Urbani v Murphy HC CHCH CIV 2007 409 1406

[2008] NZHC 2287

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

CIV 2007 409 1406

CIV 2007 409 1407

IN THE MATTER OF     Of a Proposal under Part XV of the Insolvency Act 1967 made by PETER FRANCIS URBANI, Insolvent

ANDIN THE MATTER OF  Of a Proposal under Part XV of the Insolvency Act 1967 made by JENNIFER KAREN MILLER, Insolvent

BETWEEN  PETER FRANCIS URBANI JENNIFER KAREN MILLER Judgment Debtors

ANDMARJORIE MURPHY Judgment Creditor

Hearing:         29 April 2008

Appearances: N R Soper for Judgment Creditor

C T Gray for Judgment Debtors

Judgment:      30 April 2008 at 2.30pm

JUDGMENT OF ASSOCIATE JUDGE CHRISTIANSEN

[1]      The  judgment  debtors  (Mr  Urbani  and  Ms  Miller)  apply  for,  and  the judgment creditor (Ms Murphy) opposes, their applications to the High Court for approval of their insolvency proposals.

[2]      The proposal trustee reports there is sufficient support to meet statutory guidelines for approval.  Ms Murphy calculates Mr Urbani’s offer of $4000 (net of trustee’s fees) will realise 1.02% of his total debt to unsecured creditors.   She calculates Ms Miller’s proposal equates to 1.55% of her debt.  There is no challenge

to those calculations.

PETER FRANCIS URBANI AND ANOR V MARJORIE MURPHY HC CHCH CIV 2007 409 1406  30 April

2008

[3]      Ms Murphy’s opposition challenges the proposal process, and the integrity of its outcome.

The proposal of Mr Urbani

[4]      It  is  dated  7  November  2007.     It  lists  secured  creditors  as  totalling

$392,366.11.  Those include:

(a)       Ms Murphy  $ 57,889.86 (b)  American Express  $ 21,884.47 (c)  Judith Urbani           $155,000.00 (d)  Lissen Limited  $ 65,000.00 (e)       Sound Houndz Ltd  $ 23,500.00 (f)  Dale Lester           $  8,000.00 (g)  Mickey Finns City Ltd $ 24,379.00 (h)  Mickey Finns Alehouse Ltd           $ 19,230.00 (i)  Gillions & Sons $ 17,482.68

[5]      The proposal notes the judgment debtor’s total assets are valued at $2000.00. [6]     Ms Murphy and Gillions & Sons voted against the proposal.

[7]      Ms Urbani, Lissen Limited, Sound Houndz Limited, and Hereford Chattel

Co. Limited voted for the proposal.    The trustee calculated their votes to equal

79.01%.

[8]      The trustee’s report explains the Hereford Chattel Co. Limited (Hereford) obtained an assignment of the liability of Mickey Finns City Ltd., (MF City) and Mickey Finns Alehouse Ltd (MF Alehouse).

The proposal of Ms Miller

[9]      It lists unsecured creditors totalling $257,889.86.  Those creditors comprise: (a)      Ms Murphy  $ 57,889.86

(b)       Ms Urbani  $155,000.00 (c) Lissen Limited  $ 45,000.00

[10]     The proposal was opposed by Ms Murphy.  The remaining creditors voted for it.  The trustee calculated those voting for comprised 77.29% as to value and two to one in favour.

Legal principles

[11]     The Insolvency Act 1967 (the Act) applies to the present case.   Section

143(3) provides:

The Court may refuse to approve the proposal if it is of the opinion—

(a)    That the provisions of this Part of this Act have not been complied with; or

(b)      That the terms of the proposal are not reasonable or are not calculated to benefit the general body of creditors; or

(c)     That for any reason it is not expedient that the proposal should be approved.

Opposition to Mr Urbani’s proposal

[12]     The various grounds include:

(1) The Act was not be complied with because:

(a)  Hereford  voted in favour of the proposal for both of the Mickey Finns’ debts, whereas only the MF Alehouse debt had been assigned to it.

