Broad v Kishore - [2019] NZHC 108

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2018-404-1904

[2019] NZHC 108

UNDER the Insolvency Act 2006

IN THE MATTER

of the proposal of ASHOK MAHARAJ under sub-Part 2 of Part 5 of the Act

BETWEEN

PETER JAMES BROAD as trustee named in the proposal

Applicant

AND

NICK NAND KISHORE as an unsecured creditor named in the proposal

Respondent

Hearing: 5 February 2019

Appearances:

P Broad the Provisional Trustee, in person B Cunningham for the Insolvent

R V Sami for Mr Kishore, an opposing creditor

Judgment:

12 February 2019

JUDGMENT OF ASSOCIATE JUDGE SMITH

This judgment was delivered by me on 12 February 2019 at 3.30pm, pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Solicitors / Counsel:
Skeates Law, Auckland
B Cunningham, Auckland Murdoch Price Auckland P Broad, Auckland

MAHARAJ v KISHORE [2019] NZHC 108 [12 February 2019]

[1] Mr Peter Broad, the provisional trustee in respect of a proposal to creditors made by Mr Ashok Maharaj under Part 5, subpart 2, of the Insolvency Act 2006 (the Act), applies for approval of Mr Maharaj's proposal to his creditors.

[2] A meeting of creditors was duly convened in accordance with the Act. Some of the creditors opposed Mr Maharaj's proposal, but Mr Broad's report of the meeting shows that the required majority of creditors (both in number and in value) supported the proposal. However, one of the opposing creditors, Mr Nick Kishore, has filed a notice of opposition to Mr Broad's application for approval of the proposal.

[3] Mr Kishore's principal ground of opposition is that the trustee ought not to have accepted the claim of one creditor, Westminster Finance Limited (Westminster). Westminster was by far the largest claimant, with a claim of $356,478.92, and Mr Kishore says that if the trustee had not accepted Westminster's sum at that figure the required majority of creditors voting1 would not have been met. The trustee should have rejected the proof of debt submitted by Westminster, or capped it at a reasonable sum. In either event, the requisite three-quarters in value of the debts of all creditors present and voting would not have been achieved.

Mr Maharaj's statement of affairs and proposal

Statement of affairs

[4] In his statement of affairs sworn on 5 September 2018, Mr Maharaj said that he had been trading as a builder through Victory Builders & Developers Ltd (Victory) for the past few years. Initially Victory was profitable, but later it suffered a downturn in fortunes and it was eventually put into liquidation on 2 March 2018. Mr Maharaj said that Victory was his only source of income, and his personal cashflow and ability to meet his financial obligations dried up when Victory was liquidated. Also, he said that he had recently been suspended as a licensed building practitioner for a period of six months, and that has affected his ability to obtain construction work or other employment. Mr Maharaj deposed that he could not…

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.

Continue reading Broad v Kishore

Details

AGLC: Broad v Kishore [2019] NZHC 108
Case: [2019] NZHC 108
Decision Date: 12 February 2019

CaseChat Overview and Summary

Broad v Kishore [2019] NZHC 108 involved an application by Peter Broad, the provisional trustee, to the High Court for approval of a proposal made by Ashok Maharaj, under subpart 2 of Part 5 of the Insolvency Act 2006. The proposal sought to pay unsecured creditors 15 cents in the dollar on their debts. A meeting of creditors was convened, and while the required majority in number and value of creditors supported the proposal, Nick Kishore, an opposing creditor, filed a notice of opposition to the application for approval. Kishore's principal ground of opposition was that the trustee should not have accepted the claim of Westminster Finance Limited, as it was excessively high and would have impacted the majority vote in favour of the proposal. Kishore also contended that the proposal was not reasonable or expedient to approve, citing Maharaj's incompetence as a businessman and builder, as well as the lack of clarity on the funding source for the proposal. The court considered whether the proposal complied with the provisions of the Act, whether it was reasonable, and whether it was expedient to approve it. The court found that the proposal was not reasonable due to its vagueness and lack of clarity on the funding source. Additionally, the court found that it was not expedient to approve the proposal due to concerns about Maharaj's commercial reliability and the need to protect the public from his past conduct. As a result, the application for an order approving the proposal was refused.

Orders