directed interim distribution by a pooling method (the second pooling method advanced by Mrs Hubbard: return capital to investors with positive net cash in, then distribute surplus by a time-weighted compound interest formula), as it best balances fairness, reflects investor expectations, and is practicable and cost-effective.

Court Disposition

Interim directions issued: PIP rejected; adopt modified second pooling method (return capital then distribute surplus by time-weighted compound interest) subject to refinements; traced assets isolated; leave reserved for further applications; costs to be paid from HMF with specified allowances.

Orders

  • HMF assets to be distributed generally in accordance with the model advanced by counsel for Mrs Hubbard, subject to statutory managers' proposed variation to reflect pool returns in years investors contributed and any further Court refinements
  • Statutory managers to recover any overpayments resulting from the $9,000,000 interim distribution