D J LAL HC AK CIV 2007-404-3456

D J LAL HC AK CIV 2007-404-3456 5 November 2007IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY CIV 2007-404-3456IN THE MATTER OF the Insolvency Act 1967 AND IN THE MATTER OF a proposal by Jag Deo Lal under Part 15 of the Insolvency Act 1967 Hearing: 26 October 2007 Appearances: G Harrison - Counsel for the Insolvent P N Collins - Counsel for the Auckland District Law Society Judgment: 5 November 2007 at 4.00 pmJUDGMENT OF ASSOCIATE JUDGE D.I. GENDALLThis judgment was delivered by Associate Judge Gendall on 5 November 2007 at 4.00 p.m. pursuant to r 540(4) of the High Court Rules 1985.Solicitors: Glaister Ennor, Solicitors, PO Box 63, Auckland G M Harrison, Barrister, PO Box 4338, AucklandIntroduction[1] This is an application made pursuant to S.143 of the Insolvency Act 1967 for the Court's approval of a proposal made by Jag Deo Lal ("the Insolvent") for the satisfaction of his debts. [2] The application is opposed by one of the Insolvent's creditors, the Auckland District Law Society ("the Law Society"). No other creditors oppose the application. [3] The original proposal made by the Insolvent was dated 27 June 2007 and a copy lodged in this Court. Also on 27 June 2007 notice of both the proposal and the calling of a meeting of creditors which was to be held on 11 July 2007 was posted to the Insolvent's creditors pursuant to S.141(2) Insolvency Act 1967. [4] Details of the Creditors Meeting were also advertised in the New Zealand Herald newspaper on 29 June 2007 pursuant to Regulation 52 Insolvency Regulations 1970. [5] The meeting of creditors took place on 11 July 2007. At the conclusion of this meeting the creditors voted either for or against the proposal and a resolution was passed in terms of S.142(2) Insolvency Act 1967. [6] Pursuant to S.142(3) Insolvency Act 1967 the proposal was accepted by nineteen unsecured creditors in total and rejected by five unsecured creditors. This exceeded the required majority in number of creditors. Secondly, as to the nineteen creditors who accepted the proposal, their indebtedness due from the Insolvent totalled $240,839.09. The five creditors who rejected the proposal (which included the Law Society) had debts which totalled only $73,408.96. In terms of value, therefore, this represented 76.64% of the total voting creditors in favour of the proposal and 23.36% against, slightly above the required 75% threshold provided for in S.142(3).[7] Following the Creditors Meeting the Insolvent, with the support of Peri Micaela Finnigan ("Ms Finnigan"), the provisional trustee, filed the present application seeking the Court's approval to the proposal. [8] Ms Finnigan, has filed an affidavit dated 20 August 2007 confirming that amongst other things in terms of S.143 Insolvency Act 1967, on 24 July 2007 she gave notice to all known creditors of the Insolvent of the date for hearing of the present application. The original date for hearing was to be 23 August 2007 at 11.45 am. Ms Finnigan also deposes that following advice from this Court, she gave further notice to all known creditors of the Insolvent of the change to the date of hearing of the application. [9] On 21 August 2007 the Law Society filed its notice of opposition to the present application. It did so in reliance upon S.143(2) and S.143(3)(b) and (c)Insolvency Act 1967. [10] The grounds of objection advanced by the Law Society in its notice of opposition are stated to be:"1. That the terms of the proposal are not reasonable; 2. That the proposal is inexpedient; and3. Explained in the affidavit of Martin Andrew Watts sworn on behalf of the creditor."[11] As I have noted above, the present application is not opposed by any other creditor. [12] The Insolvent is an enrolled and practising barrister and solicitor. Earlier this year he was prosecuted by the Law Society for disciplinary offences. These related in particular to a failure to comply with S.89 Law Practitioners Act and Regulation 9 of the Solicitors Trust Account Regulations 1998. These concern the obligation of a solicitor to pay client trust monies into a trust account. [13] At a disciplinary hearing on 15 & 16 March 2007 the Law Practitioners' Disciplinary Tribunal ("the Disciplinary Tribunal") found misconduct on the part ofthe Insolvent in respect of eight instances of non-compliance with his trust monies obligations in addition to a number of other matters. [14] At the conclusion of the hearing the Disciplinary Tribunal imposed several penalties on the Insolvent. First he was suspended from practice for a period of one month, secondly he was censured, and thirdly certain orders were made relating to the supervision of his legal practice after the period of suspension. [15] As to the Part 15 proposal put forward by the Insolvent here, in summary, this reflects: (a) As at 27 June 