(b) Mr Urbani did not list all his assets in that he failed to disclose shareholdings in two companies.

(2)The terms of the proposal are not reasonable nor calculated to benefit the general body of creditors because:

(a) The  proposal  by  Mr  Urbani  equates  to  approximately  a  1%

payment to all the creditors.

(b) Mr Urbani has made no attempt to pay the debtors over time when he was in paid employment.

(c) It is not expedient that the proposal should be approved because:

(i) The interests of the public weigh against allowing such a low dividend to creditors.

(ii)A good portion of the creditors were either family members or former, or current, business associates of Mr Urbani.

(iii)His conduct is such that the stigma of bankruptcy should not therefore be avoided.

(iv)Mr Urbani’s actions and extent of debt should be the subject of fully detailed investigation and oversight by the Official Assignee.

Opposition to Ms Miller’s proposal

[13]     They include:

(1)The terms of the proposal are not reasonable nor calculated to benefit the general body of creditors because:

(a) The  proposal  equates  to  approximately  a  1%  payment  to  all creditors.

(b) Ms Miller has made no attempt to make payments to creditors. (c) The IRD is excluded from the proposal.

(2) It is not expedient that the proposal should be approved because:

(a) The interests of the public weigh against allowing such a low dividend.

(b) A good portion of the creditors are either  family members  or former, or current, business associates of Ms Miller.

(c) Ms Miller’s conduct is such that the stigma of bankruptcy should not therefore be avoided.

(d) Ms Miller’s actions and the extent of debt should be the subject of fully detailed investigation and oversight by the Official Assignee.

Evidence in opposition to the proposals

[14]    It has been provided in affidavits from Ms Murphy and from Mr M S Henderson.

Ms Murphy’s affidavit

[15]     She is 80 years of age.  Ms Miller is her granddaughter.  On 12 April 2007 she obtained a judgment against Ms  Miller  and  Mr  Urbani  when  they filed  an admission of her claim.

[16]     In February 2004 she lived in Queensland.   At their invitation she flew to New Zealand for a visit.  They suggested she live with them.  In August 2004 she flew to New Zealand to look for a home for herself.  At that time she mentioned to Ms Miller she had a $70,000 term deposit investment with the National Bank of New Zealand.   It was due to mature in November 2007.   Upon maturity, I infer, the investment was shifted to another bank.  Ms Murphy arranged for Ms Miller to have signing authority and a power of attorney over her accounts.   She said after she returned to Australia, and unknown to her, Ms Miller transferred the funds to Mr Urbani’s account.  She said later their relationship deteriorated when she found out what happened to her funds.  She said neither Ms Miller nor Mr Urbani would repay it to her.

[17]     Initially,  they resisted  her  claim  through  the Christchurch  District  Court. Among matters raised in defence, included:

(a) Ms Murphy was trying to  hide  the  funds  from  the  Australian authorities.

(b) That Ms Murphy had agreed to loan the funds to Mr Urbani by way of long term loan for his business.

(c) They claim Ms Murphy should have been paying rent to them while she stayed with them in Christchurch at their invitation.

[18]     Ms Murphy denied each of those claims.  In the outcome they did not defend her claim, indeed admitted it.   She says the funds in question represented her retirement savings.

[19]     Concerning Mr Urbani’s proposal, she notes that while there is evidence that the  MF  Alehouse  debt  of  $19,230  was  apparently  assigned  to  Hereford  on  15

November 2005, and later subsequently assigned to a Mr John McCarthy, there is no evidence showing the MF City  debt of $24,379 having been assigned at all.  It was Mr McCarthy who signed the proof of debt for the proposal meeting.

[20]     Ms Murphy is concerned that the proposals will only return to her about $705 from Mr Urbani and about $1,100 from Ms Miller.   She considers those amounts “infinitesimal” compared to what she is owed.

