Dancingonmoonlight Limited v Shim

[2022] NZHC 268

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2020-404-1370

[2022] NZHC 268

UNDER

the Insolvency Act 2006

IN THE MATTER OF

the bankruptcy of THATT KIONG SHIM

BETWEEN

DANCINGONMOONLIGHT LIMITED

Judgment Creditor/Respondent

AND

THATT KIONG SHIM

Judgment Debtor/Applicant

Hearing:	14 February 2022
Appearances:	Michael Heard and Christopher Smol for the Applicant Charles Jones for the Official Assignee
Judgment:	25 February 2022

JUDGMENT OF ASSOCIATE JUDGE C B TAYLOR

This judgment was delivered by me on  25 February 2022  at 4:00pm

pursuant to Rule 11.5 of the High Court Rules

…………………………. Registrar/Deputy Registrar

Solicitors:

LeeSalmonLong (Michael Heard/Christopher Smol), Auckland, for the Applicant Official Assignee (Charles Jones), Auckland, for the Respondent

DANCINGONMOONLIGHT LIMITED v SHIM [2022] NZHC 268 [25 February 2022]

Introduction

[1]    Mr Thatt Kiong Shim was adjudicated bankrupt on 3 February 2021, on Dancingonmoonlight Ltd’s application. He has applied for that adjudication to be annulled on the basis that there has been a substantial change in his financial circumstances since the date of the adjudication.1

[2]    The relevant change is that a settlement proposal Mr Shim intended to offer Dancingonmoonlight Ltd before his adjudication (but which was not offered due to a third party’s error) has now been offered and accepted, and Mr Shim’s other creditors all either consent, or do not object, to his annulment application.

Background

[3]    Mr Shim was adjudicated bankrupt on 3 February 2021, on Dancingonmoonlight Ltd’s application. It is said that this adjudication could have been avoided had Mr Shim’s co-guarantor  on  his  guarantee  to Dancingonmoonlight Ltd communicated a settlement offer that Mr Shim wished to make before the adjudication.

[4]    Westpac and ANZ filed proofs of debt in the bankruptcy. Mr Shim also has some other liabilities that were not provable in the bankruptcy.

[5]    Mr Shim applied for annulment of his bankruptcy on 8 June 2021. Shortly thereafter, Mr Shim and Dancingonmoonlight Ltd signed a settlement deed that is conditional on the annulment of the bankruptcy.  It provides for the  resolution of  Mr Shim’s debt to the company.

[6]    Mr Shim’s other creditors either consent to, or do not oppose, the annulment application. It is said that Mr Shim can satisfy his debts to those parties as well as costs and disbursements of the Official Assignee..

[7]    The Official Assignee has filed a report with the Court dated 8 July 2021, which states that the Official Assignee ad been contacted regarded potential claims by

1      Insolvency Act 2006, s 309(1)(c).

FE Investments Ltd (a company in receivership and liquidation) (FE Investments). Mr Shim was an executive director of  that  company  between  July  2003  and  April 2019.

[8]    On 26 July 2021, the Official Assignee gave notice to Rhys Cain, as liquidator of FE Investments, and Brendon Gibson and Neale Jackson, as receivers of that company, that if they wished to file a claim in Mr Shim’s bankruptcy, they should do so by Friday 6 August 2021.

[9]    Mr Cain filed a claim for $553,000 on FE Investments’ behalf. The explanation was:

The above amount relates to money transferred from FE Investments Ltd (In Liquidation) to related parties of Mr Shim – Federal Securities (In Liquidation) and Eagle Pacific Limited. As Liquidator, we may have options for the recovery of these related party fees under various sections of the Companies Act legislation including section 292 or section 297 with respect to Voidable Transactions and section 298 regarding transactions for inadequate or excessive consideration with Directors. These may be contestable however we rely on the sections of the Companies Act which put onus on Mr Shim to prove us wrong. It should also be noted that the analysis undertaken on Mr Shim and FE Investments shows that the transferred funds were transferred to Mr Shim personally.