2007, the Insolvent had fifty-three unsecured creditors totalling $434,629.54 (including the Law Society debt of $51,640.37 of which $28,000.00 was for disciplinary costs). (b) If the proposal was to be approved the Insolvent would pay an amount from his future earnings capped at $90,000.00 to repay a maximum of 20 cents per dollar to his unsecured creditors and trustees fees and expenses. (c) This would be achieved by the Insolvent making twelve quarterly payments each of $7,500.00 to the trustee for three years commencing with a first payment on the 15th day of the fourth month following High Court acceptance of the proposal. (d) The Insolvent notes in the proposal that if he were to be bankrupted he estimates that less than 14 cents in the dollar would be available to creditors. [16] The essence of the Law Society's opposition to this proposal is that, in stark contrast to the terms of the proposal, when the Insolvent as recently as March this year gave evidence over his disciplinary charges before the Disciplinary Tribunal, he maintained a clear intention throughout that he would repay his creditors in full. The Law Society contends that in imposing what it saw as a relatively lenient range ofpenalties, the Disciplinary Tribunal was influenced by this assurance from the Insolvent about repaying his creditors. [17] As to these aspects, Mr Collins, counsel for the Law Society referred me to certain items of evidence given by the Insolvent, and submissions made by his counsel, to the Disciplinary Tribunal which I now set out:"(a) Affidavit of Jag Deo Lal dated 10 November 2006: (i) Paragraph 8: "I intend to honour my contractual and professional responsibilities in refunding or paying the clients. Throughout, this unfortunate, but orchestrated campaign to 'destroy' my practise by an erstwhile but disgruntled employee and his cohorts of the firm's clients, I have kept refunding. When I could not, at all times, in appropriate cases, I accepted liability and promised to pay when I could. (ii) Paragraph 13: I firmly believe that my ability, experience and successes as an immigration expert are and will continue to lead to my practice growing to enable me to pay my debts. (b) Affidavit dated 1 March 2007: (i) Paragraph 2: " In my response to the charges I have acknowledged my obligation to repay some of the complainants, and I will do so when my financial position enables me to. (ii) Paragraph 3: " For 2007 I have gained 42 clients already. I am working hard to re-establish myself, so that I can pay off my creditors, and in particular the complainants to whom I still owe money. If I am unable to continue practising I expect I will become bankrupt.(c) Submissions: (i) Paragraph 26: Things are obviously improving for him to the point where he will soon be able to start paying complainants, the amounts he has acknowledged are payable to them. He may become bankrupt in which case no one will be paid. If he is permitted to continue practising then there is every prospect that those moneys owed to them will be paid. (ii) Paragraph 47(iv): He has incurred significant debt as a consequence of the cessation of his practice, none of this creditors will benefit if he is further suspended from practice, or if his right to practice is removed. His rejuvenated practice is improving, to the point where he will soon be able to make payments to creditors including his former clients in reduction of the amounts owing to them until all are paid in full."[18] At the Creditors Meeting on 11 July 2007 the Law Society opposed the Insolvent's Part 15 proposal. It repeats that opposition here and advances the following expanded grounds: (a) With this background of promises and assurances given to the Disciplinary Tribunal by the Insolvent under oath, the present proposal is so lacking in credibility as to be unreasonable; and (b) The proposal is inexpedient and contrary to the public interest, for reasons relating first to the maintenance of the integrity of the legal profession and secondly to the overall interests of his disadvantaged and vulnerable former clients.Legal Principles[19] The principles applicable to a S.143 application are well established. They are set out in a number of authorities including Farmer v Rowley [1992] 2NZLR195,Re Hart [1991] 2NZLR219 and Re Guest [1990] 3NZLR 700. Essentially those principles are: (a) Jurisdiction for this Court to consider an application for the approval of a proposal only arises once the proposal has been approved by the Insolvent's creditors. (b) S.143(3) Insolvency Act 1967 does not place an onus on the provisional trustee to satisfy the Court that it should exercise its discretion in favour of a proposal. Once a proposal has been approved by the requisite number of creditors, the Court ought to approve the proposal in the ordinary course of events unless