[21]     She notes Mr Urbani receives wages of approximately $670 per week in hand, the equivalent,  she  estimates,  of  a  salary of  $46,000.    She  recalls  at  the creditors’ meeting Ms Miller stating she received approximately $600 per week in hand, roughly equivalent  to an  annual  gross  salary of  $41,000.    Although  they receive a net amount in excess of $1,200 per week there has been no attempt by either of them to make any payment due to her.  She notes their combined salary is approximately four times that which she receives each week.

[22]     Ms Murphy has concerns regarding the debt claimed by Mr Urbani’s mother in the sum of $155,000.  The evidence discloses a “first advance” in March 2003. She queries how Ms Miller has assumed an obligation to be jointly and severally liable for those funds, for they were advanced for Mr Urbani’s business purposes.

[23]     Ms  Murphy  similarly  challenges  the  debt  claimed  to  be  due  to  Lissen Limited, and notes that company was owned by a Mr Fox-Hulme whom, she says, is still a co-director and shareholder with Mr Urbani in a company called Blast Records Limited.

[24]     Ms Murphy is concerned that a large proportion of the debts in question involve family, or business associates.  She wishes a more detailed investigation be

undertaken of these debts and the circumstances surrounding them, and the documents that have been provided concerning them.   Further Mr Urbani did not disclose in his assets his shareholding in two companies, including Blast Records Limited.

Affidavit of Mr Henderson

[25]     Mr Henderson is a solicitor of the firm representing Ms Murphy.   On 4

December 2007 he attended the creditors’ meetings for Mr Urbani and Ms Miller. He took notes of the meeting at the time and afterwards prepared a typed summary from these.  Among matters noted included:

(a) Mr Urbani has had a negative balance in his bank account for approximately 2 – 3 years.

(b) He receives approximately $670 net wages per week.

(c) When asked, he initially denied having any shareholdings in other companies.   Later he did acknowledge a shareholding in two companies.  He said they were non-trading companies and had not traded since Christmas 2001.   He said the companies have no assets and no liabilities.

(d) Mr  Urbani  said  a  1970  Camaro  motor  vehicle  kept  under  a tarpaulin at his property was owned by Mr Fox-Hulme.  He said he used to own it, but transferred it to Mr Fox-Hulme to clear part of his debt to him.  He said the value of the car was $27,000, and this amount was credited to the  amount  he  owed  to  Mr  Fox- Hulme’s company Lissen Limited.   He thought that he had transferred   the   car   to   Lissen   Limited   more   than   2   years previously.

(e) Mr Urbani estimated that of the funds borrowed from his mother about   $100,000.00   was   applied   to   costs   and   funding   an

employment dispute which he lost.   Other funds in the sum of about $10,000 to $20,000 were used for refinancing costs associated with his motor vehicle (the same one sold for $2000 to help fund the creditor’s proposal).   The balance borrowed from his mother was used for the Blast Records business.

(f) Mr Urbani’s business association with Mr Fox-Hulme ended in

2005.  He received nothing in the outcome.

(g) His original debt to Lissen Limited was about $100,000.00.   He sees little of Mr Fox-Hulme presently.  Their relationship is tense due to the money Mr Urbani owes Mr Fox –Hulme.

(h) Mr Urbani acknowledged Mr McCarthy is a close friend.   The “Mickey Finns debt” was for sound equipment which had been sold but for which Mr Urbani had not accounted for the proceeds.

[26]     Concerning Ms Miller’s circumstances, Mr Henderson noted:

(a) Ms Miller had been living with Mr Urbani for six years.  She said Ms Murphy would not accept a proposal for payment over time. Also she had no surplus income.

(b) She has “a couple of hundred dollars” in her bank account.

(c) Ms Miller stated she had no shares and was not a director of any company, and was not involved in any of Mr Urbani’s business interests.

(d) As to why she had responsibility for Ms Urbani’s debt, Ms Miller stated she was living with Mr Urbani at the time the debt was incurred.  She understood the debt to be for legal fees and some of it was used for Mr Urbani’s companies, but she did not know the extent of it.  She understood from the beginning that she would be responsible for repayment of Mr Urbani’s debt to his mother.

