Webb

[2013] NZHC 523

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV-2013-485-208 [2013] NZHC 523

IN THE MATTER OF     the Insolvency Act 2006

AND

IN THE MATTER OF      the proposal of STEPHEN LAWRENCE DELAMARE WEBB

Hearing:         18 March 2013

(Heard at Wellington)

Counsel:         K.P. Sullivan - Counsel for Applicant

Reasons:        19 March 2013

REASONS FOR DECISION OF ASSOCIATE JUDGE D.I. GENDALL

Under r 11.5 of the High Court Rules I direct the Registrar to deliver these Reasons for Decision at 3.30 pm on 19 March 2013.

Solicitors:           Wilson & Co, Barristers & Solicitors, PO Box 208, Wellington 6143

SLD WEBB HC WN CIV-2013-485-208 [19 March 2013]

[1]      Before the Court in the List on 18 March 2013 was an application under s

333 of the Insolvency Act 2006 for approval of a Part 5 Sub-Part 2 Insolvency Act

2006 Creditors’ Proposal made by the applicant Stephen Lawrence Delamere Webb

(the applicant).

[2]      There is no opposition to that application.

[3]      After hearing and considering submissions from Mr Sullivan, counsel for the applicant, in support of the application on 18 March 2013, I made a decision approving the application in the terms outlined at para [5] of a Memorandum from Mr Sullivan filed in this proceeding dated 18 March 2013.

[4]      The Part 5 proposal from the applicant which was formally approved was in the following terms:

(a)      Within 10 days of the one month anniversary of this Proposal being approved  by the Court  today,  18  March  2013,  Stephen  Lawrence Delamere Webb, the applicant, will pay or procure 36 consecutive monthly payments for a period of 36 months or at any earlier date funds become available.   The monthly payments of approximately

$3,000.00 are to pay preferential creditors in full and thereafter non- preferential  creditors  on  a  pro-rata  basis  based  on  36%  of  their claimed debts.

(b)The Trustees fees and expenses (including legal expenses) will be paid by the applicant Mr Webb in addition to the sums being paid to creditors.

[5]      In giving this decision yesterday 18 March 2013, I indicated that my detailed reasons for the decision would follow.  I now set out those reasons.

[6]      The Part 5 Proposal from the applicant to his creditors is set out in the application filed in this Court on 4 March 2013 together with a report dated 25

February 2013 from John Marshall Scutter (Mr Scutter), a chartered accountant of

Paraparaumu, who is the proposed trustee for the proposal.

[7]      The applicant is 47 years of age and is a tutor, currently in Bahrain.  In July

2003 the applicant states he left the New Zealand Police after 14 years of service and began  practising  as  a  junior  lawyer  in  a  small  Christchurch  practise,  having completed a law degree while employed by the Police.

[8]      In  early  2007  the  applicant  moved  to  Nelson  with  his  wife  and  young children and obtained employment in a law firm there as a staff solicitor.   This continued until December 2007 when at that point he took up a franchise as a mortgage broker.

[9]      Subsequently,  the  applicant  returned  to  legal  practice  in April  2008  and entered into partnership with another Nelson lawyer.  This practice it seems met with some difficulties which lead to a Law Society complaint against the applicant and a large bill for legal fees in defending this complaint which he says he was unable to pay.

[10]     Since 2011 the applicant says he has struggled to pay his debts as his income has been very low and his wife has not been working.  She has had the care of their two primary aged children and a 3 year old child still at home.  In February 2011 the applicant states he made the difficult decision to move his family to Bahrain to take up an employment opportunity as a tutor with Bahrain Polytechnic.  He deposes that he saw this employment as an opportunity to be earning a good income sufficient to pay off his debts.

[11]     Sadly it seems that in Bahrain the applicant and his wife formally separated and late in 2012 pressure from his creditors who were still outstanding led to the present application.

[12]     As to his current assets, there is material before the Court to confirm that the assets of the applicant are minimal representing furniture and other personal property to a value of only about $5,000.00.

