McGrath v Finance Now for Warehouse Financial Services Limited

[2020] NZHC 1022

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2019-409-698

[2020] NZHC 1022

UNDER

the Insolvency Act 2006

BETWEEN

TRACEY McGRATH

Insolvent

AND

FINANCE NOW for WAREHOUSE FINANCIAL SERVICES LIMITED, FINANCE NOW LIMITED, LATITUDE FINANCIAL SERVICES LIMITED and WESTPAC NEW ZEALAND LIMITED

Creditors

Hearing:	14 May 2020
Appearances:	G P Davis (as agent) for the Insolvent
Judgment:	18 May 2020

JUDGMENT OF ASSOCIATE JUDGE LESTER

This judgment was delivered by me on 18 May 2020 at 2.00pm pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar 18 May 2020

McGRATH v FINANCE NOW FOR WAREHOUSE FINANCIAL SERVICES LIMITED [2020] NZHC 1022 [18 May 2020]

[1]                 The insolvent, Ms Tracey McGrath, seeks approval of a proposal under Part 5 of the Insolvency Act 2006 (“the Act”).

[2]                 Ms Liggins is the provisional trustee named in the proposal. The proposal was lodged with the Court in early December 2019 and sent by Ms Liggins to the creditors on 17 December 2019. The proposal was sent by email to the creditors by Ms Liggins. While I have previously noted that notification of a proposal by email is not strictly in accordance with s 330(1) of the Act, the practical reality is that all creditors responded to the proposal, thereby confirming receipt.1

[3]The debts of the insolvent total $81,952.

[4]                 While I have said all creditors responded to the proposal, three creditors to the value of $49,285 voted in favour of the proposal prior to the notified meeting date. All creditors who voted in favour voted by way of postal vote.

[5]                 The fourth creditor, Latitude Financial Services, while on the day prior to the creditors’ meeting confirmed the amount outstanding by the insolvent, did not provide a postal vote. Ms Liggins followed up with Latitude Financial Services, given the creditors’ meeting was the next day. Latitude Financial Services did not return its postal vote until 7:00pm on the date of the proposal meeting, which the proposal advised was being held at 9:00am. Accordingly, Latitude Financial Services’ vote (and I am not told whether it was for or against the proposal), was not counted. All those who voted, voted in favour of the proposal.

[6]                 With the proposal having been passed, Ms Liggins then applied to the Court for the proposal to be approved. Ms Liggins has filed an affidavit in relation to the giving of notice of the application for approval. Again, that notice was given by email and, again, there are doubts as to whether service by email would otherwise be valid, but Ms Liggins sought and obtained email confirmations from each of the creditors that they received notification of the application for approval. Accordingly, I consider each of the creditors was given notice of this application. No creditor, including Latitude Financial Services, has filed any objection.

1      Re ANZ National Bank Ltd, ex parte Henshaw [2019] NZHC 3330.

[7]                 Turning to the merits of the application itself. The proposal is that a little over 50 cents in the dollar will be paid by the insolvent to her creditors by way of payments of $530 per fortnight for a period of three years. The payments are going to be funded from the insolvent’s employment. She has been in the same employment for 15 years.

[8]                 Section 327 of the Act requires that the proposal be in the prescribed form and accompanied by a statement of affairs in the prescribed form. I am satisfied that that has been done. I am also satisfied that s 330 of the Act (meeting of creditors) has been satisfied.

[9]                 It is well established that the Court should only refuse approval if one or more of the trigger paragraphs in s 333(3) of the Act apply. The approach normally taken to proposals is set out by Hardie Boys J in Re Duncan Holdings Ltd (in liquidation).2

[10]              Justice Hardie Boys approach was subsequently quoted with approval by the Court of Appeal in Farmer v Rowley:3

I think the Court should accept the view of the creditors, or the majority of them, and grant approval unless it is apparent that one of the grounds for refusing approval exists.

[11]              The very heading of s 333 of the Act, that is “Court must approve proposal”, emphasises the limited nature of the discretion to refuse approval.

[12]              The reality is that given Ms McGrath has essentially no realisable assets that her bankruptcy would return nothing to her creditors. Her creditors have accepted the proposal. In the absence of any terms of the proposal, the terms of the proposal in  the circumstances are reasonable and are calculated to benefit the general body of creditors. I am not aware of any reason why it is not expedient that the proposal be approved.

2      Re Duncan Holdings Ltd (in liquidation) HC Christchurch M306/81, B138/81, 1 February 1982.

3      Farmer v Rowley [1992] 2 NZLR 195 (CA) at 205.

[13]              Accordingly, there is an order approving the proposal by Tracey McGrath made to her creditors under Part 5, subpart 2 of the Insolvency Act 2006, lodged with the Court on 13 December 2019.

Associate Judge Lester

Solicitors:
Webster Malcolm Law, Warkworth