Meyer [2013] NZHC 399 (5 March 2013)

Last Updated: 11 April 2013

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV-2012-485-2403 [2013] NZHC 399

IN THE MATTER OF the Insolvency Act 2006

AND

IN THE MATTER OF the proposal of ROSALIND JANE MEYER

Hearing: 4 March 2013

(Heard at Wellington)

Counsel: M. Bale - Counsel for Plaintiff

No appearance for the Defendant

Reasons: 5 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 this decision at

3.30 pm on 5 March 2013.

_{Solicitors: Wilson & Co, Solicitors, PO Box 208, Wellington}

R J MEYER HC WN CIV-2012-485-2403 [5 March 2013]

[1] Before the Court is 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 Rosalind Jane Meyer (the applicant).

[2] There is no opposition to that application before me.

[3] The Part 5 Proposal from the applicant to her creditors is set out in the application which has been filed in this Court together with a report dated 3

December 2012 of Mr John Marshall Scutter (Mr Scutter) the proposed trustee for the Proposal. The applicant is a real estate salesperson and has worked in this role for the last 18 years. She deposes in her affidavit that over the last four years she has been either the number one, two or three agent in the Harcourts Real Estate agents team out of a total of 45 agents. In her application and supporting 4 February 2013 affidavit, the applicant discloses that her financial predicament has resulted solely from a failed commercial property development known as the Pier Developments at Seaview Road, Paraparaumu in which she became involved with her then partner, Mr Paul Spackman.

[4] Material before the Court confirms that the present assets of the applicant and their fair realisable values are as follows:

(a) Property at 9/4 Matatua Road, Raumati Beach $245,000.00 (b) Shares in Sky City Limited (5,479 shares) $ 20,546.00 (c) Iluga Holdings Limited (20 ordinary shares) $ 20.00

(d) Iluga Holdings Limited – shareholders current

Account as recorded in the financial statements of

the company as at 31 March 2012 ($53,155.00 but value

$Nil as the company is unable to repay funds to any

Shareholder.) $Nil

(e) Bank accounts

Westpac Bank $ 1,000.00

National Bank $ 27,000.00

BNZ Bank $ 2,000.00

(f) Vehicles –

Subaru Forrester – 8 years old $ 5,000.00

Scooter $ 500.00

_{(g) Furniture and Personal Effects $ 30,000.00}

_$331,066.00

[5] As to the applicant’s present liabilities, they are shown in the applicant’s

statement of affairs and affidavit of 7 November 2012 as follows:

(a) Westpac Bank – guarantee for personal borrowing of

Paul Spackman $ 100,000.00

(b) Westpac Bank – mortgage over 9/4 Matatua Road,

Raumati Beach $ 180,000.00

(c) Capital Mortgage Income Trust – personal guarantee for mortgage over a property at 24/370 Oriental Parade, Wellington held by the Jane Gould Trust – Value $844,918.00 – property expected to realise

$600,000.00 if sold on the current market thus

leaving a shortfall of $244,918.00 $ 244,918.00

(The above losses have apparently not as yet crystallised as the mortgage repayments are being paid either through rental income or by Mr Paul Spackman)

(e) Shortfall on First Mortgage Trust - Unit 15 - Pier

Developments Limited (Struck Off) $ 427,918.00

(f) Bluestone – Unit 7 - Pier Developments Limited

(Struck Off) $ 224,393.00

(g) Property Finance Limited – Unit 11 - Pier

Developments Limited (Struck Off) $ 203,255.00

_{(h) Midland Mortgage Trust $ 9,081.00}

_{TOTAL $1,389,565.00}

[6] The terms of the applicant’s amended proposal to her creditors (the proposal being amended at the creditors’ meeting as I note below, and passed as a resolution at the meeting) are as follows:

That satisfaction of my (the applicant’s) debts to the creditors will be made in the following manner:

(i) Within 10 days after the Court approves the Proposal or one working day

after the last Creditor’s claim is admitted, I will pay or procure payment of

$30,000 from cash reserves and $10,000 from the sale of Sky City Limited shares that I hold, a total of $40,000, in aggregate to my Creditors. The amount will be paid on a pro rata basis on the claim of each Creditor;

(ii) Within 10 days of the one month anniversary of this Proposal being approved by the Court, I will pay or procure 36 payments of $2,359 in aggregate to my Creditors for a period of 36 months or at any date funds are available. The amount will be paid on a pro rata basis on the claim of each Creditor; and

(iii) During the 36 month period I will sell the property at 9/4 Matatua Road, Raumati Beach. The net proceeds after selling costs and mortgage settlement, I will pay or procure in aggregate to my Creditors. The amount will be paid on a pro rata basis on the claim of each Creditor.

[7] I turn now to consider first, whether the provisions of Part 5 Sub-Part 2

Insolvency Act have been complied with here and secondly, whether the terms of the proposal are such that it should be approved by the Court.

[8] As noted above, the present application is brought 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.

[9] The present creditors’ proposal was filed in this Court on 9 November 2012. The creditors’ meeting was held on 20 November 2012. The original proposal advanced by the applicant was amended slightly at the meeting after discussion with creditors. It provided all creditors with a clearly more favourable outcome. The amended proposal as outlined at [6] 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 (albeit for a proposal even less favourable to the creditors) by postal votes.

[10] The one creditor who voted against the amended proposal at the creditors’

meeting was Property Finance Funding Nominees Limited. An affidavit dated 17

January 2013 on behalf of this creditor has now been filed by Mr Brett Michael Chambers, a Christchurch chartered accountant who is a partner in the accounting firm Deloittes. That affidavit deposes that, although Property Finance Funding Nominees Limited (which had submitted a proof of debt claiming an amount of

$261,821.66) registered a postal vote against the original creditors’ proposal, that creditor company no longer has any remaining concerns regarding the amended proposal. Effectively it now says that not only does it not renew its objection to the proposal but in fact it now confirms it will abide by the Court’s ultimate decision.

[11] It is significant in my view also that the other creditors of the applicant who voted at the 20 November 2012 meeting (and together held 81.53% of the total debt of all voting creditors) voted in favour of the proposal.

[12] And, following the creditors’ meeting, the present application for approval and supporting material was filed on 7 February 2013. All creditors were then notified by Mr Scutter on 12 February 2013 of the hearing of this application pursuant to s 333(1)(b) Insolvency Act 2006, and none have opposed this

application. I am satisfied therefore that the provisions of Part 5 Sub-Part 2

Insolvency Act 2006 have been complied with here.

[13] And, the terms of the present proposal, as I see it, are reasonable, (particularly so in their amended state which is clearly to the further advantage of creditors) and in my view they are calculated to benefit the general body of creditors. The assured payments to creditors to be made by the applicant are first, $40,000.00 available immediately and, secondly, by my calculations, monthly payments totalling $84,924.00 over the next 3 years. These amounts total $124,924.00 and alone represent nearly 9% of the applicant’s assessed indebtedness. The possible further payment to creditors from the sale proceeds of 9/4 Matatua Road, Raumati Beach noted at [6](iii) above is in addition to this. Given these promised payments and, under all the circumstances prevailing in this case, I am satisfied too that it is expedient that the proposal which is before the Court should be approved.

[14] That said, an order was made on 4 March 2013 approving the applicant’s amended Part 5 Sub-Part 2 Insolvency Act 2006 proposal in the terms noted at para [6] above. That order is confirmed.

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

‘Associate Judge D.I. Gendall’