[10]Put differently:2

The liquidator considers that Mr Shim faces potential liabilities in relation to Federal Securities Limited and Eagle Pacific Limited, and those liabilities would be for voidable transactions under s 292 of the Companies Act 1993 and for transactions of Mr Shim as director under ss 297 and 298 of the Companies Act.

[11]   On 12 August 2021, Associate Judge Bell directed that the Official Assignee notify the liquidator of FE Investments of Mr Shim’s annulment application, and that the  liquidator   file   and   serve   any   notice   of   opposition   and   affidavits   by   3 September 2021. No notice of opposition or affidavits were filed.

[12]   Mr Shim says FE Investments’ claim does not alter the merits of his annulment application. He disputes that there have been any transactions that could be set aside.

2      Dancingonmoonlight Ltd v Shim HC Auckland CIV-2020-404-1370, 12 August 2021 (Minute of Associate Judge Bell) at [5].

[13]   On 9 February 2022, Mr Cain sent an email to the Official Assignee’s solicitor, advising that he had recalculated the company’s claim against Mr Shim to no longer attribute to him 50 per cent of the funds that had been paid to Federal Securities Ltd under the assumption that they were payable 50/50 by Mr Shim and his co-director, Mel Stewart. Mr Cain reduced the amount claimed to $400,000.

Official Assignee’s Reports

[14]   The Official Assignee has filed three reports in relation to Mr Shim’s application for annulment. The first report, dated 15 July 2021, sets out the background to Mr Shim’s bankruptcy, sets out the position with regard to his creditors at the date of the report, and the position regarding his assets at the date of the report. It also refers to the initial contact by the liquidator of FE Investments regarding a potential claim.

[15]   The second report was the supplementary report dated 6 August 2021. That report deals with the Official Assignee’s notice to the liquidator of FE Investments advising the liquidator that if he wished to submit a claim in Mr Shim’s bankruptcy he needed to do so by 6 August 2021.   It also deals with the liquidator’s advice of       4 August 2021 raising the claims against Mr Shim under ss 292, 297 and 298 of the Companies Act 1993.

[16]   The final  report filed by the Official Assignee is  an updating report dated    9 February 2022. That report updates the Court in respect of Mr Shim’s application for annulment, and also attaches relevant correspondence with the liquidator. In an email from the liquidator to the Official Assignee dated 9 February 2022, the liquidator indicated that the amount claimed against Mr Shim has been reduced to $400,000. The stated basis for the claim is s 292 of the Companies Act.

Applicant’s submissions

[17]   Mr Heard, for Mr Shim, submits that Mr Shim has a strong case for annulment under s 309(1)(c) of the Insolvency Act 2006 because:3

3 Submissions in support of annulment application dated 8 February 2022 at [22].

(a)His financial position has fundamentally changed consequent on his resolution with the judgment creditor;

(b)That resolution would have avoided bankruptcy in the first place but for an error outside Mr Shim’s control;

(c)No creditor opposes annulment;

(d)The liquidator’s proof does not properly establish any basis for the assertation that there is a provable debt;

(e)Mr Shim contests, strongly, that there is any such basis at all.

[18]   Mr Heard also submits that a possible voidable preference claim is not itself a provable debt. He says a provable debt is a debt or liability that the bankrupt owes at the time of adjudication, or after adjudication but before discharge, by reason of an obligation incurred by the bankrupt before adjudication. Mere possibility of a voidable transaction falls within neither category. To hold otherwise would be to undermine the annulment regime.4

[19]   Mr Heard submits that any claim under s 292 of the Companies Act is barred. No notice of a voidable transaction has been filed and served by the liquidator. There is no basis on which to find the existence of a debt provable in the bankruptcy. Even if such notice had been given, it would not suffice to prove a debt in Mr Shim’s bankruptcy.5

[20]   In Mr Heard’s submission, the liquidator has provided no proper support for the assertion that there are claims against Mr Shim. In any event, any attempt by the liquidator to establish a  debt would require court proceedings, which are  barred by  s 76 of the Insolvency Act.6