(e) She believes there is a document stating she owes money due to

Lissen Limited

Evidence in support of proposals

[27]     This was provided by affidavits from Mr Urbani, Ms Miller and from Mr

Urbani’s mother.

Mr Urbani’s affidavit

[28]     He  exhibits  a  copy of  an  assignment  of  debt  between  Hereford  and  Mr McCarthy.  He says it proves he is indebted to Hereford in the amount for which the proof of debt has been provided.  Although the assignment to Mr McCarthy refers only to the MF Alehouse debt, the two Mickey Finn companies have the same director , namely Mr McCarthy.   Mr  McCarthy is  also  one  of  the  directors  of Hereford.   Mr Urbani understood that Mr McCarthy was the owner of the two Mickey Finn companies and, therefore, believed that both debts were technically owing to Mr McCarthy in person.

[29]     Although the companies he remains a shareholder of have not traded for a number of years, Mr Urbani would like to return to the music recording business one day, and would like to use those companies to begin trading again.   He says he disclosed his shareholding in these companies to the provisional trustee, but was advised as the companies had no assets they had no financial worth and were not therefore listed as assets in his proposal.

[30]     In his proposal he identifies his only asset as the sum of $2000 from the sale a car he jointly owned with Ms Miller.  He said the car was sold in order to realise some funds to pay creditors.  He now says he is holding this sum in cash at his home. Since then he has purchased a new car which has been financed by way of loan from a finance company.   He says his employment contract requires him to supply a vehicle for his position as a branch manager.   He says his employer pays him a vehicle allowance as part of his salary package.   From this he must pay the loan instalments for the car, and pay for maintenance and service of the car.

[31]     He details his weekly outgoings as:

Rent  $155.00

Food  $180.00

Phone  $ 20.00

Car expenses  $245.00

Medical expenses  $ 30.00

Electric and gas  $ 20.00

TOTAL  $650.00

[32]     Mr Urbani is on a special diet due to his health problems.  This means he has to purchase special food types which are expensive.

[33]     His medical problems include sleep apnoea, and moderate depression.   He wishes to save for an operation to reduce his stomach so that he can lose weight. The estimated cost of that is $15,000.

[34]     The debts incurred and owing to Lissen are a result of some bad business decisions he made during the time he was a director Blast Studios.  In 2005 Mr Fox- Hulme agreed to take that company over.  He says a condition of the take over was that Mr Urbani’s company debts would be assigned to him.  Since then he has been unable to pay the debts to Mr Fox-Hulme, and as a result their relationship has become strained.

[35]     Mr Urbani denies Ms Murphy’s account regarding the money owed to her. He explained why, and says he and Ms Miller admitted the debt in order to avoid the costs of a defended hearing.

[36]     Mr Urbani incurred a debt to Sound Houndz when he sold some equipment on their behalf.   The payment for that equipment was deposited to his company account and immediately then applied to his company’s large overdraft.   In that outcome he agreed to be personally responsible for the debt to Sound Houndz.

[37]     The debts to the Mickey Finn companies was similarly incurred.   He was given equipment to sell on their behalf.  The payments received were deposited to his company account and also absorbed by the company’s large overdraft.  In those circumstances he agreed to be personally responsible for the debts to those two companies.

[38]     Mr Urbani attributes his insolvency and his bad business decisions to mental health issues he has experienced since he was 16.   He was diagnosed with post traumatic stress disorder in 2001 and suffered a mental breakdown at about that time. Because ACC would not fund any counselling he chose to commence proceedings against his former employers for the mental harm he had suffered while in their employ.

[39]     He prosecuted these legal proceedings while attempting to run his music business and also to continue in separate employment.  His stress led to illness and resulted in his hospitalisation.  His medication helped account for the increase in his weight.  He says sleep apnoea contributes to his problems.  He says without medical attention and weight reduction surgery his weight problem could be fatal.

[40]     He wishes to re-enter the music recording industry when financially able to do so.  He fears his reputation would be adversely affected if he was bankrupt.

