F M Custodians Ltd v Bartels
[2014] NZHC 3214
•17 December 2014
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2013-404-3515 [2014] NZHC 3214
UNDER the Insolvency Act 2006 IN THE MATTER OF
the bankruptcy of TIMOTHY STEPHEN BARTELLS
BETWEEN
F M CUSTODIANS LTD as custodial trustee of MIDLANDS MORTGAGE TRUST
Judgment Creditor
AND
TIMOTHY STEPHEN BARTELLS Judgment Debtor
CIV-2013-404-4863
UNDER the Insolvency Act 2006, Part 5 Sub-part 2
IN THE MATTER OF an application by CALLUM MACDONALD in respect of a proposal
by TIMOTHY STEPHEN BARTELLS, an insolvent
Hearing: 4 June and 27 June 2014 Appearances:
G Bogiatto for Callum Macdonald and Timothy Bartells
H Holland for F M Custodians LtdJ Belthazar and S J Davies (on 4 June only) for B F Walker, a creditor
Judgment:
17 December 2014
JUDGMENT OF ASSOCIATE JUDGE R M BELL
This judgment was delivered by me on 17 December 2014 at 3:00pm
Pursuant to Rule 11.5 of the High Court Rules
………………………………………….
Registrar/Deputy Registrar
F M CUSTODIANS LTD as custodial trustee of MIDLANDS MORTGAGE TRUST v TIMOTHY STEPHEN BARTELLS [2014] NZHC 3214 [17 December 2014]
TABLE OF CONTENTS
Paragraph Background [4] Issues [7] Mr Bartell’s proposal [13] Mr Trott’s claims [22] Treatment of partnership claims [27]
Separate creditors [35] Creditors associated with Mr Rudkin [36] Mr Trott [37]
Mr Bartell’s joint and inter-partners claims [40] Mr Rudkin’s claim for $1,097,977.87 [40] Further partnership losses [43]
Assessment of the proposal [45] Mr Macdonald’s decision to adjourn on 5 December 2014 [46] Mr Walker [51] O’Shannessy Street [54] No notification to joint creditors [55] Alteration to the proposal [57] Equal ranking of all creditors under the proposal [60] Sale of McRobbie Road [67]
Not expedient to approve the proposal in any event [72]
Result [90]
----
[1] Mr Bartells is insolvent. He has committed an act of bankruptcy by not complying with a bankruptcy notice served on him on 7 November 2013. The judgment debt in the notice is $163,500.80. The judgment creditor, FM Custodians Ltd, has applied for an adjudication order. The requirements of s 13 of the Insolvency Act 2006 have been satisfied.
[2] In response, Mr Bartells has made a proposal under Part 5 subpart 2 of the Insolvency Act. The bankruptcy application has been stood over to await the decision on the application to approval the proposal. A proposal under subpart 2 of Part 5 may be an appropriate alternative to bankruptcy.1 This decision is mainly concerned with whether to approve Mr Bartells’ proposal under s 333 of the Insolvency Act. If the proposal is approved, the bankruptcy application will be dismissed. If the proposal is not approved, it does not follow automatically that Mr Bartells should be adjudicated bankrupt. The court retains a discretion under s
37 of the Insolvency Act whether to adjudicate him bankrupt, but a refusal to approve a proposal may leave the court with little other option.
[3] Two of Mr Bartells’ creditors have opposed the proposal: FM Custodians Ltd and Mr B Walker, a judgment creditor for $113,057.24. They oppose on all the grounds under s 333(3) of the Insolvency Act 2006:
(a) the provisions of Part 5 subpart 2 of the Insolvency Act have not been complied with;
(b)the terms of the proposal are not reasonable or are not calculated to benefit the general body of creditors; and
(c) it is not expedient that the proposal be approved.
Background
[4] Mr Bartells is a failed property developer. In the way of failed property developers, his affairs are complex, involving a number of business entities,
1 Insolvency Act 2006, s 8(1)(a).
properties and overlapping liabilities. The provisions of the Insolvency Act and the Insolvency (Personal Insolvency) Regulations 2007 dealing with proposals are not sophisticated. They do not call for extensive information from the insolvent.2
Where an insolvent’s affairs are not complicated, the provisions are well suited for a prompt and orderly process for putting the proposal to creditors, and if it gains the required consents, applying to the court for approval. But when the affairs of the insolvent are not straightforward, there are difficulties. Fuller information may be required to allow creditors to make an informed decision. Often the insolvent may hold that information, but the current provisions do not require him or her to disclose it in his proposal. Given that most creditors these days make postal votes, a creditor who attends a creditors’ meeting and questions the insolvent to obtain information is unlikely to influence the outcome of the meeting. This is one of those more complex cases.
[5] Mr Bartells has been bankrupt once before. He was adjudicated on 19 April
2000 on the petition of a creditor owed $30,000. He blames that insolvency on ill health (he is bipolar and was suffering manic depression) and on mislaid trust placed in a friend to look after his affairs. He was discharged in April 2003. Since then he has been involved in property development. Some of the developments have been in partnership with Mr Peter Rudkin and Mr Gerald Williams. They recorded their arrangement in a memorandum of understanding in December 2007, although they had already been carrying on business together before then. Mr Rudkin provided the finance; Mr Williams was the project manager; Mr Bartells looked after acquisitions and marketing. A separate company would be established for each project, with one of them to be the sole director and shareholder. Profits and losses would be shared equally. Most of the projects were in South Auckland, Northern Waikato and Hauraki. A project in South Auckland, Karaka Inlet, involving development of a number of residential lots, has been unsuccessful and is likely to result in significant losses. Mr Rudkin says that on a best-case scenario after all sites are sold there will be a shortfall of about $1,800,000, in addition to accumulated losses of $3,294,000. Mr Rudkin’s company, Skjellerup Garden Developments Ltd, is owed $4,468,430.
Other creditors are owed $5,020,215.
2 The information requirements are much less than what bankrupts need to give in statements of affairs under reg 6 of the Insolvency (Personal Insolvency) Regulations 2007.
[6] Mr Bartells has also been involved in projects not involving Mr Rudkin and Mr Williams. These have included a management contract for a motel in Taupo, proposed acquisition of a motel development in Te Anau and other land developments in Paeroa and South Auckland. Companies and trusts he has used include Rainbow Securities Ltd, Domani Industries Ltd, Village Inn (2012) Ltd and Believe Trust.