[21]   Mr Heard submits that annulment of Mr Shim’s bankruptcy is appropriate.  Mr Shim disputes that the liquidator’s claim could ever be proved. In circumstances where no proceeding in respect of debt claims was filed before the adjudication, all confirmed creditors either consent to or do not oppose the annulment, and no objection

4      At [23]–[25], citing Vegar v Aorangi Forests Ltd [2014] NZHC 1109 at [22].

5      At [26]–[30], citing Insolvency Act, s 76.

6      At [31]–[32].

to the application has been lodged,  it  is  appropriate to  grant  an  application under s 309)(1)(c).7

Submissions by counsel for the Official Assignee

[22]   Mr Jones, for the Official Assignee, noted in his address to the Court that orders under s 309(1)(c) are not commonly given, and there is a dearth of judgments in relation to these orders.

[23]   Mr Jones contrasted the situation in relation to Mr Shim’s application for annulment with the situation where all the bankrupt’s debts are being paid at the time of annulment. He referred me to Re Green ex parte Bank of New Zealand,8 a decision of Associate Judge Sargisson. In that instance, the bankrupt paid into Court sufficient funds to cover other creditors’ claims, thereby providing certainty that the creditors will be paid.

[24]   In the present case, there is not the same certainty that all creditors will be paid. The creditors, other than the judgment creditor, are:

(a)ASB Bank, being a liability of Mr Shim under a guarantee in respect of its mortgage over two trust-owned properties. The amount owing under that mortgage is approximately $2 million.

(b)ANZ Bank New Zealand — being an unsecured claim for credit card debt totalling approximately $25,000.

(c)Westpac Bank — being unsecured claims for personal credit card debts and overdraft on the joint account, totalling approximately $25,000.

(d)Toyota Finance, for an amount of approximately $3,000.

7      At [33]–[36], citing Ensom v National Glass HC Auckland CIV 2008-404-4374, 14 July 2009 at [2].

8      Re Green ex parte Bank of New Zealand HC Auckland CIV-2006-404-6480, 11 February 2008.

Mr Jones submitted that these are not insignificant amounts and Mr Shim has not provided a lot of information as to how he will make payment of these claims, other than indicating he will pay them from his consulting income in Malaysia.9

[25]   On the other side of the ledger, Mr Jones referred to the Ensom10 decision, in which, notwithstanding two claims were not paid, an order under s 309(1)(c) was made.

[26]   Finally, Mr Jones submitted that if the liquidator’s claim is “a prospective creditor”, meaning it is not a provable debt, then it does not need to be taken into account in the consideration of Mr Shim’s annulment application. If it is not a provable debt, then Mr Shim is not released from a potential claim under s 304 of the Insolvency Act and the liquidator will be able to pursue that claim against Mr Shim. Mr Jones also submitted that if the liquidator’s claim is not a provable debt, then an action to pursue it by the liquidator is not barred by s 76 of the Insolvency Act. This is contrary to Mr Heard’s submission that s 76 bars an action by the liquidator to bring claims against Mr Shim under ss 292, 297 or 298 of the Companies Act.

[27]   In his reply, Mr Heard did not take issue with Mr Jones’ submission in relation to s 76. On review of s 76, I agree with Mr Jones’ submission that s 76 does not operate to bar the liquidator’s claims against Mr Shim if these claims are not provable debts for the purposes of s 232.

Legal principles

[28]Section 309 of the Insolvency Act 2006 provides, in relevant part:

309     Court may annul adjudication

(1)The court may, on the application of the Assignee or any person interested, annul the adjudication if—

…

(c)the court considers that the liability of the bankrupt to pay his or her debts should be revived because there has been a

9 Affidavit of Mr Shim dated 11 February 2022 at [13].

10     Ensom v National Glass, above n 7.

substantial change in the bankrupt’s financial circumstances since the date of adjudication … .