Affidavit of Ms Miller

[41]     Her affidavit, also dated 17 April 2008, lists her only asset as being the sum of $2000 from the sale of their car.  Like Mr Urbani she will be borrowing $5000 from his mother for the purpose of paying creditors in the event the proposal is accepted.  Ms Miller’s weekly outgoings mirror those claimed by Mr Urbani, save she does not pay his vehicle costs.  Instead she has a separate weekly commitment of

$70 per week  for  fuel  expenses.    She  also  claims  a  sum  of  $20  per  week  for veterinarian expenses.

[42]     Presently, she borrows a vehicle to get her to and from work.  She works at a time when public transport is not available.

[43]     Ms Miller has a student loan to a value of approximately $17,000.  She has excluded the student loan from her proposal as she intends servicing it separately. She had done this because she  understands  that  student  loans  are  exempt  from bankruptcy and bankruptcy proposals, and that she must pay off this loan in full.

[44]     She  would  like  to  contribute  towards  the  cost  of  Mr  Urbani’s  weight reduction surgery to help him resolve his health issues.  Those issues, she says, have a profound effect on her life.

[45]     As for her accepting responsibility for Ms Urbani’s debt, she says it was her understanding of the law that as his de facto partner she was automatically jointly liable for all the debts Mr Urbani accrued in the course of their relationship.

[46]     As to her indebtedness to Lissen Limited, she says this relates to a debt that was incurred whilst she was a director of the Blast Studios Limited.

[47]     She denies taking her grandmother’s money without authorisation.  She has always denied this.  She says the reasons for Ms Murphy’s claims are family related, and due to a dysfunctional relationship concerning Ms Miller’s mother.

[48]     Ms Miller says the reasons for her insolvency relate to Mr Urbani’s mental health, and the affect that has had on his ability to make sound business decisions. His health issues continue, but she wishes to work with him to help those to be overcome.

[49]     She believes bankruptcy would affect her ability to continue in employment, because it would make financing a vehicle near impossible.  She needs a vehicle to get to and from work and cannot continue borrowing one.

[50]     Bankruptcy will affect her financial ability to have a family.

Ms Urbani’s affidavit

[51]     The affidavit from Ms Urbani deals with the circumstances of her loan of the sum of $155,000.00 to her son.

[52]     She says these funds were lent to her son and Ms Miller pursuant to term loan contracts.  The first was made to help fund Court action.  Mr Urbani asked for the loan and his mother provided it in good faith.   It was agreed a contract would be drawn to formalise the arrangement.

[53]     The second loan made was to help Mr Urbani clear some business related debts.  Again, it was agreed a written loan contract would record the arrangement.

[54]     She said after the loans were made it was agreed Ms Miller would be jointly and severally liable for the loans, because she was Mr Urbani’s de facto partner, and because the money was lent to improve their financial situation as a whole.

Considerations

[55]     In the ordinary course of events a Court will endorse a proposal approved by an insolvent’s creditors, that is unless one of the reasons set out in s 143 for refusing approval exists.

[56]     An opposing creditor bears a responsibility of showing that a proposal is not reasonable, but it is for the Court to decide whether the proposal would be expedient in the public interest.

[57]     The Court must accept or reject the proposal, for it does not have the power to give approval subject to conditions.

[58]     In determining considerations of the wider public interest, the Court may refuse a proposal even when it has been approved without objection.

The Mickey Finn debts

[59]     I  have  some  concerns  regarding  these.     They  are  separate,  but  were combined, and listed as being owed to Hereford in the report of the trustee.   The documentation shows that Mr Urbani’s debt to MF Alehouse was assigned to Hereford on 15 November 2005.  The company subsequently assigned that debt to Mr McCarthy, a director   and shareholder of  Hereford,  on  21  December  2006. Hereford was struck off the New Zealand Companies Office Register on 12 October

2007.

[60]     Hereford provided a proof of debt in its name and signed by Mr McCarthy. However, no evidence has been provided showing an assignment of the MF City debt to Hereford – despite requests from Ms Murphy’s solicitors that that evidence be provided.