Issues
[7] Here are some of the matters to be dealt with.
[8] Mr Bartells proposes to pay his creditors a dividend of 5.59 cents in the dollar by payments to his trustee over three years. He arrived at that figure by taking
$90,000 as the total amount that he would pay. As his proposal went through the meeting stage, the claims accepted by his trustee were higher than he had initially disclosed in his statement of assets and liabilities. To maintain his dividend, since the meeting he has amended the proposal to increase the total payments he will make over the three years. His creditors have not voted on that adjustment.
[9] Mr Bartells’ proposal treats all creditors equally. In most cases that would not cause any difficulty. In this case however it does. That is because Mr Bartells was in partnership with Mr Rudkin and Mr Williams. In bankruptcy law that requires his creditors to be treated according to whether they are his separate creditors, joint creditors of the partnership or his partners claiming for inter-partner liabilities. That classification creates priorities among creditors – a matter that goes to the validity of the proposal.
[10] Creditors who financed the Karaka Inlet development will suffer a loss. They are partnership creditors and are therefore creditors of Mr Bartells, but they were not included in the proposal or given the opportunity to vote on it.
[11] Mr Bartells did not include his former father-in-law, Mr Richard Trott, as a creditor. Notwithstanding that, Mr Trott made a claim which the trustee accepted. His claim is for three debts, which need to be dealt with discretely because of the
partnership question. Mr Bartells maintains that he has settled his liabilities to Mr Trott. He did that by assigning to Mr Trott at an undervalue an interest in an agreement to buy a property at McRobbie Road, Karaka. That transaction may merit investigation by the Official Assignee if Mr Bartells were adjudicated bankrupt.
[12] The “not expedient” ground for refusing to approve a proposal allows the court to consider whether the proposal is an appropriate response to a debtor’s insolvency. In this case, an important consideration is assessing the risk to the community in allowing Mr Bartells to carry on business as a free agent.
Mr Bartells’ proposal
[13] The proposed trustee is Callum Macdonald, an Auckland chartered accountant. As it was originally filed in court, Mr Bartells’ proposal was to pay his creditors $90,000 over three years, with payments to be made quarterly, the first payment two months after approval of the proposal.
[14] His statement of assets and liabilities shows total assets of $4,550 and liabilities of $1,608,994.41. All liabilities are shown as owed to actual creditors, not contingent creditors. There are 12. Many of them are professionals or consultants. All are unsecured. Mr Rudkin is shown as a creditor for $1,039,903.40. No other creditor is owed more than $200,000. Mr Walker is shown as a creditor for $70,000. None of the creditors of the Rudkin/Williams/Bartells partnership are shown as creditors of Mr Bartells. The proposal does not discriminate among creditors. All are to rank equally.
[15] The proposal was lodged in court on 14 November 2013. Mr Macdonald gave notice to all known creditors on 21 November 2013. Mr Walker, however, says that he did not receive the notice.
[16] The creditors’ meeting was held on 5 December 2013. Mr Macdonald chaired it. Before the meeting, Mr Macdonald received a claim from Mr Trott, saying that he was a creditor of Mr Bartells for at least $500,000. He voted against the proposal. Mr Bartells disputed that Mr Trott was a creditor.
[17] At that meeting, 12 postal votes were received and accepted; 10 supported the proposal; two were against it; three creditors (including Mr Walker) did not send in postal votes and did not attend. No creditor attended the meeting in person. Mr Macdonald accepted claims totalling $1,986,549.60. The increase in the number of creditors and claims included these:
(a) an increase in Mr Rudkin’s claim to $1,097,977.87;
(b) a new claim by the trustees of the Peter Rudkin Kenepuru Trust for
$594,231.16; and
(c) a new claim by Karaka Inlet Ltd, trustee of the Karaka Inlet Trust
(also associated with Mr Rudkin), for $106,082.50.
[18] Mr Macdonald has not produced copies of any claims by creditors, except Mr Trott’s. Mr Rudkin’s evidence explains his claims. For this proceeding there were no challenges to the other claims accepted by Mr Macdonald.
[19] With Mr Trott excluded, the required majorities of 50 per cent in number and
75 per cent in value were satisfied.3 But if Mr Trott were included, those in support were less than 75 per cent in value. Mr Macdonald adjourned the meeting to
13 December 2013 to allow time to consider whether Mr Trott was a creditor. Mr Macdonald says that during that week he received further information from Mr Trott which satisfied him that he was a creditor. He was also advised that Mr Trott wished to change his vote to support the proposal.
[20] At the adjourned meeting on 13 December 2013, Mr Macdonald treated Mr Trott as a creditor and counted his vote in favour of the proposal. The outcome was that over 50 per cent of the creditors who cast votes supported the proposal and
94.72 per cent in value also supported the proposal. Mr Walker had not voted. He was treated as having abstained. FM Custodians Ltd and an associated company, Karamu Finance Company Ltd, were the only ones to oppose. In the final counting, Mr Macdonald treated Mr Trott as a creditor for $1,062,000. On Mr Macdonald’s
counting, total creditors came to $3,431,804.52, whereas originally only
$1,608,994.41 had been included in Mr Bartells’ statement of assets and liabilities.
[21] By the time the application came before the court for approval, Mr Bartells proposed an amendment to his proposal. Instead of paying his creditors $90,000 over three years, he would pay them $198,000. This adjustment was made to take into account the increase in claims of creditors. He intended that the original creditors would receive the same dividend as under his original proposal – 5.59 cents in the dollar. He made the adjustment not only on account of Mr Trott’s debt, but also because he accepted that the debt to Mr Walker was $113,057.24, not $70,000.
Mr Trott’s claim
[22] Mr Bartells did not include Mr Trott in his initial statement of assets and liabilities. His explanation is that he considered that he had repaid the debt already. At first Mr Trott told Mr Macdonald that he was a creditor for at least $500,000. He followed that up with further information that he was a creditor of Mr Bartells for:
(a) a loan to the Rudkin/Bartells/Williams partnership of $400,000 plus a
$200,000 fee under a deed of 30 January 2007, which together had since compounded to reach $1,350,000;
(b)$210,000 for his liability for a loan from Home Bonds that he had taken out for Mr Bartells;
(c) $200,000 lent to Mr Bartells and Mr Trott’s daughter to assist in
buying the management contract for the Taupo motel.