[29]   Section 309(1)(c) requires only that a change in circumstances has occurred that means the bankrupt can satisfy his or her debts.11

[30]A “provable debt” within the meaning of the Act entails:

231Meaning of provable debt

(1)A provable debt is a debt or liability that a creditor of the bankrupt may prove in the bankruptcy.

(2)A creditor’s claim form is the document that a creditor submits to the Assignee for the purpose of proving the debt.

(3)A debt is proved when it is admitted by the Assignee.

232What debts are provable debts

(1)A provable debt is a debt or liability that the bankrupt owes—

(a)at the time of adjudication; or

(b)after adjudication but before discharge, by reason of an obligation incurred by the bankrupt before adjudication.

…

[31]   A creditor in a bankruptcy must submit a creditor’s claim form to the Assignee within a specified time limit, which must comply with prescribed formalities and be submitted using the correct procedure.12 The relevant formalities are found in the Insolvency (Personal Insolvency) Regulations 2007:

12       Creditor’s claim form

(1)A creditor’s claim form under section 233 or 247 must—

(a)be signed by the person completing the form; and

(b)be dated; and

(c)have attached to it evidence of the debt and any other evidence supporting the claim.

11     Memelink v Official Assignee [2019] NZHC 1357 at [50]–[51], citing Stephen Revell and John Walsh (eds) Insolvency Law and Practice (online ed, Thomson Reuters) at [IN309.06].

12     Insolvency Act, s 233.

…

[32]   It is for the creditor to establish its claim on the balance of probabilities.13 The creditor is required to provide cogent evidence confirming or corroborating the claim.14

[33]   It is also necessary to set out those provisions of the Companies Act’s voidable transactions regime on which FE Investments’ liquidator relies:

292     Insolvent transactions voidable

(1)A transaction by a company is voidable by the liquidator if it—

(a)is an insolvent transaction; and

(b)is entered into within the restricted period.

(1A)     A transaction by a company is voidable by the liquidator if it—

(a)is an insolvent transaction; and

(b)is entered into with a related party of the company within the related party period.

(2)An insolvent transaction is a transaction by a company that—

(a)is entered into at a time when the company is unable to pay its due debts; and

(b)enables another person to receive more towards satisfaction of a debt owed by the company than the person would receive, or would be likely to receive, in the company’s liquidation.

…

(4A) A transaction that is entered into within the restricted period is presumed, unless the contrary is proved, to be entered into at a time when the company is unable to pay its due debts.

(4C)     Where—

(a)a transaction is, for commercial purposes, an integral part of a continuing business relationship (for example, a running account) between a company and a creditor of the company (including a relationship to which other persons are parties); and

13     H Investments Ltd (in liq) v Official Assignee [2018] NZCA 76, [2019] NZCCLR 11 at [41].

14     See Walker v Official Assignee [2014] NZHC 975 at [37]; and Horton v McKillen [2015] NZHC 3134 at [33].

(b)in the course of the relationship, the level of the company’s net indebtedness to the creditor is increased and reduced from time to time as the result of a series of transactions forming part of the relationship;

then—

(c)subsections (1) and (1A) (as relevant) apply in relation to all the transactions forming part of the relationship as if they together constituted a single transaction; and

(d)the transaction referred to in paragraph (a) may only be taken to be an insolvent transaction voidable by the liquidator if the effect of applying subsection (1) or (1A) in accordance with paragraph (c) is that the single transaction referred to in paragraph (c) is taken to be an insolvent transaction voidable by the liquidator.

…

297Transactions at undervalue

(1)Under subsection (2) the liquidator may recover from a person (X) the amount C in the formula A − B = C, where—

(a)A is the value that X received from a company under a transaction to which the company was or is a party; and

(b)B is the value (if any) that the company received from X under the transaction.

(2)The liquidator may recover the difference in value (that is, C in the formula in subsection (1)) from X if—

(a)the company entered into the transaction within the specified period; and

(b)either—

(i)the company was unable to pay its due debts when it entered into the transaction; or

(ii)the company became unable to pay its due debts as a result of entering into the transaction.

