Hantom v Nzcu Baywide t/a Nzcu South

[2020] NZHC 126

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2019-409-517

[2020] NZHC 126

BETWEEN

MICHAEL HANTOM

Insolvent

AND

NZCU BAYWIDE trading as NZCU SOUTH, SBS MONEY LIMITED (WAREHOUSE MONEY), AVANTI FINANCE LIMITED, FINANCE NOW LIMITED and FLEXI CARDS LIMITED

trading as Q CARD Creditors

Hearing:	On the papers
Counsel:	G P Seger for the Trustee
Judgment:	11 February 2020

JUDGMENT OF ASSOCIATE JUDGE LESTER

[1]    On 18 December 2019, I issued a judgment in which I indicated I considered that the proposal by the insolvent was in the correct form, was a practical and appropriate proposal, and would, at the end of the day, see the creditors better off than if the insolvent was adjudicated bankrupt. Given the proposal was approved at a creditors meeting and given the Court should only refuse approval in limited circumstances, I anticipated that when this matter was recalled that the proposal could be approved.1

1      Hantom v NZCU Baywide [2019] NZHC 3410.

HANTOM v NZCU BAYWIDE [2020] NZHC 126 [11 February 2020].

[2]    In my judgment of 18 December 2019, I expressed concern about the fact that a secured creditor had not been served and about the fact that it appeared that the creditors had been given notice of this application by email.

[3]    The Trustee has advised that it was a conscious decision not to serve the secured creditor and it was accepted that they would not be bound by the proposal.

[4]    As I noted in my earlier judgment, the failure to serve a creditor goes to the Court’s discretion as to whether to approve the proposal. Essentially, the secured creditor is being treated as in a standalone class. The reality for the insolvent is that if the payments to the secured creditor are not maintained then, upon the realisation of the security there will be a shortfall to the secured creditor. That secured creditor would then be at liberty to proceed against the insolvent in the ordinary way for the unsecured remainder of their debt.

[5]    The Trustee in the further material provided did not respond expressly to whether the creditors responded to the email she sent advising them of this application. The memorandum of counsel says that the Trustee’s affidavit confirms that all creditors received and responded to the Trustee’s email advising them of the application and the hearing date, that is not in fact what paragraph four of the Trustee’s affidavit says.

[6]    All creditors (other than the secured creditor already referred to) voted by post after being emailed the proposal and approved the proposal. The Trustee’s advice is that she advised the creditors by email of this application. The memorandum of counsel confirms that all creditors were notified of the application and responded. Given those facts, I am prepared to proceed on the basis that the creditors were given notice of this application.

[7]    The issue arises because of the use of email to give notice of the proposal and of this application, in circumstances where there was no express agreement by the creditors to be given notice by email. However, given  all  creditors  responded  to the email giving them notice of the proposal and given none of the creditors objected,

in this case I am prepared to treat service requirements as having been satisfied. Ultimately, the risk in that regard lies with the insolvent.

[8]    Accordingly, the application by the insolvent to approve his creditors proposal is granted.

Associate Judge Lester

Solicitors:

Webster Malcolm Law, Warkworth