Thompson v Diston - [2015] NZHC 2050

IN THE HIGH COURT OF NEW ZEALAND PALMERSTON NORTH REGISTRY

CIV-2015-454-35 [2015] NZHC 2050

UNDER The Insolvency Act 2006

IN THE MATTER OF

a proposal by Guy Marshall Diston under
Part 5, Subpart 2

BETWEEN

STEVEN JAMES TOMPSON AND KAREN MICHELLE TOMPSON Judgment Creditors

AND

GUY MARSHALL DISTON Judgment Debtor

Hearing: 22 July 2015 and 12 August 2015

Counsel:

D A Bleier for J Scutter, the trustee named in the proposal

Judgment:

28 August 2015

JUDGMENT OF ASSOCIATE JUDGE SMITH

[1] Mr Scutter applies for approval of a proposal made by Mr Diston to his creditors in April 2015.

[2] Mr Diston was a shareholder and director of a company called Waikanae Plastics Limited (Waikanae). The company failed, and on 6 May 2014 it was placed in liquidation. Mr Diston was left with a substantial number of debts, many of them resulting from personal guarantees of Waikanae’s liabilities which he had given. The debts far exceeded Mr Diston’s ability to pay, and in April 2015 he put a proposal to his creditors under subpart 2 of part 5 of the Insolvency Act 2006 (the Act).

[3] Mr Diston’s proposal was accepted by the required majority of his creditors at a creditors’ meeting held on 8 May 2015. Mr Scutter now makes the required
application for Court approval of the proposal, under s 333(1) of the Act.

STEVEN JAMES TOMPSON AND KAREN MICHELLE TOMPSON v GUY MARSHALL DISTON [2015] NZHC 2050 [28 August 2015]

[4] The application was first called in the list on 30 June 2015. No notices of opposition had been filed, but I indicated to Mr Bleier that I would wish to hear further submissions on two questions. Those questions were:

(a) whether unsecured creditors would in fact be better off under the proposal than they would be if Mr Diston were adjudicated bankrupt; and

(b)whether the proposed dividend to unsecured creditors, which appeared to be less than one cent in the dollar, was so low that the Court should regard it as unreasonable.

[5] I adjourned the application for hearing on 22 July 2015.

[6] Before the case was called on 22 July 2015, an affidavit was filed by Mr Tompson, one of the judgment creditors. Mr Tompson had voted against the proposal. Mr Tompson expressed certain concerns about the proposal, including an allegation that Mr Diston and/or his wife were then operating a business from their home in Waikanae which had not been disclosed to creditors. He stated that he considered that Mr Diston’s conduct ought to be investigated, and that there would be no investigation if the proposal were approved. Mr Tompson also contended that the equity in the home owned by Mr Diston and Mrs Diston at Elizabeth Street in Waikanae is such that a sale would yield more for creditors than the amounts they would receive under the proposal.

[7] Mr Tompson elected not to appear in support of his objection when the case was called on 22 July 2015, but I considered…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Thompson v Diston

Details

AGLC: Thompson v Diston [2015] NZHC 2050
Case: [2015] NZHC 2050
Decision Date: 28 August 2015

CaseChat Overview and Summary

In Thompson v Diston, Guy Marshall Diston applied for Court approval of a proposal he made to his creditors under subpart 2 of part 5 of the Insolvency Act 2006. Diston was left with a substantial number of debts, many of them resulting from personal guarantees of Waikanae’s liabilities which he had given. Diston's proposal was accepted by the required majority of his creditors at a creditors’ meeting held on 8 May 2015. The issues to be determined were whether the proposal was unreasonable or not calculated to benefit the general body of creditors, and whether there was any reason to conclude that it would not be expedient to approve the proposal. The Court found that the proposal was unreasonable because the dividend to unsecured creditors would be less than one cent in the dollar, and there was no tangible benefit for creditors in the proposal. The Court also found that there was no reason to conclude that it would not be expedient to approve the proposal. The application for an order approving the proposal was therefore refused.

Orders