These total $1,760,000 but Mr Trott has deducted $100,000 from the motel loan, because his daughter was jointly liable. He has allowed $37,200 for repayments received. He has allowed $560,000 for a property at McRobbie Road, Karaka which he bought at a discount. He puts Mr Bartells’ net indebtedness at about $1,062,000.
[23] The borrowers under the 2007 loan for $400,000 were the
Rudkin/Williams/Bartells partners. Mr Rudkin has counted Mr Trott as one of the
partnership creditors in estimating the partnership’s likely loss after selling all assets, but has allowed only $400,000 for the loan, not the $1,350,000 claimed by Mr Trott.
[24] Mr Bartells says that both the 2007 loan for $400,000 and the Home Bonds loan are partnership liabilities. The loan document for the 2007 loan supports him on that, but no documents have been put in evidence for the Home Bonds loan. Mr Trott’s claim document describes it as a loan “taken out on behalf of Tim Bartells”. Mr Rudkin does not refer to any partnership liability to Mr Trott except the 2007 loan. In the circumstances I treat the Home Bonds liability as Mr Bartells’ alone.
[25] Mr Bartells acknowledges liability to Mr Trott only for the Taupo motel loan. He says that repayments total $103,400, not counting the transfer of the Karaka property.
[26] Mr Macdonald accepted Mr Trott’s claim, rather than Mr Bartells’ version. Mr Trott’s documents show that he supported the proposal, notwithstanding his opposition at the outset. Mr Macdonald did not address the point that the 2007 loan had been brought into account in both Mr Trott’s claim and Mr Rudkin’s estimate of partnership losses. While Mr Trott’s claim is made up of several debts, Mr Trott and Mr Macdonald combined them as if they were one debt.
Treatment of partnership claims
[27] I deal with the treatment of claims when a partner is adjudicated bankrupt. That is relevant as it bears on priorities – under s 333(4)(a) the court cannot approve a proposal if it does not provide for the payment, before other debts are paid, of those debts that would have priority if the insolvent were adjudicated bankrupt.
[28] Mr Bartells was in partnership with Mr Rudkin and Mr Williams. The memorandum of understanding records that they were carrying on business in common with a view to profit.4 They agreed to share profits and losses equally. Each of them was an agent of the firm and each of them carrying on the business of
the partnership in the usual way bound the firm and his other partners.5 Each partner is jointly liable with the others for debts and obligations incurred by the partnership.6
[29] Mr Bartells denies that he has any personal liability to the creditors of the partnership. He apparently relies on the partnership operating through companies established for each project. It is not clear that that insulates him from claims by external creditors. Finance was raised for developments. Banks and other financiers invariably ask for guarantees. If another partner gave a guarantee for financial accommodation, that would be an obligation incurred by the partnership and Mr Bartells would share liability for it. In this case Mr Rudkin has such liabilities.
[30] On bankruptcy of a firm or of an individual partner, partnership liabilities are treated separately from non-partnership liabilities. Lord Lindley gave this explanation in his text on partnership law:7
In administering the estate of a bankrupt firm or of some or one only of its members, it is necessary to distinguish accurately, first, joint from separate estate; and, secondly, joint from separate debts: for the leading principle of administration is, if possible, to pay the debts of the firm (joint debts) out of the assets of the firm (joint estate), and the private debts of each partner (separate debts) out of his own private property (separate estate); in other words, to make each estate pay its own creditors.
[31] Similarly, in Ex p Cook, Lord King LC said:8
It is settled, and is a resolution of convenience, that the joint creditors shall be first paid out of the partnership or joint estate, and the separate creditors out of the separate estate of each partner; and if there be a surplus of the joint estate, besides what will pay the joint creditors, the same shall be applied to pay the separate creditors, and if there be on the other hand a surplus of the separate estate, beyond what will satisfy the separate creditors, it shall go to supply any deficiency that may remain as to the joint creditors.
[32] These principles were developed into detailed rules, some of which are described in Lindley & Banks on Partnership.9 Not all of them have been brought
5 Section 8.
6 Section 12.
7 Cited in Roderick I’Anson Banks Lindley & Banks on Partnership (19th ed, Sweet & Maxwell, London, 2010) at [27-78].
8 Ex p Cook (1796) 2 P Wms 500 at 500-501, 24 ER 834 (Ch) at 834.
9 Lindley & Banks, above n 7, at chp 27. For earlier New Zealand authorities applying these principles, see Re Ryan, ex p New Zealand Guardian Trust Co Ltd (1992) 4 NZBLC 102,524 (HC) and Re Nooyen (2002) 7 NZBLC 103,789 (HC).
into the Insolvency Act, but s 279 applies the general principle in the administration of the bankruptcy of a partner:
Creditors to have priority over creditors of joint bankrupt
If a person (A) is a partner of a firm and is adjudicated bankrupt, any creditors to whom A is indebted jointly with the other partners of the firm must not receive any money obtained from the realisation of the separate property of A until all the separate creditors have had their claims paid in full.
[33] It is also necessary to note that partners may have claims among each other in respect of the partnership. In bankruptcy those claims rank below unsatisfied joint creditors. Lord Lindley gave this explanation:10
The principle that a debtor shall not be allowed to compete with his own creditors, is as strictly carried out in administering the separate estates of individual partners, as in administering the joint estate of a firm. The separate estate of each partner is liable to the debts of the firm, subject only to the prior claims of his separate creditors; whence it is obvious that one partner cannot compete with the separate creditors of his co-partner, without diminishing the fund which, subject to their claims, is applicable to the payment of the joint debts, and therefore of his own creditors. In other words, the rights of the joint creditors preclude one partner from ranking as a separate creditor of his co-partner, until the joint creditors are paid in full.
[34] In this case, there are all three classes: (a) separate creditors of Mr Bartells; (b) creditors of the partnership; and
(c) one of his partners, Mr Rudkin, in respect of partnership liabilities.
Separate creditors
[35] Now to see how particular creditors would be classed if Mr Bartells were bankrupt. Of the claims made for the proposal, the only ones requiring consideration are those associated with Mr Rudkin and Mr Trott. There is nothing to suggest that the other creditors accepted by Mr Macdonald have joint claims against the
partnership. Their claims are separate. I also treat those creditors who did not lodge claims with Mr Macdonald for the proposal, including Mr West, as separate.
Creditors associated with Mr Rudkin
[36] The claims by the trustees of the Peter Rudkin Kenepuru Trust (for
$594,231.16) and by Karaka Inlet Ltd (for $106,082.50) are for separate debts of Mr
Bartells.
