Baldock v ASB Bank Limited - [2022] NZHC 637

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2021-404-1794

[2022] NZHC 637

UNDER the Insolvency Act 2006

BETWEEN

LOGAN PHILLIP BALDOCK

Insolvent

AND

ASB BANK LIMITED

FINANCE NOW LIMITED t/as WAREHOUSE

HARMONEY LIMITED

LATITUDE FINANCIAL SERVICES LIMITED

Creditors

Hearing: 3 February 2022

Appearances:

B Jones for the Insolvent

Judgment:

31 March 2022

JUDGMENT OF ASSOCIATE JUDGE SUSSOCK

This judgment was delivered by me on 31 March 2022 at 4.00pm pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Solicitors:
Webster Malcolm Law, Warkworth

BALDOCK v ASB BANK LTD & ORS [2022] NZHC 637 [31 March 2022]

Introduction

[1] The insolvent, Mr Logan Phillip Baldock, seeks approval of a creditors’ proposal under part 5 subpart 2 of the Insolvency Act 2006.

[2] The insolvent filed his proposal on 1 September 2021. Through his provisional trustee, Christine Higgins, Mr Baldock then followed the procedure for putting that proposal by notice to his creditors together with the information required under the Insolvency Act.

[3] Notice was given to every known creditor on 21 September 2021 that a meeting of creditors would be held on 28 October 2021 to consider the proposal.

[4]The notice was accompanied by the following:

(a)a statement of the assets, debts and liabilities of the insolvent;

(b)a list of the insolvent’s creditors affected by the proposal and showing the amounts of their claims;

(c)a copy of the insolvent’s proposal, a claim form (proof of debt) and a postal voting letter.

[5] On 27 October 2021 the provisional trustee gave notice to every known creditor that an online creditors’ meeting would be held.

[6] The meeting of creditors was held on 28 October 2021. No creditors personally attended as they had each provided postal votes in advance accepting the proposal.

[7] The proposal was therefore accepted by a majority in number and three quarters in value of the creditors who voted by postal vote, as required by s 331 of the Insolvency Act.

Court’s approval of proposal – legal principles

[8] Following the acceptance of the proposal by the creditors, the trustee is required to apply to the Court for approval. Section 333 of the Insolvency Act provides:
333 Court must approve proposal
(1)After the proposal has been accepted by the creditors, the trustee must, as soon as practicable,—
(a)apply to the court for approval of the proposal; and
(b)send notice of the hearing of the application in the prescribed form to the insolvent and to each known creditor.

(2)The court must, before approving a proposal, hear any objection that is made by or on behalf of a creditor.
(3)The court may refuse to approve the proposal if it considers that—
(a)the provisions of this subpart have not been complied with; or
(b)the terms of the proposal are not reasonable or are not calculated to benefit the general body of creditors; or
(c)for any reason it is not expedient that the proposal be approved.

(4)The court must not approve…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2022] NZHC 637
Decision Date: 31 March 2022

CaseChat Overview and Summary

The High Court of New Zealand was presented with a case involving Logan Phillip Baldock, an insolvent individual, and several creditors, including ASB Bank Limited, Finance Now Limited trading as Warehouse, Harmony Limited, and Latitude Financial Services Limited. Baldock sought approval of a creditors’ proposal under the Insolvency Act 2006. The proposal was to make fortnightly payments from Baldock's employment income over three years to cover all proven debts, contingent on certain conditions. The creditors had accepted the proposal by postal votes.

The legal issues the court had to decide included whether the proposal complied with the statutory requirements, whether it was reasonable and calculated to benefit the general body of creditors, and if there was any reason why it would not be expedient to approve the proposal. The court had to consider if the proposal provided for the payment of priority debts, the trustee's fees, and costs incurred by others in organising the creditors' meeting.

The court found that the proposal complied with the statutory requirements, as the necessary documents had been filed and any formal or accidental errors had been corrected. The court also concluded that the proposal was reasonable and advantageous for the creditors, as it would recover more debt than alternative methods. The court found no reason why it would not be expedient to approve the proposal, and it satisfied the requirements of section 333(4) of the Insolvency Act, as there were no priority debts and the trustee's fees and expenses were provided for.

The court approved the proposal of Logan Phillip Baldock filed on 1 September 2021 pursuant to section 333 of the Insolvency Act. The insolvent's proposal would be implemented, and the creditors would receive payments as outlined in the proposal.

Orders