…

298Transactions for inadequate or excessive consideration with directors and certain other persons

(1)Where, within the specified period, a company has acquired a business or property from, or the services of,—

(a)a person who was, at the time of the acquisition, a director of the company, or a nominee or relative of or a trustee for, or a trustee for a relative of, a director of the company; or

(b)a person, or a relative of a person, who, at the time of the acquisition, had control of the company; or

(c)another company that was, at the time of the acquisition, controlled by a director of the company, or a nominee or relative of or a trustee for, or a trustee for a relative of, a director of the company; or

(d)another company that was, at the time of the acquisition, a related company,—

the liquidator may recover from the person, relative, company, or related company, as the case may be, any amount by which the value of the consideration given for the acquisition of the business, property, or services exceeded the value of the business, property, or services at the time of the acquisition.

(2)Where, within the specified period, a company has disposed of a business or property, or provided services, or issued shares, to—

(a)a person who was, at the time of the disposition, provision, or issue, a director of the company, or a nominee or relative of or a trustee for, or a trustee for a relative of, a director of the company; or

(b)a person, or a relative of a person, who, at the time of the disposition, provision, or issue, had control of the company; or

(c)another company that was, at the time of the disposition, provision, or issue, controlled by a director of the company, or a nominee or relative of or a trustee for, or a trustee for a relative of, a director of the company; or

(d)another company that, at the time of the disposition, provision, or issue, was a related company,—

the liquidator may recover from the person, relative, company, or related company, as the case may be, any amount by which the value of the business, property, or services, or the value of the shares, at the time of the disposition, provision, or issue exceeded the value of any consideration received by the company.

(3)For the purposes of this section,—

(a)the value of a business or property includes the value of any goodwill attaching to the business or property; and

(b)the provisions of section 7 apply with such modifications as may be necessary to determine control of a company.

[34]The process for seeking to set aside an insolvent transaction is set out in s 294:

294     Procedure for setting aside transactions and charges

(1)A liquidator who wishes to set aside a transaction or charge that is voidable under section 292 or 293 must—

(a)file a notice with the court that meets the requirements set out in subsection (2); and

(b)serve the notice as soon as practicable on—

(i)the other party to the transaction or the charge holder, as the case may be; and

(ii)any other party from whom the liquidator intends to recover.

(2)The liquidator’s notice must—

…

(3)The transaction or charge is automatically set aside as against the person on whom the liquidator has served the liquidator’s notice, if that person has not objected by sending to the liquidator a written notice of objection that is received by the liquidator at his or her postal, email, or street address within 20 working days after the liquidator’s notice has been served on that person.

(4)The notice of objection must contain full particulars of the reasons for objecting and must identify documents that evidence or substantiate the reasons for objecting.

(5)A transaction or charge that is not automatically set aside may still be set aside by the court on the liquidator’s application.

[35]   The voidable preference jurisdiction is retrospective, with the Court exercising a discretion to require payments to be made to the company in liquidation so that the recipient of a payment is put in the same position as creditors of the company who did not receive payments and who share in any distribution made in the liquidation.15

[36]For completeness, s 76 of the Insolvency Act should also be noted:

76       Effect of adjudication on court proceedings

(1)On adjudication, all proceeding to recovery any debt provable in the bankruptcy are halted.

(2)However, on the application by any creditor or other person interested in the bankruptcy, the court may allow proceedings that had already

15     Timberworld Ltd v Levin [2015] NZCA 111, [2015] 3 NZLR 365 at [66], citing Allied Concrete Ltd v Meltzer [2015] NZSC 7, [2016] 1 NZLR 141 at [95].

begun before the date of adjudication to continue on the terms and conditions that the court thinks appropriate.

Analysis

[37]   I am of the view that in the main Mr Heard’s submissions are  correct. Section 232 of the Insolvency Act states that a provable debt is a debt or liability that the bankrupt owes at the time of adjudication, or after adjudication but before discharge, by reason of an obligation incurred by the bankrupt before adjudication. The unconfirmed possibility of a voidable transaction falls within neither category, as submitted by Mr Heard.