Mr Trott
[37] Mr Trott has three claims, but only two of them are separate: the $210,000 for the Home Bonds loan and the $200,000 for the loan for the Taupo motel. The loan for $400,000 under the deed of January 2007 (now claimed to be $1,350,000) was made to the three partners as property developers and is a joint claim. Mr Trott will not have a claim as a separate creditor. That is because he has already been paid out of Mr Bartells’ separate estate. He gives a credit for $560,000 for Mr Bartells’ property at McRobbie Road, which he acknowledges was transferred to him at a discount. He believes that the property is worth $1,100,000. The credit of $560,000
is more than enough to cover Mr Bartells’ separate debt to Mr Trott.11
[38] Mr Bartells’ known separate creditors in his bankruptcy are:12
Bruce Johnson Legal
$32,775.48
Barry Walker
$113,057.24
Mike Smith
$183,603.10
FM Custodians Ltd
$163,500.80
Malcolm & Cadenhead
$40,000.00
Accountants Hawkes Bay
$49,510.37
G Smith
$1,000.00
A Cottle
$3,000.00
11 He says that $37,200 was paid by “Bartells and others” and accordingly, those payments may
have gone in reduction of the joint debt.
12 The first three did not make claims and did not vote on the proposal.
Peter Rudkin Kenepuru Trust $594,231.87
Karaka Inlet Ltd
$106,082.50
APL Property Valuers
$11,975.39
David Hughes Contracting
$4,502.53
P Wilson
$9,223.24
Total
$1,312,462.52
[39] Because their claims exceed the available assets, they are the only creditors who might receive any distribution on Mr Bartells’ bankruptcy. Joint creditors will receive nothing.
Mr Bartells’ joint creditors and inter-partner claims
Mr Rudkin’s claim for $1,097,977.87
[40] Mr Rudkin says that in 2011, losses in the various joint projects came to
$3,293,933.60 and Mr Bartells is liable for one third of that amount - $1,097,977.87. One inference that might be drawn from Mr Rudkin’s evidence is that, as he was the financier, he had borne the losses of $3,293,933.60 and he was looking to Mr Bartells for his contribution to bring about an equal sharing of the losses. That would be an inter-partner claim. That could be only an inference. Mr Rudkin does not say so expressly. Mr Bartells says however that I should not draw that inference. While he does not contest Mr Rudkin’s standing and his claim for $1,097,977.87, he says that those losses have been incurred by the development companies, which had borrowed from financiers. Mr Rudkin has not borne those losses alone.
[41] There are difficulties in Mr Bartells’ position.
(a) First, no-one has separated out how much is owed to Mr Rudkin personally as opposed to the creditors of the development companies.
(b)Second, if the losses were incurred by the financiers of the partnership, they should have been included as creditors for the
proposal and should have been notified of the proposal and invited to take part. It seems reasonable to treat them as creditors as they are bound to have taken guarantees from at least one of the partners as directors of the development companies. As to this point, Mr Rudkin has put in evidence a “Deed of Acknowledgement of Debt and Provision for Guarantees” under which he and a number of project companies and trusts acknowledged indebtedness for advances made by Margery Rudkin and Skjellerup Garden Developments Ltd and gave cross-guarantees for those advances. The advances total
$4,468,426.35. As Mr Rudkin’s partner, Mr Bartells shares his
liability under the guarantee in that deed.
(c) Third, Mr Bartells could not notify Mr Rudkin as a surrogate of those creditors. Supposing that Mr Rudkin had guaranteed the loans taken by the development companies, Mr Rudkin cannot use his position as surety to stand in place of the lenders unless he has paid out the lenders and become subrogated to their rights. This position is analogous to the rule against double proof, under which a surety may
not claim in competition with the creditor.13
(d)Fourth, Mr Bartells’ nomination of Mr Rudkin as creditor for partnership liabilities invites suspicion that he has chosen someone who can be counted on to vote favourably for him, as opposed to financiers who may not be so well disposed towards Mr Bartells.
[42] Despite those difficulties, one matter is clear. The claim for $1,097,977.87 does not rank among the separate creditors. In Mr Bartells’ bankruptcy, it will rank below those creditors.
Further partnership losses
13 See Re Oriental Commercial Bank (1871) LR 7 Ch App 99 at 103-104 and the discussion of the rule in Re Kaupthing Singer & Friedlander Ltd (in administration) (No 2) [2011] UKSC 48, [2012] 1 AC 804.
[43] In addition to the losses of $3,293,933.60, Mr Rudkin has said that further losses of about $1,800,000 are anticipated, once all assets are sold. He estimates total recoveries at $7,689,129, with external creditors at $5,020,215 and the debt to his family company, Skjellerup Garden Developments Ltd, at $4,468,426.35. Mr Trott is shown as one of the external creditors at $400,000, not the $1,350,000 he claims. If Mr Trott’s claim is accepted at his figure, there will be a corresponding increase in the anticipated losses of the partnership. Mr Rudkin has not made any claim for the anticipated losses of $1,800,000. Assuming that external creditors are paid first, the loss will fall on Skjellerup Garden Developments Ltd, but that company has not made a claim, even as a contingent creditor.
[44] As with Mr Rudkin’s claim for $1,097,977.87, these losses and Mr Trott’s claim under the 2007 deed are joint claims and also rank below the separate creditors.
Assessment of the proposal
[45] The objecting creditors raised objections to the procedure that was followed.
Mr Macdonald’s decision to adjourn on 5 December 2013
[46] FM Custodians Ltd took issue with Mr Macdonald’s decision to adjourn the meeting. Its objection was that Mr Macdonald should have advised other creditors when doing so. Mr Macdonald ought not to have accepted Mr Trott’s claim for
$1,062,000 without advising other creditors. If Mr Macdonald had told it about Mr Trott’s claim, it would have had someone attend the meeting to question Mr Bartells about the debt to Mr Trott. I do not accept that objection.
[47] First, all creditors are entitled to attend a meeting, even if they have not received notice of the meeting from the provisional trustee. I infer that from s 330:
(1) The provisional trustee must, as soon as practicable after the proposal is filed, call a meeting of creditors by posting to every known creditor at the creditor's last known address—
(a) a notice of the date, time, and place of the meeting:
(b) a summary of the insolvent's assets and liabilities:
(c) a copy of the proposal and particulars of any charge or guarantee:
(d) a creditor's claim form:
(e) a postal vote in the prescribed form.
