McCready v Green Cabs Limited

[2013] NZHC 2594

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV 2013-485-1370

[2013] NZHC 2594

UNDER

the Insolvency Act 2006

IN THE MATTER

of the bankruptcy of

GRAHAM EDWARD MCCREADY
Judgment Debtor

AND

GREEN CABS LIMITED

Judgment Creditor

Hearing:

2 October 2013

Counsel:

Judgment Debtor in Person

G D Pearson for Judgment Creditor

Judgment:

4 October 2013

REASONS FOR JUDGMENT OF RONALD YOUNG J

Introduction

[1]    Green Cabs and Callum Brown have a judgment debt against Mr McCready for $10,230.80. Mr McCready has not paid the debt. And so the Judgment Creditor sought to bankrupt Mr McCready.

[2] Mr McCready opposes any bankruptcy order. He says that it is just and equitable that no order of adjudication be made or that there are other reasons why an order of adjudication should not be made.[1] Mr McCready says that he has a realistic plan to pay off both the Judgment Creditor’s debt and his other debts through a Summary Instalment Order that he has applied to The Trustee and Insolvency Service.  No such order has currently been made.  It is opposed by the

Judgment Creditor.

MCCREADY v GREEN CABS [2013] NZHC 2594 [4 October 2013]

[1] Insolvency Act 2006, s 37(c) and (d).

[3]   The  Judgment  Creditor  says  that  I  should  make  an  adjudication  order. Mr McCready’s arrangements are inadequate and unreliable and will not result in a significant payment to the Judgment Creditor.

[4] After hearing submissions from Mr McCready and counsel for the Judgment Creditor I made an order for adjudication of Mr McCready on 2 October 2013. I advised Mr McCready that I would in due course give my reasons for rejecting his invitation for me to invoke s 37 of the Insolvency Act.[2]   I now do so.

[2] [Give reference].

[5] Significant material was placed before the Court by Mr McCready which was broadly irrelevant.  I do not need now identify that material.

[6]    With Mr McCready’s agreement the discussion with him focussed primarily on his application for Summary Instalment Order and whether his plans to supplement that order were realistic and could be relied upon.

[7] Before I consider those matters I deal  with  the  claim  by  the  Judgment Creditor that Mr McCready’s debts exceeded $40,000 and were, therefore, outside of the jurisdiction to make a Summary Instalment Order.[3]

[3] [Give reference].

[8] My conclusion is that it is not possible to be certain that Mr McCready’s debts are more than $40,000 although it is possible they are. I proceed, therefore, on the basis that a Summary Instalment Order could be made.

Mr McCready’s case

[9] The essence of Mr McCready’s submission is, therefore, that he has made a realistic offer to pay his debts through the Summary Instalment Order. Although the initial payments under the order might be small he believes that he can increase payments so that his debts are fully paid after a period of five years. This, he says, is a preferable course to bankruptcy where the creditors may get nothing.

[10]  In this application for a summary instalment order, Mr McCready identifies his unsecured debts as $35,511.83. He says that his income was $441 a week (from a State pension). He said that he spent $405 a week and therefore had a surplus of some $36 a week. He proposed to pay instalments of $50 a fortnight for a period of five years. That would repay 24 cents in the dollar of the total debts owed and 24 cents in the dollar of the Judgment Creditors.

[11] Mr McCready said that he was due to receive a lump sum from Accident Compensation Corporation of some $3,000 in February 2014 which he would pay to his creditors. He noted that there may be a change in his financial circumstances which would enable him to increase his fortnightly payments and pay his creditors a better return.  If that happened the Summary Instalment Order would be varied.

[12] Mr McCready in an affidavit filed on 2 October 2013 provided some further information regarding his financial circumstances. He noted that although the Judgment Creditor’s estimate of his debts exceeded $43,000 at least $2,800 of that sum was a secured debt which could not be part of a Summary Instalment Order. This order was concerned only with unsecured debts. There were also disputes he said about the Creditor’s claim for judgment interest and costs on these proceedings.

[13]     As to his personal circumstances, Mr McCready said was currently paying

$106 a fortnight to Instant Finance as a secured creditor. He said that this loan would be repaid in full in a further 26 payments or one year. He would then be able to increase his payments to his creditors by that $106 a fortnight meaning payments would be $156 a fortnight.

