Hopkins v New Life Upholstery Limited HC Whangarei CIV 2010-488-000106

[2011] NZHC 662

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2010-404-2605

IN THE MATTER OF     the Insolvency Act 2006

AND IN THE MATTER OF the bankruptcy of JM Scott

BETWEEN  JULIE MAREE SCOTT Judgment Creditor

ANDUDC FINANCE LIMITED Judgment Debtor

CIV 2010-404-5325

AND IN THE MATTER OF a Proposal under Part 5 Subpart 2 of the

Insolvency Act 2006

BETWEEN  JULIE MAREE SCOTT Insolvent

Hearing:         8 July 2011

Counsel:         TM Heydon for judgment creditor

GP Denholm for judgment debtor and trustee of the proposal
MV Robinson for Westpac Banking Corporation

Judgment:      8 July 2011 at 1:08 PM

(ORAL) JUDGMENT OF ASSOCIATE JUDGE FAIRE

Solicitors:           MinterEllisonRuddWatts, PO Box 3798, Auckland

Foy & Halse, PO Box 26 218, Auckland

Simpson Grierson, Private Bag 92 518, Auckland

SCOTT V UDC FINANCE LIMITED HC AK CIV 2010-404-2605 8 July 2011

[1]      Two applications are before me for determination. They are:

(a)       An application by a trustee in respect of a proposal by the judgment debtor for approval under Part 5 of the Insolvency Act 2006; and

(b)The judgment creditor’s application for an order for the adjudication of the judgment debtor.

[2]      A short point arises in relation to the application for approval of the proposal. It is whether the position of Westpac should have been taken into account by the then provisional trustee at the creditors’ meeting on 19 October 2010.

[3]      Prior to that meeting the judgment debtor’s solicitors had invited Westpac to confirm that the judgment debtor’s debt to the bank was limited to the assets of the Aranui Trust.  Although the request received no specific formal confirmation at the time, the proof of debt which was lodged discloses that the debt to the bank was said by the bank to be limited to the assets of the Aranui Trust.

[4]      Section 331 of the Insolvency Act 2006 provides in subs (3):

(3)     The  resolution  accepting  the  proposal  must  be  decided  by  a  majority  in number and three-quarters in value of the creditors who—

(a)      vote; and

(b)      are personally present or are represented at the meeting by a person specified in section 332 or have voted by postal vote.

[5]      In his report the trustee records the voting position as follows: (a)     Carson Fox           for  $36,415

(b)      Morrison Kent            for                  $126,294.82 (c) Nalla Trust           for  $120,000

(d)      Westpac  for                  $2,055,915.40 (e)         UDC           against  $594,896.10

[6]      The  proof  of  debt  filed  by  Westpac  New  Zealand  Ltd  discloses  an indebtedness as at 30 August 2010 of $1,968,167.59.  It added that the liability was limited to the assets of the Aranui Trust.

[7]      The position maintained by Westpac has not changed.  There does not seem to  be any good  reason  why Westpac’s  position  was  recorded  as  a vote  for the proposal having regard to the proof of debt.  Without Westpac’s support and on the basis that it is a creditor for a substantial sum the required majority in value of creditors required by s331(3) of the Insolvency Act 2006 is not met.  The effect of that is that the jurisdictional basis for making an application to the court for the approval of the proposal is not met: s 333(3)(a) Insolvency Act 2006.

[8]      But, in any event, if that procedural objection were ignored and the position of Westpac is maintained, namely that the indebtedness is limited to the assets of the Aranui Trust, there is no majority as required by s 331 of the Insolvency Act 2006 now in support of this proposal.   On that basis and additional to the jurisdictional basis that I have mentioned, I am satisfied that I would not be justified in terms of s 333(3)(c) of the Insolvency Act 2006 in approving this proposal.

[9]      Accordingly, the proposal is not approved.

[10]     I now deal with the application seeking an order adjudicating Julie Maree

Scott a bankrupt.

[11]     I am satisfied that the debt set out in the application has not been paid and the jurisdictional  bases  for  make  an  order  of  adjudication  are  met  in  this  case. Mr Denholm advances no ground which would support the exercise of the discretion to refuse adjudication in this case.

[12]     Accordingly I order that Julie Maree Scott be adjudicated bankrupt.

[13]     This order is made at 1:08 pm on 8 July 2011.

[14]     Costs  are  order  in  favour  of  the  petitioning  creditor  in  relation  to  the adjudication proceeding based on Category 2 Band B together with disbursements as

fixed by the Registrar

JA Faire

Associate Judge