Edmonds v ASB Bank Limited

[2020] NZHC 496

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2019-409-493

[2020] NZHC 496

BETWEEN

JENNIFER ANNE EDMONDS and TIMOTHY DANIEL EDMONDS
Insolvents

AND

ASB BANK LIMITED, AVANTI FINANCE LIMITED, HARMONEY LIMITED,

CREDIT UNION BAYWIDE trading as NZCU SOUTH, LATITUDE FINANCIAL

SERVICES LIMITED trading as GEM, FLEXI CARDS LIMITED, CAN’T WAIT.COM LIMITED, ANDY AND DEE BALLAGH, CHAVVAH BROWN, CRAIG ELSTOB, DANNY AND ELIZABETH

EDMONDS and MARLENE AND SAM BALLAGH

Creditors

Hearing:	4 February 2020
Appearances:	G Davis for Trustee
Judgment:	12 March 2020

JUDGMENT OF ASSOCIATE JUDGE LESTER

This judgment was delivered by me on 12 March 2020 at 4.00pm pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar 12 March 2020

EDMONDS v ASB BANK LIMITED [2020] NZHC 496 [12 March 2020]

[1]                 This is a joint application by Mr and Mrs Edmonds for approval of a Creditors’ Proposal under Part 5 of the Insolvency Act 2006 (“the Act”).

[2]                 In a Minute I issued on 17 December 2019, I raised the issue of whether the Act permits joint proposals and I referred to Elder v Elder, which provided the Court has no ability to hear a joint Proposal.1

[3]                 The Trustee has filed a memorandum referring to an authority in which she says the Court permitted a joint proposal to be advanced.2

[4]                 As the Trustee was not able to supply a copy of the judgment, I requested that the file be made available. There is no judgment only a Minute approving the proposal. It does not discuss the validity of a joint proposal but it is an example of the Court giving its approval to a joint proposal.

[5]                 The Proposal made by Mr and Mrs Edmonds otherwise complies with the Act in that it is in the required form.

[6]                 Notice of the Proposal was given by the Trustee by way of email. I have in other judgments raised the point that the Act does not of itself permit the giving of notice of Proposals by way of email. The Act requires notice to be given by post. The Contract and Commercial Law Act 2017 sets out the requirements that must be met for notice go be given validly by email. An agreement on the part of the person to be provided with the information is required. No such agreement existed here, but the practical answer is that all creditors responded to the notice of Proposal (albeit two creditors responded late, but they did not oppose) and the Proposal was passed with the required majority of creditors in number and in value voting in favour.

1      Elder v Elder [2012] NZHC 289 at [2].

2      Pillay   and   Pillay   v   Collection   House   (NZ)   Ltd     HC Auckland CIV-2008-404-4430, 10 September 2008.

[7]                 The Proposal aims to return to creditors 85 cents in the dollar. The Proposal is designed in substance to allow the insolvents time to pay off their debts.

[8]                 I agree with the Trustee that the terms of the Proposal are reasonable and calculated to benefit the general body of creditors.

[9]                 In this case, secured creditors have not been brought into the Proposal. There is a requirement that all creditors be served and where a creditor is not served, that is a matter that goes to the Court’s discretion as to whether to approve the Proposal. The practical point is that the insolvents  run the  risk that the Proposal  will  not  bind  the secured creditors should they default in respect of a secured debt.

[10]              Given the support for the Proposal and the amount that is proposed to be paid to unsecured creditors, I consider the Proposal should be approved.

[11]              Notice of this application was given by the Trustee to creditors by email. I have in other judgments dealing with Proposals under the control of the same Trustee, made the observation that giving notice of this application by email does not meet the requirements of the Contract and Commercial Law Act 2017 for the giving of notice by email. However, as all creditors responded to the Proposal sent to the same email address being used by the Trustee to give notice of the application, I am prepared to treat  the notice  of this application as having been served, but  my doing so is  not    a precedent for that course to be adopted in the future. If it turns out that a creditor did not in fact receive notice and would have opposed this application for some reason, then the reality is that the creditor will have good grounds for applying to have the Proposal set aside.

[12]              As to the Proposal being a joint Proposal, at the risk of stretching a point, I am prepared to consider the Proposal on that basis, but again without creating an authority for that occurring in the future. The alternative is to dismiss the application and require the insolvents to incur further costs in starting afresh. The creditors were content to accept the Proposal on the basis that it was put and given the Proposal otherwise complies with the Act and is for the benefit of the creditors, there is an order approving

the proposal by the insolvent to the creditors under pt  5,  subpt  2  of  the  Insolvency Act 2006.

Associate Judge Lester

Solicitors:
Webster Malcolm Law, Warkworth