(2) A creditor who has proved a claim in the prescribed manner may vote on the proposal by sending a postal vote that reaches the provisional trustee before or at the meeting…
[Emphasis added]
Creditors who may vote under subsection 2 are not restricted to the known creditors in subsection 1.
[48] Second, a creditor has the option of not attending, but of giving a postal vote
– s 330(2) and (3). But by not attending, that creditor does not take up the chance to elect the chairman of the meeting, examine the insolvent, discuss the merits of the proposal and the like. Those who do not attend can only influence the meeting by their postal vote. By not attending in person they take the risk of other creditors influencing the meeting. A chairman is entitled to infer that those creditors who send in postal votes do not wish to be heard further on the proposal. They have already made up their minds.
[49] Third, the chairman is entitled to adjourn the meeting.14 The meeting on
12 December 2013 was the resumption of an adjourned meeting, not a second meeting that had to be notified afresh under s 330. In adjourning the meeting, Mr Macdonald was not required to notify creditors who had not attended in person. They had waived further input into the meeting by their postal votes.
[50] Mr Macdonald cannot be criticised for adjourning after receiving Mr Trott’s claim. Given Mr Bartells’ denial of liability, it was understandable that he would need time to clear the matter up. Accordingly, I see no error in the course Mr Macdonald took.
Mr Walker
[51] Mr Walker objected because he did not receive notice of the meetings on
5 and 13 December 2013. He became aware of the proposal only after the meetings. If he had been advised, he would have voted against the proposal. As a creditor, the amount he was owed was not $70,000 as stated by Mr Bartells, but $113,057.24 under a judgment of the District Court at Papakura.
[52] Section 330(1) requires the provisional trustee to post to every known creditor, to the creditor’s last known address, notice of the time, date and place of the meeting and related information. Mr Walker’s last known personal address was the office of his New Lynn lawyers, Davies Law. That office is at Apartment 24,
1 Ambrico Place, New Lynn, Auckland. Mr Macdonald sent the notice to Mr Walker c/o Davies Law at “1 Arbrico Place, New Lynn, Auckland 0600”. Mr Walker says that his lawyer never got the notice. On the other hand, the application to this court to approve the proposal was sent to Mr Walker “c/o Davies Law, PO Box 15547, New Lynn”. That was effective service, because Mr Walker then took steps in response. I find that the mistaken address in Mr Macdonald’s notice to Mr Walker in November 2013 resulted in Mr Walker not receiving the notice.
[53] Mr Walker also complains about the understatement of the debt owed to him. While Mr Walker did not receive the notice and did not have the opportunity to take part in the December meetings, I do not regard this slip by itself as invalidating the proposal. In Farmer v Rowley,15 the Court of Appeal waived a similar irregularity because, even if the creditor had attended, the requisite majority would still have been obtained. In this case, Mr Walker’s debt is relatively small in relation to other debts claimed in Mr Bartells’ insolvency. Similarly, the misstatement of Mr Walker’s debt is insignificant. Even if Mr Walker had attended the meeting, and the amount of his debt had been corrected, that by itself would not have changed the
result. By themselves, the defects involving Mr Walker, the misstatement of his debt and the failure to give him notice of the creditors’ meeting are not so substantial as to make the creditors’ resolution invalid.
O’Shannessey Street, Papakura
[54] At the hearing on 4 June, I queried whether Mr Bartells had omitted any claims in respect of a property at O’Shannessey Street. Mr Bartells provided further information for the hearing on 27 June. Mr Bartells’ company, Domani Industries Ltd, owned two unit titles in a development in O’Shannessey Street, Papakura, both subject to mortgages. Mr Bartells says that he did not guarantee the loans for the mortgages. Papakura Plus Ltd bought the properties in January 2014 subject to the mortgages. I accept Mr Bartells’ evidence that he is not under any personal liabilities in respect of O’Shannessey Street.
No notification to joint creditors
[55] As Mr Bartells says that there are creditors of the partnership who have not been paid or who will suffer losses after all the sales of the lots in the Karaka Inlet development, they should have been told of the proposal and given the chance to vote. The objecting creditors did not take this point. While this is a significant irregularity, the partnership creditors have not been prejudiced, because on my view of the priorities, they were subordinate to Mr Bartells’ separate creditors and could not claim parity with them. By itself this oversight does not count against approval.
[56] The matters considered above are not by themselves enough to require the court to refuse to approve under s 333(3)(a). There is however more substance in the following matters.
Alteration to the proposal
[57] Section 333(6) limits the court’s power to allow changes to the proposal:
When it approves the proposal, the court may correct any formal or accidental error or omission, but must not alter the substance of the proposal.
[58] Mr Bartells initially offered to pay his creditors $90,000 over three years. His creditors voted on that proposal, but presumably on the basis of what was disclosed in Mr Bartells’ statement of assets and liabilities. That was to give each creditor a dividend of 5.59 cents in the dollar. With Mr Macdonald accepting
increased claims, the dividend would be reduced (assuming creditors would rank equally). So Mr Bartells offered to increase his payments over the three years to
$198,000. I queried both his ability to meet that increased commitment and the court’s power to allow the change to the proposal. Mr Bartells gave further evidence directed at showing his ability to pay. That invites the question why Mr Bartells did not offer to pay that sum in the first place if he is so confident of his ability to pay it. But it is not for me to judge that. That is for his creditors when they vote on a proposal.
[59] The scheme of the legislation is that a proposal is notified to creditors who may vote on it at a meeting. At the meeting, the proposal may be changed. If the proposal, including any changed proposal, obtains the required votes in favour, the trustee is required to apply to the court for approval of that proposal. Barring formal or accidental errors or omissions, which the court may correct, the proposal cannot be changed between the meeting and the court’s approval. Mr Bartells’ offer to pay more towards his creditors is a change in substance, not just in form. The court may not do the creditors’ job of assessing his ability to pay increased amounts. Because I cannot change the substance of his proposal, it remains one for payment of $90,000 over three years.