one of the reasons set out in S.143 for refusing approval exists. (c) An opposing creditor has an onus to show that the provisions of the Act have not been complied with or that the proposal is not reasonable under S.143(3)(a) or (b). It is for the Court to exercise its own independent judgment in order to decide whether or not the proposal would be expedient in the public interest under S.143(3)(c). [20] It is clear from Farmer v Rowley that the Court's discretion to approve or refuse to approve a proposal is confined by the terms of S.143(3). In that case, Richardson J. in the Court of Appeal said at pages 199-200:"It follows that the exercise of the discretion reposed in the Court under the section (S.143(3)) must be related to the particular paragraph or paragraphs relied on."[21] Farmer also appears to provide clear authority for the following propositions: (a) The approval process under S.143 is not intended as an opportunity for reactivating the earlier acceptance process (it is not a re-run of the Creditors Meeting).(b) In determining whether a proposal is reasonable under S.143(3)(b) the Court must exercise its independent judgment but it will nevertheless be influenced by the commercial judgment of the creditors who, in approving the proposal, have demonstrated their willingness to receive a partial repayment without recourse to bankruptcy. (c) Public interest considerations may be relevant to the expediency issue under S.143(3)(c). (d) S.143 does not provide a general discretion for the Court to refuse a proposal because the insolvent person might conceivably make a better offer. [22] And it is clear too that if the Court is of the opinion that the terms of a proposal are not reasonable or it is not expedient to approve a proposal then it should refuse its approval rather than directing a variation or approving a conditional proposal – Re Trott & Joy unreported High Court Auckland, 14 April 1989, Tompkins J B1471/88 and Re McGarry unreported High Court Auckland, Greig J, 29 May 1990 B2320/89.The Circumstances of the Insolvent[23] On the material before the Court it is clear that by any standards Mr Lal is insolvent. This material indicates that he has some fifty-three creditors comprising a total indebtedness of $434,629.54. His statement of position shows that his net assets (taking into account finance raised on his BMW Z3 motor vehicle) have an estimated realisable value of $5,564.47, plus recoverable debtors from his legal practice of approximately $53,655.00. [24] So far as the Insolvent's unsecured creditors are concerned, it would seem that at least five of them are members of his immediate or extended family. These are Aruna Shandil, his partner (who is a creditor to the extent of $7,500.00), Ram Pati Hiralal, his mother (a creditor for $1,000.00), Krishna Lal, his brother (a creditorfor $5,000.00), Timothy Scott Wood, his son-in-law (a creditor for $56,613.71) and Satendra Shyam, his brother-in-law (a creditor for $10,000.00). [25] With regard to these family debts, before me Mr Lal, the Insolvent, under cross-examination confirmed specifically that the debts owing to these family members are genuine and remain outstanding. He also stated, however, that only the large debt to Timothy Scott Wood, his son-in-law, was a documented one. The other debts, he said, represented loans in cash made by his family to keep him "afloat" and to pay legal expenses for his disciplinary hearing. Before me, none of this was challenged in any significant way by the Law Society. Indeed, Mr Collins specifically acknowledged that the Law Society was not contending that any of these family debts were "bogus" in any way. [26] Turning now to the Creditors Meeting on 11 July 2007, it is clear from material before the Court that all those family members mentioned in paragraph [24] above were present and voted in favour of the proposal. [27] Although it is clear that in the past this Court has occasionally been minded at a meeting which approves a proposal to discount votes of "friendly" creditor voters, in the present case as I have said, counsel for the Law Society, Mr Collins, took no issue with either the debts said to be owing to the Insolvent's family members or the fact that they all voted in favour of the proposal. If a discounting was to occur here it is clear from decisions such as Re Riddiford High Court Wellington, Neazor J, 21 September 1989 B91/89 and Re Jax Marine Pty Ltd and Companies Act 1961 [1967] 1NSWR145 that the test must always be that it is necessary to discount to the point of discarding only votes of those creditors who have interests which are such as to render their views self-centred rather than a class-promoting view. As Neazor J went on to note in Re Riddiford, however, it is often the case that the"friendly" interests only wish to have their money paid