Henshaw v ANZ National Bank Limited [2020] NZHC 201 (18 February 2020)

Last Updated: 21 February 2020

IN THE HIGH COURT OF NEW ZEALAND DUNEDIN REGISTRY I TE KŌTI MATUA O AOTEAROA ŌTEPOTI ROHE

CIV-2019-412-83 [2020] NZHC 201

UNDER	the Insolvency Act 2006
BETWEEN	ETHAN ANGUS HENSHAW Insolvent
AND	ANZ NATIONAL BANK LIMITED, WESTPAC NEW ZEALAND LIMITED, THORN GROUP FINANCIAL SERVICES LIMITED, AMERICAN EXPRESS INTERNATIONAL (NZ) INC, HARMONEY LIMITED, FLEXI CARDS LIMITED, HEARTLAND BANK LIMITED, LATITUDE FINANCIAL SERVICES LIMITED Creditors

Hearing:	On the papers
Counsel:	M O’Neil for Insolvent
Judgment:	18 February 2020

JUDGMENT OF ASSOCIATE JUDGE LESTER

This judgment was delivered by me on 18 February 2020 at 4.30pm pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar 18 February 2020

HENSHAW v ANZ NATIONAL BANK LIMITED [2020] NZHC 201 [18 February 2020]

[1] On 16 December 2019 I issued an interim judgment in respect of this application for approval of the creditors’ proposal.¹

[2] In that interim judgment, I indicated I was satisfied in respect of the form and substance of the proposal and that it warranted approval, subject to issues of service being addressed and the correction of an anomaly in one of the affidavits.

[3] The service issue related to the fact that notice of the proposal was given by email and I noted that s 330(1) of the Insolvency Act 2006 (“the Act”) refers to the proposal being posted to every known creditor at their last known address. While the Trustee has said that she routinely uses emails in respect of proposals and indeed has done so in respect of nearly 200 creditors proposals, the fact remains that under s 224(1) of the Contract and Commercial Law Act 2017, a legal requirement to give information in writing is only met if the person to whom the information is required to be given consents to the information being given in electronic form and by means of electronic communication, if applicable.

[4] The practical issue as to service falls away where a creditor actually responds to an email, but in this case where the Court was not informed whether two creditors who were emailed the proposal had responded or not, then the issue became one of significance.

[5] In this case, the Trustee in a supplementary affidavit sworn 29 January 2020 advises that in respect of one creditor who did not respond, she had met with its collection manager and spoken to them directly about the proposal. Evidence has been provided that the other creditor did respond to receiving the proposal.

[6] I also noted in my interim judgment that a secured creditor had not been notified. As I noted in my interim judgment, failure to notify a creditor is a matter that

¹ Henshaw v ANZ National Bank Ltd [2019] NZHC 3330.

goes to the Court’s discretion. The Trustee has explained the decision not to serve the secured creditor on the grounds that it has in the past prompted secured creditors to repossess security. Ultimately, this represents a risk to the maker of the proposal as if they fail to pay their secured debt and there is a shortfall under the security then the proposal will not apply to that shortfall. Further, there is the potential that the entering into the proposal may of itself be a breach of the security arrangements, depending on the terms of the security.

[7] In my interim judgment I noted that some of the figures provided in the Trustee’s report were different from those provided in the insolvent’s statement of assets and liabilities. The Trustee has corrected the position and now confirms that the proposal should see the creditors subject to the proposal, received 100 cents in the dollar. In a real sense, the proposal is simply aimed at locking in time for the insolvent to pay his debts.

[8] As the proposal is in the appropriate form, was approved by the requisite majority at the creditors meeting and given it is intended to return 100 cents in the dollar to creditors, it is appropriate that there be an order approving the proposal.

[9] Accordingly, there is an order approving the proposal of Ethan Angus Henshaw dated 12 August 2019.

Further observation as to service

[10] The Court has no desire to create added costs in respect of insolvent proposals, but service of the proposal on creditors is at the heart of the creditors’ proposal process. Not only must the proposal be properly served but there must be proper notification of the application for approval.

[11] In the absence of the requirements of s 224(1) of the Contract and Commercial Law Act 2017 Act being met, there will not be good service of the proposal or the application for approval. Here, there is no confirmation that recipients of notice of this application advised the Trustee that they did not wish to be heard, which in a practical sense would serve as confirmation of service. However, given this proposal does aim to return 100 cents in the dollar to the creditors and given no creditor voted
against the proposal, I am prepared to adopt a pragmatic approach in this case, but my doing so is not a precedent for service by email being otherwise good service.

Associate Judge Lester

Solicitors:

Webster Malcolm Law, Warkworth