Equal ranking of all creditors under the proposal
[60] Mr Bartells’ proposal lumps all creditors together. There was no attempt to distinguish separate and joint creditors. Creditors were not told of the distinction. Lower-ranking creditors with claims for greater sums were allowed to vote in competition with higher-ranking claims for smaller sums. Mr Trott and Mr Rudkin
were able to dominate the voting.16
[61] An argument for the objecting creditors is that if Mr Trott and Mr Rudkin had been excluded from voting in respect of their lower-ranking claims, but all other postal votes were counted and Mr Walker had taken part, then the required 75 per
cent would not have been reached. The procedural provisions of the Insolvency Act
16 In some countries, legislation provides for creditors to vote in separate classes on proposals, e.g.
Canada’s Bankruptcy and Insolvency Act 1985, Part III.
for proposals do not, however, require creditors to be told about priorities and do not require different classes of creditors to vote separately. That is consistent with the Act’s approach of keeping complexity out of the procedures for proposals.
[62] Instead the Act allows the different positions of classes of creditors to be considered at a later stage in the process – when the court is asked to approve the proposal. Under s 333(4)(a) the court must not approve a proposal if it does not provide for the payment, ahead of other debts, of those debts that would have priority under the Insolvency Act if the insolvent were adjudicated bankrupt. Section 279 is a priority provision. In this case, the priority it gives to separate creditors has been overlooked in favour of joint creditors. Because the proposal does not give priority to Mr Bartells’ separate creditors, s 333(4)(a) bars me from approving the proposal.
[63] Mr Bartells submitted that there was nothing in the language of the subpart 2 of Part 5 of the Insolvency Act that requires a distinction to be made between separate and joint debts, but the combined effect of ss 279 and 333(4) count against that.
[64] Further, in Magsons Hardware Ltd v Bogiatto,17 the Court of Appeal held that under s 333(3)(b) (refusal if the terms of the proposal are not reasonable or are not calculated to benefit the general body of creditors), the relative benefits to different classes of creditors may be considered. It said:18
…while the reasonableness element imports into the Court’s independent judgment the views of the creditors, the alternative touchstone of benefit to the general body of creditors under s 333(3)(b) raises the fairness of the proposal between classes of creditors, requiring a comparative analysis of the creditors’ relative positions under the proposal or bankruptcy respectively.
[65] Under this head also, I do not approve the proposal because of the failure to distinguish between separate and other creditors. None of the information made available to creditors alerted them to the distinction – neither the fact of the
partnership (which Mr Rudkin and Mr Trott were of course aware of) nor the legal
17 Magsons Hardware Ltd v Bogiatto [2011] NZCA 378.
18 At [29].
consequences. Without that information, the creditors were at a disadvantage in assessing the proposal. While the cases say that “not reasonable” is to be assessed from the perspective of a commercially experienced prudent creditor,19 I would be setting matters too high to expect creditors to be alive to how s 279 of the Insolvency Act would operate on Mr Bartells’ bankruptcy. That lack of information available to the creditors means that the court cannot give the usual respect shown for their commercial judgment.
[66] The proposal is not calculated to benefit the general body of creditors in the sense used by the Court of Appeal in Magsons Hardware Ltd v Bogiatto cited above. The proposal allows Mr Trott and Mr Rudkin, who dominated the voting, to be paid
– a position they would not enjoy under Mr Bartells’ bankruptcy. That was to the
disadvantage of other creditors.
Sale of McRobbie Road
[67] There is another matter that arises out of the comparison of the creditors’ positions under bankruptcy and under the proposal: Mr Trott’s acquisition of the property at McRobbie Road. It may be an insolvent transaction under ss 193-195 of the Insolvency Act. Mr Trott acknowledges that he bought it at a discount of
$560,000. With that, he appears to have received more in reduction of the separate debts due to him than he would in Mr Bartells’ bankruptcy. For the transaction to be voidable it must be within two years of Mr Bartells being served with FM Custodians Ltd’s bankruptcy application.20 In this case the transaction is caught if it took place on or after 8 November 2011.
[68] Mr Walker’s affidavit of 28 March 2014 exhibits documents relating to the McRobbie Road transaction. On 20 June 2011 Karaka Inlet Ltd, then known as Kingseat Countryside Living Ltd, entered into an agreement to sell a lot to be created at 43B and 125 McRobbie Road to Rainbow Securities Ltd, one of Mr Bartells’
companies, for $600,000. Mr Bartells signed as director of Rainbow Securities Ltd
19 Farmer v Rowley, above n15 at 201; Magsons Hardware Ltd v Bogiatto, above n17; Herbert v New Zealand Guardian Trust Company Ltd [2012] NZCA 442; Re Kelly ex p Structured Finance Ltd [2009] 2 NZLR 785 (HC) at [45].
20 Insolvency Act, s 193(a) and s 194(b).
and also gave a written guarantee in support of Rainbow’s obligations as purchaser. The front page of the copy of the agreement attached to Mr Walker’s affidavit has Rainbow’s name crossed out and replaced with “T S L Bartells and/or nominee” as purchaser, but it is not clear when that change was made. In December 2011, Rainbow Securities Ltd gave a written assignment of its interest in the agreement of sale and purchase to Mr Trott and gave notice of the assignment to Karaka Inlet Ltd. Fresh notice of the assignment was given in June 2012. The deposit of $60,000 was apparently paid ahead of the assignment, leaving $540,000 for Mr Trott to pay on settlement.
[69] While Mr Trott took the place of Rainbow Securities Ltd as purchaser, such an assignment might arguably be a transfer of Mr Bartells’ property under s 195(2)(a) of the Insolvency Act, given Mr Bartells’ control of the company. Certainly the parties treated it as such.
[70] Mr Trott acknowledges that the property he bought is worth $1,100,000. Mr Bartells says it had a registered valuation of $1,170,000. Mr Trott has treated this acquisition at an undervalue as reducing Mr Bartells’ indebtedness to him. He changed his vote from opposing Mr Bartells’ proposal to supporting it. That change of position from a former father-in-law let down badly by his erstwhile son-in-law suggests that the matter may be worth following up. He may have appreciated that he would be worse off under Mr Bartells’ bankruptcy. If the $560,000 discount could be recovered from Mr Trott as an insolvent transaction, there may be more available for separate creditors on Mr Bartells’ bankruptcy than under his proposal.
[71] The other creditors were not told about the sale of McRobbie Road. It only came out in evidence. The creditors would not have known about the potential to set aside the sale when they sent in their postal votes. This factor goes to the reasonableness of the votes of those creditors who did not know of the relevance of the sale at an undervalue. It also goes against the reasonableness of the proposal under s 333(3)(b).
