Vegar v Aorangi Forests Ltd - [2014] NZHC 1109

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2013-404-3163 and 3166 [2014] NZHC 1109

IN THE MATTER
of a proposal by Peter Thomas Vegar and a

proposal by Helen Jean Vegar under the
Insolvency Act 2006

BETWEEN

PETER THOMAS VEGAR First Insolvent

HELEN JEAN VEGAR Second Insolvent

AND

AORANGI FORESTS LTD & ORS Creditors

CIV-2013-404-3685

IN THE MATTER of an appeal under Regulation 32(1) of the Insolvency (Personal Insolvency) Regulations 2007

BETWEEN ANTHONY JOHN EBERT AND JENNIFER JANE EBERT Appellants

ANDPETER THOMAS VEGAR Respondent

CIV-2013-470-536

IN THE MATTER of an appeal under Regulation 32(1) of the Insolvency (Personal Insolvency) Regulations 2007

BETWEEN HILLERSDEN VINEYARD CONTRACTING LTD (IN LIQUIDATION)
Appellant

ANDPETER THOMAS VEGAR AND HELEN JEAN VEGAR
Respondents

VEGAR v AORANGI FORESTS LTD & ORS [2014] NZHC 1109 [23 May 2014]

Hearing: 17 December 2013 and 7 February 2014

Counsel:

RB Stewart QC for Provisional Trustee
K Fulton for Mr and Mrs Vegar
SP Bryers for Trustees of Florence Trust
JK Boparoy for Hillersden Vineyard

Judgment:

23 May 2014

JUDGMENT OF BREWER J

This judgment was delivered by me on 23 May 2014 at 3:00 pm pursuant to Rule 11.5 High Court Rules.

Registrar/Deputy Registrar

Solicitors: Kevin McDonald & Associates (Takapuna) for the Provisional Trustee
Craig Griffin & Lord (Auckland) for Mr and Mrs Vegar
Gaines Law (Blenheim) for Trustees of the Florence Trust
Waterstone Insolvency (North Shore City) for Hillersden Vineyard

Introduction

[1] Mr Peter Vegar and Mrs Helen Vegar are insolvent. On 11 July 2013, a creditors’ meeting was convened in Tauranga to allow their creditors to vote on proposals which they made pursuant to s 326 of the Insolvency Act 2006 (“the Act”). They were linked proposals and I will refer to them as “the proposal”. Five creditors voted for the proposal, three against it, and three of the votes were rejected by the Provisional Trustee of the Creditors’ Proposal.

[2] The reason the votes were rejected was that the Provisional Trustee did not consider that the voters were creditors with provable debts. He, therefore, used his power under reg 32(1) of the Insolvency (Personal Insolvency) Regulations 2007 (“the Regulations”) to reject their claims.

[3] Two of the thwarted voters, the Florence Trust (“the Trust”) and Hillersden Vineyard Contracting Ltd (in liquidation) (“Hillersden”) now appeal the Provisional Trustee’s rejection of their claims.1

The issue

[4] As I explain below, the Trust and Hillersden are prospective creditors. The issue is whether a prospective creditor has a claim which can be admitted for the purposes of voting at a creditors’ meeting.

Background

The Trust’s claim

[5] The Trust says it lent $100,000 to Mr Peter Vegar. It has a single page document, not professionally drawn, which it says evidences the debt. Mr Peter Vegar denies being a debtor under the document and has a number of arguments, factual and legal, as to why he is not a debtor. On 8 August 2012, the Trust commenced proceedings against Mr Vegar in the District Court at Warkworth seeking judgment for the…

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.

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Details

Case: [2014] NZHC 1109
Decision Date: 23 May 2014

CaseChat Overview and Summary

Vegar v Aorangi Forests Ltd was a case where Mr and Mrs Vegar, who were insolvent, proposed a creditors' arrangement to pay off their debts. Some creditors, including the Florence Trust and Hillersden Vineyard Contracting Ltd (in liquidation), wanted to vote on this proposal but were rejected by the Provisional Trustee. The Provisional Trustee believed that the creditors did not have valid debts to be able to vote. The Trust and Hillersden appealed this decision. The court had to decide if prospective creditors with disputed claims can vote at a creditors' meeting. The court found that only creditors with provable debts, which are debts that would be payable in bankruptcy, can vote. Prospective creditors, whose claims are not yet proven, cannot vote. The court also found that the Provisional Trustee was within his power to reject the claims of the Trust and Hillersden for voting purposes. The appeals were dismissed.

The court's decision was based on the interpretation of the Insolvency Act 2006 and the Insolvency (Personal Insolvency) Regulations 2007. The court found that the definition of "provable debt" in the Act only includes debts that are currently owed, and not contingent or prospective debts. The court also found that the regulation allowing creditors to vote when there is uncertainty about their claims is an administrative provision, not a judicial decision on the merits of the claim. The court concluded that prospective creditors can protect their interests by opposing the Court's approval of the proposal or seeking to cancel or vary the proposal after approval. In this case, the Provisional Trustee was within his power to reject the claims of the Trust and Hillersden for voting purposes, and the appeals were dismissed.

Orders