back and are not seeking to advance their own interests at the expense of other creditors – see Brookers Insolvency Law para. IA143.18. [28] In the present case, if the creditor votes attaching to the debts owing to the five family members noted above (which total some $80,113.71) were to bedisallowed this would mean that the required 75% threshold approval of creditors in value would not have been met in terms of S.142(3). This, however, was not an issue which was pursued by the Law Society in its opposition to the present application. And, the unequivocal evidence before this Court given by Mr Lal, the Insolvent, who I note as an enrolled barrister and solicitor is an officer of this Court, is that these debts are genuine and remain properly owing by him. [29] That said, and given that these points were not taken by the Law Society in its opposition the Court obviously must proceed on the basis that the S.142(3)Insolvency Act 1967 requirements for the proposal have been met here. [30] Finally, Mr Lal explains his present financial predicament in his evidence, by maintaining that this has been brought about simply by the legal practice difficulties he experienced which culminated in his earlier suspension for the one month period. This he claims was inextricably linked to what he describes as a campaign from an ex-employee and the media, which temporarily destroyed his immigration client practice.The Proposal[31] At the outset it needs to be noted that no challenge is made here to the proposal's compliance with the procedural requirements of the Insolvency Act 1967and in particular S.140, S.141, S.142, S.143(1) and S.143(3)(a). As I have noted above, it is only the provisions of S.143(3)(b) and (c) Insolvency Act 1967 which are placed in issue by the Law Society. [32] The essence of the proposal here is that over the next three years the insolvent will make available to the provisional trustee sufficient monies from his legal practice income (with a cap of $90,000.00) to enable creditors to be paid 20 cents in the dollar. The sum is to be paid from earnings at the rate of $7,500.00 each quarter. The Insolvent deposes that he is quite confident of being in a position to make payments at this level from his continuing legal practice.[33] Despite comments from Mr Collins for the Law Society which doubted whether, given the recent history of the Insolvent, he would be in a position to meet these payments, no evidence of any real kind was placed before the Court to question the ability of Mr Lal as a practising lawyer to earn income from his practice at a level to meet the $7,500.00 quarterly payments for the next three year period. [34] Mr Lal maintains he can do so. There is no evidence otherwise before the Court and I must accept therefore that this proposal is properly achievable by the Insolvent.The Creditors[35] The Court is required to proceed on the basis that a majority of the Insolvent's creditors in number, and at least 75% of the creditors in value, support the proposal. Usually that is a matter of some considerable weight in Part 15 applications because as I have noted the Court is entitled to accept that creditors have exercised their independent commercial judgment in voting in favour of the proposal. [36] As to this aspect, however, Mr Collins noted that of the Insolvent's total fifty- three creditors some twenty-three were previous clients of his legal practice. As such, according to Mr Collins, these creditors who were almost all immigration related clients often with little command of English or New Zealand business practice, would have had little understanding of the Part 15 proposal procedures. Of the twenty-three client creditors, it seems that only six voted on the proposal. Three voted in favour. These three apparently had total debts of $11,898.08 out of a total indebtedness owing to the Insolvent's client creditors of $135,759.41 – that is 8.76% in value of client creditors. And the other three who voted, cast their votes against the proposal. [37] The Law Society accordingly contends that it would be neither expedient here nor in the public interest in maintaining the integrity of the legal profession for the Insolvent's present proposal to be approved by the Court, given that such a small percentage both in value and in numbers of the creditors who were former legalpractice clients of the Insolvent voted in favour of the proposal. In my view, those issues are properly put before the Court here and the Law Society has done so in an appropriate way. [38] They are matters which are clearly of some relevance. However, from material before the Court, there is no dispute that the Insolvent provided proper notice to those client creditors first, of his Creditors Meeting and the Part 15 proposal and secondly, of the date of the Court hearing of this