[61]     Although the proof of debt was supplied by Hereford, the vote was given by Mr McCarthy who has only been able to provide proof of assignment of the single Mickey Finns debt totalling $19,230.00.

[62]     If the MF City debt is to be discounted, then the debtor is unable to provide the requisite 75% of creditors to obtain approval.

[63]     Ms Gray, for Mr Urbani, notes that Mr McCarthy was a director of both Mickey Finns companies, that they had the same shareholder and were treated by Mr Urbani and Mr McCarthy as being one and the same.   She says both debts were assigned to Mr McCarthy in December 2006, but the documentary evidence does not support this conclusion.  Ms Gray says that if there was an error on the proposal it does not affect the outcome because the only person affected is Mr McCarthy.

[64]     On the other  hand,  it  appears  to  me  that  in  the  absence  of  proof  of  an assignment to his own company, Mr McCarthy is on tenuous grounds in asserting a right on his own behalf.

Non-disclosure of assets

[65]     In my view, any perceived failure by Mr Urbani to list assets in company shareholdings is of little concern.  There is no evidence that shareholding has any value.   On questioning at the creditors’ meeting Mr Urbani, albeit latterly, acknowledged the shares in question.   On balance and for the other particulars he gave concerning that shareholding, the Court should accept his explanation that he was given advice by the proposal trustee that those shares have no value.

Reasonableness of the proposal

[66]     It is usual for a debtor to submit to the Court that his/her proposal provides greater benefit than if the proposal was rejected, in particular if in that outcome the creditor would receive nothing at all.

[67]     I  consider  that  submission  to  be  a  starting  point.    Whilst  accepting  the majority view of the creditors ought to be given due recognition, in particular where the debts have a commercial character, an offer of barely 1%, and involving a sum of money which equates to about one and a half week’s of the debtors’ combined wages must, in all the circumstances, be viewed as inconsequential.

[68]     In those circumstances, a creditor is entitled to take the view that she would be no worse off receiving nothing.

[69]     In  my  view,  an  offer  of  payment  of  about  1  cent  in  the  dollar  is  not reasonable.   Also the debtors cannot make any payment at all without borrowing from Mr Urbani’s mother.  Their total contribution is $2000 from the sale of a motor vehicle.  Unquestionably, they are both insolvent.

No attempt of the judgment debtors to make contributions from their salaries.

[70]     Their combined salaries equate to about $1,250 net per week.  I would have expected the debtors to have provided additional information to support their claims of weekly expenditure.  Their claim of $360 per week for food appears high.   Mr

Urbani’s claim of extra expense due to his special health needs is explained in general terms only.

[71]     Mr Urbani says he spends about 30% of his net income on car expenses, which he justifies in order to retain the employment position he holds.  He says he receives a car allowance as part of his wage, but the extent of this is not identified. Because of the significance of the claim for car running expenses, the Court should expect more material than has been provided.

[72]     The debtors explain the significance of Mr Urbani’s health problems and their  hopes  for  a  successful  medical  outcome,  but  they  demonstrate  a  present inability to accumulate any savings to this end.

Whether the votes of “friendly” creditors should be disregarded

[73]     The debtors claim their debts have been bona fide incurred.  This is an issue which invariably concerns the Court upon opposed applications of this kind.   The Court’s view is that in some circumstances the votes of some creditors may carry less weight than the votes of others, even if their claims are genuine and voluntarily given.  It is really a question of  determining whether the creditors will likely receive some benefit in the outcome.   Often that is observed with creditors with whom a debtor retains a personal or business relationship.

[74]     The Court should accept that Mr Urbani owes his mother $155,000.   The Court should not necessarily accept Ms Miller has that liability.  The funds were not lent to her, but rather to pay Mr Urbani’s legal costs, and to support his business aspirations.  Likely there is no consideration for Ms Miller’s promise to pay based upon her claim that she was Mr Urbani’s de facto partner.

[75]     Ms Urbani is prepared to make yet a further advance to the debtors, provided their proposal is approved by the Court.   Without this offer there is, in reality, nothing at all for the creditors.

