Christie v Dorchester Finance Ltd HC Auckland CIV 2011-404-000100

[2011] NZHC 265

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2011-404-000100

UNDER  THE INSOLVENCY ACT 2006

BETWEEN  WAYNE EMERY CHRISTIE Insolvent

ANDDORCHESTER FINANCE LTD, DUN & BRADSTREET (NEW ZEALAND) LTD, RECEIVABLES MANAGEMENT (NZ) LTD, AVANTI FINANCE LTD, COLLECTION HOUSE (NZ) LTD, ASB BANK LTD, BAYCORP NZ LTD, PAYDAY ADVANCE LTD

Creditors

Appearances: W E Christie in person

Judgment:      29 March 2011

ORAL JUDGMENT OF ASSOCIATE JUDGE ABBOTT

Solicitors:

Barter & Co, PO Box 197, Albany Village for trustee

W E Christie, 35A Batkin Road, Avondale 0600 insolvent in person

CHRISTIE V DORCHESTER FINANCE LTD & ORS HC AK CIV 2011-404-000100 29 March 2011

[1]      Wayne Emery Christie has filed a proposal in this court for a compromise with his creditors.  He has disagreements with the provisional trustee named in that proposal (Ms C Liggins) and has filed an application to cancel the proposal.

[2]      Ms Liggins, whom I infer was subsequently appointed trustee at a creditors’ meeting, has a slightly different view of the issues between herself and Mr Christie, but she accepts that the proposal cannot proceed, and has filed a memorandum requesting that it be withdrawn or cancelled.

[3]      Mr Christie’s creditors appear to accept that the proposal should not proceed. The only matter which the court needs to consider is the proper process to bring it to an end.

Background

[4]      Mr Christie filed his proposal on 13 January 2011.  He proposed making the sum  of  $65,000  available  to  his  creditors  over  a  5  year  period,  by  weekly instalments.   After deduction of the trustee’s fees and expenses, that would have resulted in the creditors receiving almost the whole of their debts.

[5]      After the proposal was filed, but before any creditors’ meeting was held, Mr Christie wished to change some of the terms, in particular by excluding a bank debt (the reason seems to be  that he was keen to retain a bank account which he might not otherwise have been able to do – although the evidence is not clear on this). After the trustee was unwilling to accept his changes (she informed him that he could not pick and choose which creditors to include and exclude) Mr Christie purported to discharge the trustee on 31 January 2011, and then approached his creditors with a view to making separate arrangements with each.  It appears that the overall effect was still to try to clear all of his debts.

[6]      By the time that Mr Christie purported to dispense with the services of the trustee, the statutory process was in place, and creditors had been notified of a meeting (scheduled for 9:00am on 17 February 2011).  Additionally, the trustee (still provisional at that point) had received postal votes from creditors.

[7]      The trustee informed Mr Christie on 9 February 2011 that he would need to obtain the court’s permission to withdraw.  He had not done so by the time set for the creditors’ meeting.  The trustee has provided an affidavit stating that there were no creditors attending the meeting in person, but that all creditors submitted postal votes and none voted against the proposal.   I also infer that the creditors endorsed the provisional trustee as trustee for the proposal.

[8]      Subsequent to the time of the meeting, the trustee adds that she received a call from a creditor claiming that it should have been admitted as a secured rather than an unsecured creditor.   This does not change the overall outcome to this application, but it does demonstrate the concerns that the trustee had  about the approaches being made direct by Mr Christie to his creditors and the information she received.

[9]      By  memorandum  dated  25  March  2011  the  trustee  has  sought  leave  to withdraw.  She states in her affidavit in support her grounds for doing so are:

(a)       I did not believe some of the things Mr Christie had said were true;

(b)      I did believe that Mr Christie would comply with terms of the proposal; (c) I felt that I could no longer act as trustee for Mr Christie.

As this affidavit was only sworn on 25 March 2011, Mr Christie may not have had time to respond to those statements.

[10]     The trustee states in her affidavit that she wrote to creditors on 14 March

2011, seeking their mandate on her proposal to withdraw and for the proposal to be cancelled.  In that letter she said that she felt that she was likely to be compromised by Mr Christie’s wish to withdraw, and was not confident that he would honour the terms of the proposal as had been put to the creditors.  The trustee says that she has received confirmation and support from all creditors to withdraw this proposal from the court.

Consideration

[11]     Once a proposal is filed, the court has overall control of what happens to it. The insolvent has no statutory entitlement to withdraw once the statutory procedure is under way.  Similarly, there is no express statutory power for the trustee to seek to withdraw before the matter is put before the court.  The trustee may apply to vary or cancel the proposal after it is approved by the court (s 339(1)(a) of the Insolvency Act 2006) but does not appear to have any discretion up to that time, and particularly after the proposal has been approved at a meeting of creditors.  Having said that, I consider that it must be open to the court to make an order cancelling a proposal before it is brought to the court for approval, as in this case. There is little purpose in requiring a trustee to proceed to bring an application for approval, simply to give the court jurisdiction under s 333(3)(c) of the Act to refuse to approve the proposal if, for any reason, it is not expedient that it be approved.

[12]     I am satisfied that in the particular and unusual circumstances of this case, where all creditors have been  advised  of the difficulties and have consented to withdrawal, that the court can exercise its inherent jurisdiction to dismiss a proceeding,  without  insisting  that  the trustee  apply formally for  approval  under s 333(1) of the Act.  In my view that would put both the trustee and the insolvent to unnecessary expense, in this case potentially to the detriment of creditors.   The outcome may well have been different had any one of the creditors wished to retain the proposal as put to them and agreed at the meeting. I also add that I have been advised in court today that Mr Christie has come to agreement with all but one of his creditors and that last creditor has indicated that it is deferring its agreement until it receives confirmation that the proposal has been withdrawn or cancelled.

[13]     I make an order cancelling the proposal filed on 13 January 2011.

Associate Judge Abbott