application. Clearly no objection or opposition to the present application has been received from any of the client creditors. [39] In the face of that, and given also that there is no specific evidence before this Court of the inability of any client creditor to truly understand the terms of the proposal and the current S.143 procedures being undertaken, the Court is constrained somewhat. In my view it cannot take that aspect of opposition raised by the Law Society much further here other than possibly to bear it in mind as one of the several factors to be considered in the exercise of the Court's discretion.My Decision[40] Before me no suggestion was made that the machinery provisions of S.140 and S.143(3)(a) Insolvency Act 1967 have not been complied with here. [41] As I have noted the principal grounds relied upon by the Law Society to oppose this application are set out in S.143(3)(b) and (c). These are to the effect first that the terms of the proposal are "not reasonable or are not calculated to benefit the general body of creditors", and secondly that "for any reason it is not expedient that the proposal should be approved." [42] Turning first to S.143(3)(b), this sets out two alternative grounds upon which the Court may decline to give its approval. The first ground is that the terms of the proposal are "not reasonable". As to this aspect the Law Society contends that the proposal is unreasonable because of the wide disparity between the position taken by the Insolvent before the Disciplinary Tribunal and the position he now takes in thisproposal. The Law Society goes on to maintain the proposal is entirely lacking in credibility and is therefore unreasonable and in addition, given what it says is a history of the Insolvent changing his position when it suits him to do so, the proposal is also ultimately doomed to failure. [43] At the outset, it needs to be noted that Mr Collins for the Law Society accepted without question a key element advanced by the Insolvent in favour of his proposal. This was to the effect that the unsecured creditors would be better off if the Insolvent is able to retain his professional status and practice than would be the case if he was incapable of practising because of his bankruptcy. On this, S.57(5)Law Practitioners Act provides:"If a practitioner is adjudicated bankrupt, any Practising Certificate issued to him shall cease to be in force".[44] In Re Lowndes unreported High Court Auckland, Barker J., 10 May 1991 B2161/90 the Court stated:"The proposition that an insolvent person, whose only apparent way of providing funds is by professional practice in which he could not engage if he were made bankrupt, should be allowed some personal incentive to pursue that course in preference to becoming bankrupt is not inherently unreasonable. If the insolvent person was to be seen to be able to dine at the rich man's table whilst his creditors received only crumbs, that plainly would be unreasonable; but the evidence does not suggest that that is likely to be the case ".[45] In the present case, the Law Society contends that in the present case there is an element present of the Insolvent "dining at the rich man's table". Mr Collins noted, and before me Mr Lal acknowledged, that the Insolvent owns and is driving a BMW Z3 convertible motor vehicle (with a personalised number plate) whilst, if the Part 15 proposal is approved, his creditors await only a 20% return over a three year period. Although the comment advanced for the Law Society is properly made and may well indicate a need for the Insolvent to fairly reflect upon his real life style andits outward appearance to creditors and former clients, the evidence before the Court does show that Mr Lal's actual equity in this BMW motor vehicle is only approximately $5,000.00. [46] Other than this complaint over the Insolvent's choice of motor vehicle, the Law Society does not appear to raise here any other issues concerning extravagant living or life style on the part of the Insolvent to the extent that he could be said to be"dining at the rich man's table" whilst his creditors struggle. Indeed, on these aspects, the Insolvent gave evidence that he lives in rented accommodation, in the recent past he has only survived with the support of members of his family, he currently has one dependent, that he has not taken holidays since 2005 when his legal practice business crashed and he has not been overseas since December 2005 when he went to Fiji only for three or four days. [47] Turning now to the evidence of the Insolvent's statements and submissions to the Disciplinary Tribunal (noted at paragraph [17] above), it does seem clear that in both November 2006 and March 2007 the Insolvent indicated that he intended to repay all his clients and other creditors. [48] What is also clear from the Disciplinary Tribunal hearing however comes from the record exhibited to Mr Lal's affidavit dated 31 August 2007 as Exhibit "A". This is a closing remark from Mr Cooney, the Chairman of the Disciplinary Tribunal, where he provides the following advice to Mr Lal:"Just one point. Mr Lal, I urge you to obtain proper accounting advice and finally in terms of your creditors, please look at – I think it's Part V of the Insolvency Act – I am not wishing to teach my grandmother to suck eggs, but you can get a composition there which would take a lot of pressure off you. That is by way of gratuitous comment. Thank you."