[76]     The position concerning Mr Fox-Hulme is unclear.   His company (Lissen Limited) is purportedly owed significant sums by Mr Urbani and Ms Miller.  Yet the evidence suggests they offered to become responsible for a debt that was, it appears, incurred by Mr Urbani’s company.   Also, despite Mr Urbani’s claim, there is no evidence Ms Miller has at any time been a director or shareholder of the company in question.  I cannot conceive what consideration she could give in order to assume any legal responsibility to meet the debt concerned.

[77]   Further, there is a motor vehicle worth apparently $27,000 which was transferred to Mr Fox-Hulme two years ago, but which remained under cover and parked in the debtors’ driveway – at least until November 2007.  These facts need to be  considered  against  Mr  Urbani’s  claim  that  his  relationship  with  his  former business partner is tense.

[78]     Likewise, it seems to me that Mr Urbani agreed to assume responsibility for debts to the Mickey Finn companies in circumstances where these debts were originally incurred by his own company.  It must be questionable whether, in law, he is responsible for those debts.

The debtors’ conduct

[79]     The Court would be concerned if despite claims of impecuniosity there was evidence that the debtors’ deliberately and wilfully squandered assets, or lived extravagantly, or were persons of questionable character.

[80]     Ms Murphy claims the debtors’ misappropriated her funds.  They deny this. They say they capitulated because they could not afford the legal costs of defending her claim.  Initially and unquestionably, however, they pursued a defence which, in part, challenged Ms Murphy’s character.  This, all the while claiming she advanced them  the  funds  by way of  business  loan.    Whatever  the  position,  the  evidence suggests Ms Miller arranged for a transfer of the funds to Mr Urbani’s account while Ms Murphy lived in Australia.  Also there appears no record of a loan arrangement.

[81]     The debtors’ reasons for not making any payment at all to Ms Murphy are, they say, because she was not prepared to receive anything less than a lump sum. The evidence suggests the debtors never had any means to pay a lump sum, nor indeed anything by way of regular instalment.  It is reasonable to infer that when the debtors signed admissions of claim they never had any intention at all of paying anything to Ms Murphy.

Non-inclusion of Ms Millers’ Student Load debt

[82]     Ms Miller says this debt, totalling $15,000, was not listed because she was told it would be payable in full regardless of a bankruptcy.  That is not correct.  The loan will only be paid  as bankruptcy realisations and management  allows.   Ms Millers’ claim to settle this debt in full in time seems, with respect, unrealistic.  This debt should have been listed in her proposal.

Summary

[83]     There are question marks concerning the debtors’ responsibility for debts to Lissen Limited, and to the Mickey Finn companies.  I have identified concern about the proof of debt lodged by Mr McCarthy in respect of MF City.

[84]     Despite plans to save for a surgical procedure, and for Mr Urbani to revive dormant trading companies in order to re-enter the music recording industry, the Court has no confidence whatsoever he will achieve these objectives.

[85]     He  blames  his  business  collapse  on  bad  business  decisions  made  whilst suffering from depression, a condition which apparently persists.

[86]     In my view, the debtors have neither the wit nor the means to realise their ambitions on their own.   Whether it is Mr Urbani’s business inability which has contributed to his health position, or vice versa, the Court does not really know.

[87]     For all the considerations that I briefly allude to in this summary there is good cause for further investigation and oversight by the Official Assignee.  I am not

convinced by claims of bona fides, or up front and honest dealings with former business associates.  Also, I have concerns that the debtors aspire to pick up their business dealings where they left off.  This could well provide the potential for risk to those with whom they make business dealings.

[88]     Regardless, their offer of about 1 cent in the dollar has no merit at all. [89]    The applications for approval are dismissed.

[90]     Ms Murphy’s bankruptcy petitions have been adjourned pending the outcome of the debtors’ applications for proposal approval.   Those petitions are now to be called in the Bankruptcy List at 10am on 12 May 2005 in Christchurch.

Solicitors

Anthony Harper Lawyers, Christchurch for Judgment Debtors

Corcoran French Christchurch for Judgment Creditor