[14]  He said in his affidavit “I have also confirmed the tax refund for year ending 31 March 2013 of $3,000 will be paid to creditors” (sic). He said that the tax reimbursement was being held up because the Judgment Creditor was refusing to provide a relevant taxed invoice to him. Finally, he said that he had applied to the Legal Services Agency to write off a $5,500 debt which was included in his total debts.

[15] As to his assets and income he said he had a motor vehicle, a 1995 Volvo which had serious mechanical problems and had been recently sold for $350 and he had brought a 1994 Rover for $710 in its place.

[16] Mr McCready claimed that he was employed by New Zealand Private Prosecution Service Limited at $125 per hour which undertook private prosecutions particularly in the District Court. He said the Service was recognised as a prosecutor in its own right by the District Court. That company owed him significant money for work he had done. He said that that company was self funding from paid services. It had for the two months ending 30 September, a gross income of $1,704. He was confident that as an employee of that company he would earn further significant money which he would put toward payment of his creditors.

Discussion

[17] As  I  have  noted  I  accept  that  it  is  not  possible  to  confidently say  that Mr McCready’s unsecured debts were more than $40,000 and therefore a summary instalment order could not be made.   What is clear is that if they are less than

$40,000 they are not much less than that sum.

[18] I am not satisfied that it would be just and equitable for me not to make an order of adjudication and I am not satisfied there is any other reason that an order should not be made.

[19] Much of Mr McCready’s information provided in support of his claim that he can repay all the debts of his creditors within three to five years is speculative and some is simply wrong. The only information that I can be satisfied is relatively accurate and reliable is the information in his application for a summary instalment order. He has promised to pay $50 a fortnight for five years and if the does so he will repay 24 cents in the dollar to his creditors.

[20] There is no substantive evidence that Mr McCready will receive a lump sum from Accident Compensation Corporation nor is there anything which binds him to pay this sum to his creditors if he does receive it.

[21] As to his tax refund there is frankly little hope that Mr McCready will be paid this claimed refund. The claimed refund arises from the judgment debt (the subject of these proceedings). The judgment debt is a costs order made in favour of the Judgment Creditor against Mr McCready. It arises from litigation between them. Mr McCready says that the solicitors for the Judgment Creditor should provide him with an invoice for the amount of the judgment debt because he is paying for the Judgment Creditor’s legal services in the costs order made by the courts.

[22] As counsel for the Judgment Creditor pointed out no service  has  been provided by Green Cab’s solicitors for Mr McCready and therefore no invoice could be provided and no reimbursement of GST to Mr McCready. There is little or no prospect of Mr McCready receiving any tax refund.

[23] There is no information about whether the Legal Services Agency  are prepared to right off its debt to Mr McCready and so I must proceed on the basis that that sum is owing.

[24] There is nothing to suggest that the New Zealand Private Prosecution Service Limited would be in any position to pay Mr McCready a salary for the work he is doing. The only income it has received so far is a small amount over the past two months for the provision of accountancy services by Mr McCready. Mr McCready’s hope that the company will somehow obtain costs in private prosecutions against defendants is, in my assessment, extremely unlikely and if obtained likely only to be very modest. I, therefore, cannot see it is at all likely that Mr McCready’s income will increase in the foreseeable future.

[25] There are other reasons to be concerned about Mr McCready’s proposal more generally. Mr McCready has previously been bankrupt; he was released from that bankruptcy in 2006. Mr McCready has convictions involving tax fraud as well as a conviction for blackmail.

[26] Mr McCready is exposed to other liabilities in the meantime. He is the informant in two private prosecutions where costs orders could be made against him personally.

[27]   To  return  to  Mr McCready’s  proposal.   It  involves  a  modest  payment; 24 cents in the dollar payment over five years. There are reasons to be concerned about Mr McCready’s reliability in keeping to any arrangement. He has seriously overestimated his capacity to make further payments either lump sum or income related.

[28] Even in its current form I doubt Mr McCready’s commitment to making fortnightly payments for five years.

[29] For the reasons given, therefore, I made at 11.01 a.m. on 2 October 2013 an order adjudicating Mr McCready bankrupt.

Ronald Young J

Solicitors:

Duncan Cotterill, Wellington