Not expedient to approve the proposal in any event
[72] The point reached here is that the proposal fails under s 333(4)(a) because it does not provide for priority for Mr Bartells’ separate creditors and also under s 333(3)(b) because the terms of the proposal are not reasonable and are not calculated to benefit the general body of creditors. One option at this stage would be to let Mr Bartells have another go – put a fresh proposal to his creditors taking into account the defects in his current proposal. I do not intend to do so. That is because I regard bankruptcy as a more appropriate response to Mr Bartells’ insolvency. In that I am applying s 333(3)(c): it would not be expedient to approve a proposal in any event. It is also the exercise of the discretion on the bankruptcy application
against Mr Bartells.21 These matters overlap because they both require deciding the
appropriate response to Mr Bartells’ insolvency.
[73] Bankruptcy involves up to five elements. In Jamieson v Official Assignee, I said:22
In my view bankruptcy can have up to five purposes:
(a) The administration of the bankrupt's estate in the interests of creditors;
(b) Promoting the accountability of debtors for their liabilities; (c) Protecting the community from the debtor incurring
liabilities insolvently;
(d) Punishment for misconduct; and
(e) Freeing the debtor from his liabilities so that he can begin afresh.
The first purpose is seen in the vesting of the debtor's property in the Official Assignee, the powers given to the Official Assignee to get in assets, obtain information, receive proofs of debt, set aside voidable transactions and to distribute to creditors. Provisions for meetings with creditors and appointment of a committee to assist the Assignee also show that this aspect of bankruptcy is primarily in the interests of creditors.
21 See the discretion under the Insolvency Act, ss 36 and 37.
22 Jamieson v Official Assignee (2012) NZCCLR 8 (HC) at [11]-[16]. Other decisions to similar effect are Evia Rural Finance Ltd v Cribb [2012] NZHC 579; Cribb v Evia Rural Finance Ltd [2014] NZCA 543; Sheppard v Blanchett [2012] NZHC 789; Darby v Official Assignee [2013] NZHC 22.
The second is seen in the courts' references to commercial morality. It is directed at encouraging the performance of monetary obligations by providing consequences if they are not.
The third is seen in the restraints on a bankrupt from incurring credit, carrying on business without the consent of the Official Assignee and from holding office as a director. It is one aspect of the public interest.
The punitive aspect of bankruptcy is less commonly recognised. Bankruptcy undoubtedly has a stigma and carries disabilities. It may be a proper basis for bankruptcy in some cases of misconduct. This aspect can be seen in the discharge decision Re Atwill:
“But I think also that some penalty must be imposed on him in
respect of his past misconduct and irresponsibility… ”
And in re Trott & Joy, where Tompkins J considered whether a proposal should not be approved on the grounds of misconduct:
“An insolvent's misconduct may be so irresponsible and its effects on creditors or others so devastating that a Court may conclude that it is in the public interest that the person responsible should not escape the stigma of bankruptcy. Rather, it may be in the public interest that such a person should be marked as a bankrupt and further, that he should suffer the various disqualifications that go with bankruptcy. Those disqualifications are after all designed to protect the unsuspecting community from the ravages of irresponsible financial conduct. And the stigma of bankruptcy is itself a deterrent to others from behaving in a like manner.”
The kind of misconduct Tompkins J had in mind was deliberate and wilful squandering of assets, excessively extravagant living and misconduct of a gross character — more serious misconduct than Adams J may have had in mind in Re Atwill. Punishment is not required for every business failure or insolvency. While it may apply only in a minority of cases, there are cases that are so serious that bankruptcy is required instead of less onerous alternatives.
The fifth purpose can be seen in the dictum of Vaughan Williams LJ in Re
Gaskell:
“After all, the overriding intention of the Legislature in all Bankruptcy Acts is that the debtor on giving up the whole of his property shall be a free man again, able to earn his livelihood, and having the ordinary inducements to industry. Sometimes it is not right that the bankrupt should not be free immediately; he must pass through a period of probation; and theoretically there may be cases in which he ought not to be free at all, but prima facie he is to give up everything he has, and on doing that he is to be made a free man. ”
[74] Under s 8 of the Insolvency Act, a proposal under Part 5 subpart 2 is an alternative to bankruptcy, but it is important to note that it does not have all the features of bankruptcy. In Sheppard v Blanchett I put it this way:23
When considering proposals against these five elements of bankruptcy, it can be seen that proposals have certain advantages but also some disadvantages. The advantages of a proposal are that it allows for consensual administration of the affairs of the bankrupt, and it allows the debtor to retain his autonomy. Proposals invariably allow the debtor to remain in business. Proposals usually involve more efficient administration of the affairs of the bankrupt and there is usually a provision of the proposal that the debtor will carry the costs of administering the proposal. That can result in more efficient arrangements than those that follow a formal adjudication in bankruptcy. Under bankruptcy, release and re-integration into the community is usually delayed unless there is a prompt annulment or the bankrupt succeeds in an application for early discharge. On the other hand, under a proposal the bankrupt remains free to operate in the community, is not debarred from incurring credit and is not subject to any of the other disabilities of bankruptcy.
As to disadvantages, a proposal may not address some of the other elements of bankruptcy. A proposal is not a useful mechanism for protecting the public from the insolvent recklessly incurring more credit. A proposal does not involve any element of punishment of the insolvent. It can be an open question whether a proposal does reflect due accountability on the part of the insolvent.
When a proposal comes before the court for approval, the court checks to see whether the procedures have been followed. It checks whether the proposal is reasonable as between creditors and the insolvent, but also amongst the creditors themselves. And it also checks whether the public interest factors are triggered as well.
[75] On considering a proposal for approval, the court is required to consider whether the proposal or bankruptcy is a better way of dealing with the debtor’s insolvency in the light of the varying purposes of each.
[76] Now for Mr Bartells.
[77] A significant difference between bankruptcy and an approved proposal is that, with the latter, the insolvent is not subject to the restrictions of bankruptcy. He remains free to carry on in business, to act as director of companies and to incur credit. It is necessary to assess the risk in allowing a debtor to remain such a free agent. The question is whether the risk is great enough to require bankruptcy.
[78] It is no answer to say that the insolvent is not a serious risk because his creditors have approved the proposal. Creditors are more likely to consider the prospect of payment by the debtor and may believe that the prospects are better if the debtor is not made bankrupt. While they will know not to do business with the insolvent again, they need not concern themselves with the risk to others. The court however must take a wider view.