[38]   Mr Heard has referred me to Vegar v Aorangi Forests Ltd.16 It is worthwhile briefly reiterating the facts of this decision. The prospective creditors in that case challenged the rejection of their votes on a proposal made under s 326 of the Insolvency Act, which had been made on the basis that they were not voters with a provable debt. One claim was framed on the basis that money paid to Mrs Vegar was a voidable transaction (though this claim was then re-cast as money owed on current account). Brewer J considered that the claimants were “prospective creditors” rather than contingent or future creditors. He could not “point to an existing obligation which can be called upon in a contingent event. The claims amount to allegations of present liability which are contested and which are, as yet, unproven”.17 Holding the claims were not provable debts and could not enable the claimants to vote, Brewer J stated:18

[24] The creditors’ proposals regime would be significantly undermined if prospective creditors with disputed claims could assert the same rights at creditors’ meetings as those with provable debts. Such claims could take a year or longer to resolve, and could result in no claim being proven. Parliament removed the words “present or future, certain or contingent” from the definition of “provable debts”. It is not for me to reinstate them.

I respectfully adopt the formulation of Brewer J in the Vegar case, as being relevant to the present circumstances. The claims of a “prospective creditor” of the liquidator are unproven claims and the liquidator is, in my view, a prospective creditor only.

16     Vegar v Aorangi Forests Ltd, above n 4.

17 At [2].

18 At [24].

[39]   The prospective nature of the liquidator’s claims is further reinforced by a consideration of what would be required by the liquidator to establish a voidable transaction in respect of Mr Shim under s 292.

[40]   Section 294 of the Companies Act provides for the procedure relating to voidable transactions. A liquidator must file a notice in the requisite form with the Court and serve it on the relevant parties.19 That initiates a procedure whereby the transaction is set aside unless the served party sends the liquidator a notice of objection within 20 working days.20

[41]   If a notice is served and a party objects, the liquidator must file an application to the Court for an order setting aside the transaction.21 If a notice of voidable transaction has been filed and no notice of objection is provided, the transaction is automatically set aside.

[42]Mr Heard submits in the present case:

(a)no notice of voidable transaction has been filed and served by the liquidator;

(b)that there is no extant basis on which to find the existence of a provable debt in a bankruptcy;

(c)even if such a notice had been served, the notice process alone is insufficient to create the obligation or liability sufficient to prove a debt in Mr Shim’s bankruptcy, which would inevitably require seeking a Court order; and

(d)s 76 is a bar to the liquidator obtaining a Court order.

[43]   I accept Mr Heard’s submissions in this respect, except in respect of any claims by the liquidator being barred by s 76 of the Insolvency Act. As Mr Jones has pointed

19     Companies Act 1993, s 294(1).

20     Section 294(3).

21     Section 294(5).

out, s 76 is only a bar to the liquidators’ bringing a claim if the claim against Mr Shim under s 292 was a provable debt which, as determined above, it is not.

[44]   Accordingly, I find that the liquidator’s potential claim against Mr Shim under s 292 is not a provable debt for the purposes of s 232 of the Insolvency Act, and in respect of such potential claims the liquidator is a prospective creditor only. Consequently, it does not need to be taken into account in assessing Mr Shim’s application for annulment.

Position under sections 297 and 298 of the Companies Act

[45]   Mr Heard has submitted that the liquidator has not provided any proper support for the assertion that there are claims against Mr Shim under these sections of the Companies Act and, even if there were, any attempt to establish a debt by the liquidator would require Court proceedings. The potential claims of the liquidator under these sections do not amount to provable debts in the bankruptcy of Mr Shim and, as with the liquidator’s potential claim against Mr Shim under s 292, the liquidator is only a prospective creditor in relation to potential claims under ss 297 and 298 of the Companies Act. I accept Mr Heard’s submissions as correct.

