Kyle v American Express International (NZ) Inc

[2022] NZHC 1195

IN THE HIGH COURT OF NEW ZEALAND GREYMOUTH REGISTRY

I TE KŌTI MATUA O AOTEAROA MĀWHERA ROHE

CIV-2021-418-23

[2022] NZHC 1195

UNDER

the Insolvency Act 2006

BETWEEN

VIVIENNE KYLE

Insolvent

AND

AMERICAN EXPRESS INTERNATIONAL (NZ) INC, AVANTI FINANCE LIMITED,

BANK OF NEW ZEALAND, HARMONEY LIMITED,

KIWIBANK LIMITED, LATITUDE FINANCIAL SERVICES LIMITED

Creditors

Hearing:	9 May 2022 (by AVL)
Appearances:	R Shahram for Provisional Trustee No other appearances
Judgment:	26 May 2022

JUDGMENT OF ASSOCIATE JUDGE LESTER

KYLE v AMERICAN EXPRESS INTERNATIONAL (NZ) INC [2022] NZHC 1195 [26 May 2022]

[1]    The insolvent  seeks  approval  of  a  proposal  under  pt  5  of  the  Insolvency Act 2006 (the Act). The insolvent’s situation is due to COVID induced redundancy.

[2]    The notice of application for  approval  of  the  proposal  was  lodged  with the Court on 14 March 2022 and sent by the Office of the Provisional Trustee (the Trustee) to creditors on 22 March 2022.

[3]    While the proposal was emailed to all but one creditor, all creditors to whom the proposal was emailed confirmed receipt. The one creditor to whom an email was not sent was Kiwibank Ltd and I will turn to the position of Kiwibank Ltd below.

[4]    Of the insolvent’s six creditors, four voted in favour and two voted against. The position with the vote of Kiwibank Ltd was not clear. In the report of Ms Liggins, the trustee, she says “Kiwibank Limited did not return their documents despite several requests”. However, in the Minutes for the creditors meeting Ms Liggins states: “Kiwibank Limited sent in their vote via an email, as they were unable to edit the postal vote and return”. The Minutes of the meeting record that four creditors voted in favour who were owed a total of $60,480.74 and one creditor voted against who was owed $2,900.98. Kiwibank Ltd’s vote, if it had been against the proposal, would not have altered the outcome. The proposal would still have been accepted by the majority in number of creditors and at least three quarters in value of the creditors who voted on the proposal as required by s 331 of the Act.

[5]    When the application was called on 9 May 2022, I requested that counsel file a memorandum clarifying the position with Kiwibank. An updating memorandum has been filed advising Kiwibank voted against the proposal. The Court relies on the accuracy of the trustee’s Minutes in respect of creditors’ votes, so care in their preparation is vital.

[6]    Under the proposal the insolvent will make fortnightly payments to his creditors over five years which will return to them approximately 76 cents in the dollar.

[7]    I now turn to the form and substance of the application. Under s 327 of the Act, the proposal must be in the prescribed form and accompanied by a statement of affairs in the prescribed form.  I  am satisfied these requirements are met here.   As   I have said, notice of the proposal and of this application was received by the creditors as they replied to emails from the trustee’s office, save for the issue of Kiwibank Ltd. Notice of this application was sent to Kiwibank by post. Section 333(1)(b) refers to notice of the hearing for approval of a proposal being sent rather than being served.

[8]    The approach adopted by the Court is that unless it is apparent that one of the grounds for refusing approval of a proposal set out in s 333(3) of the Act applies,   the Court should accept the view of the creditors or the majority of them.1

[9]    All of the creditors here are involved in the finance industry. All but two have made a commercial assessment of the proposal and elected to accept it. One vote against the proposal is for a small proportion of the overall debt, albeit the Kiwibank debt is about 14.5 per cent of the total debt. The creditors opposing the application did not take any steps to oppose this application.

[10]In the circumstances, I am satisfied it is appropriate to approve the proposal.

[11]   Accordingly, there is an order approving the proposal of the insolvent filed with the Court on 31 August 2021.

Associate Judge Lester

1      Farmer v Rowley [1992] 2 NZLR 195 (CA) at 196, approved in Herbert v New Zealand Guardian Trust Co Ltd[2012] NZCA 442 at [27].