[79] Mr Bartells’ conduct does give concern as to the risks of leaving him free to carry on as a free agent. He was a property developer – a high-risk occupation. He intends to carry on as a developer. According to one of his affidavits, he has entered into a joint venture with a Mr Smith (said to be a man of substance) to purchase a property at Paeroa as a site for a proposed retirement village. He is not required to provide any funding. His role is locating the property, obtaining resource consents and “adding value”. His affidavit contains rosy projections as to the prospects of this venture.
[80] He had a similar role in the Rudkin/Williams/Bartells partnership, but that was disastrous for him. He also gave rosy projections as to the success of the Karaka Inlet development at Karaka. In February 2013, he was claiming that it would give a profit of $7,000,000 to be split three ways among the partners,24 but that was hopelessly wrong. As Mr Rudkin sets out in his affidavit, the Karaka Inlet development made heavy losses. That failure gives no confidence that Mr Bartells
will make a success of other property ventures.
[81] Typically an insolvent who makes a proposal to his creditors under the Insolvency Act has gone into business but failed; and then finds some more stable occupation in which he or she can recover financially. Staying in the same line of business in which the insolvent has failed, particularly a risky one, is not a promising path to financial recovery. The problem is that the insolvent will be a hazard for others, not just himself.
[82] Mr Bartells says that he will earn commission on sales in Karaka Inlet through his company, Rainbow Developments Ltd. All companies with that name
have been struck off. He was not associated with any of them. Mr Bartells was a director of Rainbow Securities Ltd, but that went into liquidation in 2012 and was struck off. He was also a director of Rainbow Industries Ltd, but that company has also been struck off. He also refers to Rainbow Investments Ltd, but that is a Christchurch company in which he has no interest.
[83] His dealings with the objecting creditors do not give confidence. In August
2013, he gave FM Custodians Ltd a sworn statement of his financial position. That was after it had obtained judgment against him and was pressing for payment. He claimed total assets of $5,963,000 and debts of $2,462,000, giving a very large surplus. Three months later he made the statement of assets and liabilities for this proposal, showing a completely different picture.25 He accepts that his first statement was over-optimistic, but does not show any insight that that is one of his foibles. He does not appreciate that he ought to have been accurate in his sworn statement of his financial position. He does not explain how he could have been so
badly wrong.
[84] In 2012 Mr Bartells was interested in buying a motel in Te Anau, the Village Inn. His company, Village Inn (2012) Ltd, entered into an agreement to buy the motel for $1,525,000. Mr Bartells had no cash for the purchase. He borrowed
$55,000 from Mr Walker as bridging finance for some of the costs of purchase. Mr Walker lent the money to another of Mr Bartells’ companies, Domani Industries Ltd. The securities for the loan were a second-ranking general security agreement, a guarantee from Mr Bartells and a mortgage of an equitable interest in the land at McRobbie Road. Mr Walker was told that Mr Bartells was said to be the purchaser of the land, but was to nominate Domani to take title. After advancing the funds, Mr Walker lodged a caveat against the title to the McRobbie Road property. It turned out that the property was subject to the agreement for sale to Rainbow Securities Ltd of June 2011, but, as already noted, in December 2011 Rainbow Securities Ltd assigned the agreement to Mr Trott, who also lodged a caveat. Rainbow Securities Ltd also assigned the agreement to Jarcel Investments Ltd in July 2012. Rainbow Securities Ltd was struck off in August 2012. It turned out that at the time of the loan neither Mr Bartells nor Domani Industries Ltd had any interest
in the land over which they could give a security to Mr Walker. Mr Bartells must have known that when he took the loan from Mr Walker. While it is true that Mr Walker does make risky loans, that does not mean that Mr Bartells was entitled to mislead him.
[85] Another worrying matter is Mr Bartells’ earlier bankruptcy. It is not just the fact of the bankruptcy, although it is an added risk factor. The problem is that when it was raised in the hearing on 4 June, his lawyer had no instructions about it. In a contested application for approval of a proposal, any earlier bankruptcy is obviously relevant, but Mr Bartells did not consider that he needed to trouble his own lawyer with that information.
[86] Overall my assessment is that Mr Bartells is a significant danger to the commercial community. I regard his conduct as so reckless that it would not be safe to allow him to carry on in business.
[87] That factor alone is enough to require Mr Bartells’ adjudication in
bankruptcy. It is supported by other factors.
[88] Given the recklessness with which he borrowed from Mr Walker, Mr Bartells’ conduct calls for a sterner response than his proposal. While a proposal may demonstrate accountability, his conduct is to be condemned. A proposal will not achieve that.
[89] There will be benefits in placing Mr Bartells’ affairs under the control of the Official Assignee. They are complex. Proposals are for much more straightforward cases. An independent investigation in the interests of his creditors is appropriate. In particular, the McRobbie Road transaction requires scrutiny to see if it is preferential and can be set aside. At this stage there is reason to believe that it may produce more for creditors than Mr Bartells’ proposal.
Result
[90] For the above reasons, bankruptcy is a more appropriate response to
Mr Bartells’ insolvency than his proposal. Accordingly, I make the following orders:
(a) I dismiss the application for approval of the proposal;
(b)I adjudicate Mr Bartells bankrupt. The time of the order is 3.00 pm on Wednesday the 17th day of December 2014.
(c) The costs of FM Custodians Ltd and Mr Walker in both opposing the proposal and in applying for adjudication are to be paid from Mr Bartells’ estate under s 274(1)(b) of the Insolvency Act. If costs cannot be agreed, memoranda may be filed.
[91] For Mr Bartells it was submitted that if I did not approve the proposal, I should not make an immediate bankruptcy order, but should allow time for Mr Bartells to consider an appeal. I decline that course. The two decisions are linked and are made together. It is not necessary to make them at different times. As with any other debtor, Mr Bartells will retain his rights to appeal against both the
refusal to approve his proposal and his adjudication.
Associate Judge R M Bell
Solicitors:
G Bogiatto, Auckland, for Callum Macdonald and Timothy Bartells
Bramwell Grossman Lawyers (S C Cowan) Hastings, for FM Custodians Limited
Davies Law (S J Davies/J Belthazar), New Lynn, Auckland, for Barry Francis Walker
Copy for:
H Holland, Barrister, Auckland, for FM Custodians Limited
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