[46]   As with the liquidator’s potential claim under s 292, as the potential claims by the liquidator under ss 297 and 298 are not provable debts, the bringing of proceedings by the liquidator in respect of such claims is not barred by s 76 of the Insolvency Act.

[47]   Finally, in relation to potential claims by the liquidators under s 297 and 298, it is unclear whether the liquidator is pursuing claims under these sections. In the liquidator’s correspondence with the Official Assignee of 9 February 2022,22 the liquidator’s only reference is to a claim under s 292. Even if the liquidator is pursuing claims under these sections, he is a prospective creditor only in respect of these claims, and they are not provable debts for the purposes of s 232 of the Insolvency Act.

22     Updating report of the Official Assignee dated 9 February 2022, Exhibit A.

Is annulment of Mr Shim’s bankruptcy appropriate?

[48]   The final issue to be considered is whether it is appropriate for Mr Shim’s bankruptcy adjudication to be annulled.

[49]   The main issue that needs to be considered in this context  is the fact that    Mr Shim is not making arrangements to pay all his creditors at the time his bankruptcy is annulled. As noted in the various reports of the Official Assignee, the creditors of Mr Shim, apart from the judgment creditor, are:

(a)Toyota Finance (now repaid).

(b)ANZ Bank New Zealand — unsecured claim for credit card debt (totalling approximately $25,000, although some of this debt may be disputed by Mr Shim).

(c)Westpac Bank — unsecured claims for personal credit card debt and overdraft debt (totalling approximately $25,000, although some of this debt may be disputed by Mr Shim).

(d)ASB Bank — guarantor for mortgages over two trust-owned properties

— a contingent liability of approximately $2 million.

Mr Shim has acknowledged he owes ANZ and Westpac Bank certain amounts of money, although there may be some dispute as to the quantum of his liability. He has, however, confirmed he will make payment of what is determined as owing by him to those banks. ASB Bank appears to be comfortable with its position as a secured creditor in respect of the trust properties.

[50]   Relevant  here  also  is  the  submission  made  by  Mr  Jones  for  the  Official Assignee. Mr Jones referred me to Re Green ex parte Bank of New Zealand.23 In that case, there were two parallel bankruptcy proceedings against Mr Green under the previous insolvency legislation, the Insolvency Act 1967. Mr Green paid into

23     Re Green ex parte Bank of New Zealand, above n 8.

Court a sufficient amount of money to cover all creditors’ debts. In that instance, there was certainty that the creditors would be paid.

[51]   However, Mr Heard has referred me to Ensom v National Glass,24 also referred to by Mr Jones. In that case, the applicant reached agreement with all his creditors regarding repayment of their debts, and none of those creditors opposed his application. While there were two further debts claimed no proceeding in respect of those claims has been filed in Court before the hearing of the application, nor had any objection to the application been lodged. Associate Judge Christiansen considered this enough of a change in circumstances that, in the context where nothing suggested an inability to meet promises on the part of the bankrupt, nor any wider considerations of public interest, the application should be granted under s 309(1)(c).25

[52]   In Mr Shim’s case, some more information about how he proposes to repay the ANZ Bank and Westpac Bank would have perhaps been helpful to the Court. However, neither of the banks are opposing the annulment and there are no grounds to suggest Mr Shim will not honour his commitment to making payments.

Result

[53]   I therefore order that Mr Shim’s bankruptcy be annulled under s 309(1)(c) of the Insolvency Act 2006.

Costs

[54]Costs are reserved.

[55]   The applicant and the Official Assignee are to endeavour to agree the  Official Assignee’s costs within five working days of the date of this judgment. The Official Assignee’s costs shall not exceed the sum of $19,876.44 held by the  Official Assignee in its trust account.

24     Ensom v National Glass, above n 7.

25 At [8].

[56]   If the applicant and the Official Assignee are unable to agree costs within the five working day period, then counsel for each of the parties may file a memorandum as to costs (not to exceed three pages) in the Court within a further five working days.

……………………………. Associate Judge Taylor