[13]     As to the applicant’s present liabilities, they are outlined in amended form in the Report of the trustee on the Proposal dated 25 February 2013 as follows:

Liabilities

Preferential Creditors

-     Inland Revenue for PAYE and GST

-     Alison Beer – Wages
-     Kevin Ryan - Wages

Unsecured Creditors

-     Inland Revenue

-     Minter Ellison Rudd Watts
-     New Zealand Law Society
-     Bottled in Nelson Limited
-     American Express
-     Land Information New Zealand
-     Radio Nelson
-     Copier Company Nelson
-     Vodafone
-     John Webb

-     Margaret Webb

Amounts     Owed

Revised by Trustee

$  10,000.00

$    7,000.00
$    3,000.00

$  51,599.00
$  89,109.00
$  26,400.00
$  22,000.00

$    5,785.00
$    7,100.00
$    2,000.00
$    2,052.00
$    1,200.00

$  12,000.00
$  55,000.00

TOTAL  $294,245.00

[14]     The terms of the applicant’s slightly amended proposal to his creditors (this proposal being amended at the creditors’ meeting as I note below and passed as a resolution at that meeting) are set out para [4] above.

[15]     As  I  have  already  noted,  the  present  application  is  bought  under  s  333

Insolvency Act 2006 which provides:

333       Court must approve proposal

(1)        After the proposal has been accepted by the creditors, the trustee must, as soon as practicable,—

(a)        apply to the Court for approval of the proposal; and

(b)       send  notice  of  the  hearing  of  the  application  in  the prescribed form to the insolvent and to each known creditor.

(2)       The Court must, before approving a proposal, hear any objection that is made by or on behalf of a creditor.

(3)       The Court  may refuse to  approve the  proposal if it  considers that—

(a)       the provisions of this subpart have not been complied with; or

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

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

(4)       The Court must not approve a proposal if it does not provide for the payment, before any other debts are paid, of—

(a)       those debts that would have priority under this Act if the insolvent was adjudicated bankrupt; and

(b)       the trustee's fees and expenses that are properly incurred by the trustee in respect of the proposal; and

(c)       costs incurred by a person other than the insolvent in organising and conducting a meeting of creditors for the purpose of voting on a proposal.

(5)       Subsection (4)(a)  does  not  apply to  the  extent  that  a  creditor waives the priority that the debt of that person would otherwise have had.

(6)       When it approves the proposal, the Court may correct any formal or accidental error or omission, but must not alter the substance of the proposal.

[16] The creditors’ proposal was filed in this Court on 7 February 2013. The creditors’ meeting was held on 15 February 2013. The original proposal advanced by the applicant was amended slightly at the meeting after discussion with creditors to provide clarification that the preferential creditors would receive 100 cents in the dollar and all non-preferential creditors would receive a dividend equalling 36 cents in the dollar. The amended proposal outlined at [4] above was then accepted by a majority in number and more than three quarters in value of the creditors who voted and were either personally present at the meeting or represented at the meeting by a person holding appropriate proxy or voting by postal votes. In fact of all those creditors who voted here, 100% voted in favour of the proposal.

[17]     And, following the creditors’ meeting the present application for approval and all supporting material was filed on 4 March 2013.   On 6 March 2013, all creditors were notified by Mr Scutter the proposed trustee of the hearing of this application  pursuant  to  s  333(1)(b)  Insolvency  Act  2006  with  copies  of  the

Application for Approval, Minutes of the creditors’ meeting and notice of hearing being provided to all creditors.  I am satisfied therefore that the provisions of Part 5

Sub-Part 2 Insolvency Act 2006 have been complied with here.

[18]     As to the terms of the proposal  itself,  as noted above these provide for payment I understand from the applicant’s earnings of 100% of the debts owing to preferential creditors, and payment totalling 36% of the debts owing to non- preferential  creditors  over a period  of three  years.   As  I have noted above,  no creditors  have  opposed  the  present  application.    In  my  view  the  terms  of  this proposal are calculated to benefit the general body of the applicant’s creditors and represent more than the creditors would be likely to receive in the event of the applicant’s bankruptcy given particularly that his assets at this point are minimal.

[19]     For all these reasons I am satisfied too that it is expedient that the proposal which is before the Court should be approved.

[20]     That said, an order was made on 8 March 2013 approving the applicant’s Part

5 Sub-Part 2 Insolvency Act proposal in the terms noted at para [4] above.   That order is confirmed.

[21]     In that application before me, no costs were sought by the applicant or by the trustee on the application itself. There is to be no order made as to costs here.

‘Associate Judge D.I. Gendall’