Neil Tony Hickman and others v Turn and Wave Limited, Greenstone Barclay Trustees Ltd and Iicon Central Ltd - SC 46/2011

Summary

Civil Appeal – Securities Act 1978 – Whether Court of Appeal erred in its interpretation of s 33 of the Securities Act, its interpretation of the term “debt security” under the Securities Act, and its interpretation of the scope of the exemption in s 5(1)(b) of the Securities Act – Whether Court of Appeal erred in finding that if the Blue Chip investment products were invalid, they were not interdependent with the sale and purchase agreements – Whether the Court of Appeal erred in holding that the sale and purchase agreements were not tainted by illegality if in breach of s 33 of the Securities Act[2011] NZCA 100 CA 796/2009, CA 797/2009, CA 798/2009

Result

Leave to appeal is granted on the following questions:

(1) Did the marketing by Blue Chip companies and sales agents of the Blue Chip investment products amount to offers to the public of equity and/or debt securities for the purposes of s 37 of the Securities Act 1978?

(2) If so, is the exemption in s 5(1)(b) applicable?

(3) If the answers to questions (1) and (2) are favourable to the investors, does this impeach the ability of the developers to enforce the agreements for sale and purchase on the basis that they (a) constituted part of the relevant allotments and were thus void and of no effect under s 37(4) or, (b) were tainted by their association with those allotments and thus illegal?

6 September 2011

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A The appeals are allowed.

B The SPAs executed at the same time as, or after, the corresponding Blue Chip investment product agreements were entered into are declared to be unenforceable under s 37 of the Securities Act 1978.

C The High Court is to determine whether SPAs, entered into before the corresponding Blue Chip investment products were executed, were subscriptions for securities.

D The cases are otherwise generally remitted to the High Court to make such further orders as may be consistent with this judgment.

E The respondents are to pay the appellants costs $75,000 and usual disbursements.

F Costs in the High Court and Court of Appeal are to be as determined by those courts.

9 August 2012

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Recall judgment

Former order F now replaced by orders F, G and H.

F The existing orders for costs in the High Court and Court of Appeal are set aside.

G Other than those affected by timing issues (being Mr Hutchinson in the case of TWL, and in the case of Greenstone Barclay, Mr and Mrs Bogardus, Ms Janes, Mrs and Mrs Johnson, Mr Crawford-Greene, Mr and Mrs Dick and Mr and Mrs Lester) the appellants are to be awarded costs and disbursements in the High Court and Court of Appeal in sums to be determined by those Courts in light of the judgment of this Court.

H Costs and disbursements in relation to the appellants affected by timing issues are to be addressed in the High Court and Court of Appeal once those timing issues have been resolved.

11 December 1012

Additional Information

Transcript Hearing date : 7 – 9 November 2011
Elias CJ, Tipping, McGrath, William Young, Anderson JJ.