[49] Before me, Mr Harrison, counsel for the Insolvent contended and in my view there was merit in this contention, that it was the Chairman of the Disciplinary Tribunal himself who with these comments "sowed a seed" for the present proposal by suggesting directly the real possibility that the Insolvent might bring this Part 15application. Notwithstanding this, the Law Society now opposes that application. In my view, these are further factors which do not particularly assist the Law Society's opposition to the present application. [50] Lastly, the Law Society contends that the present proposal is lacking in credibility because of the non-participation of a significant body of the Insolvent's unsecured creditors being his former clients. Reference has already been made to this aspect at paragraph [36] above. [51] As I have already noted there is no evidence before the Court to verify the position of the majority of the Insolvent's immigration client creditors. Nor can it be said categorically that the only reason for the non-participation of those clients in this Part 15 process is because of their lack of understanding of English or our New Zealand system. The Insolvency Act 1967 does set out a detailed process for these Part 15 proposals, and for their approval both by creditors and by the Court. The Court cannot without good reason go beyond this stipulated process. Exceptional circumstances at least are necessary where this is required in terms of the broader interests of justice. As I see it, the Law Society has not put before the Court sufficient by way of special circumstances in this case to justify the Court looking behind the machinery provisions for the present proposal. [52] And turning now to the second alternative ground in S.143(b) that the terms of a proposal are not calculated to benefit the general body of creditors, in the present case, the undisputed evidence before the Court, accepted by the Law Society, is that the proposal would lead to the creditors receiving twenty cents in the dollar whereas if it is not approved, the Insolvent would have no choice but to proceed to bankruptcy in which event he would be unable to continue his legal practice and the creditors would receive little if anything. [53] I find therefore that the Law Society has been unable to establish to the satisfaction of the Court that in terms of S.143(3)(b) Insolvency Act 1967 the present proposal is either unreasonable or it is not calculated to benefit the general body of creditors.[54] I turn now to consider the Law Society's last ground of objection to the present application. This relates to S.143(3)(c) and is to the effect that it is not expedient that the proposal should be approved. On this, the Law Society contends that it is inexpedient and contrary to the public interest here, for reasons relating to the maintenance of the integrity of the legal profession, and in the interests of the Insolvent's disadvantaged former clients, that the proposal be approved. [55] Mr Collins in his submissions for the Law Society submitted that it is contrary to the public interest for Part 15 of the Insolvency Act to be used as "a refuge of convenience" when it suits the purposes of a professional person such as the Insolvent here who only a short time earlier had made promises to the Disciplinary Tribunal to repay his creditors and in particular his client creditors. The Law Society's contention is that this is precisely what is happening here and in the interests of public confidence in both the legal profession and the Part 15 procedure, it should not be countenanced by the Court. [56] These are powerful allegations made on behalf of the Law Society. They do present a somewhat troubled picture here. In Re Whimp (High Court Christchurch 4 August 2006, Christiansen A.J., CIV 2006-409-867) the Court, in noting at para. [65]:"while there is much about the proposal that to my mind would excite suspicion there is nothing concrete I can point to that would require the Court to decline the proposal," nevertheless still approved a proposal where creditors stood to receive about 20 cents in the dollar. The Associate Judge there described this as:"a more generous offer than is usual in insolvent proposals."Whilst in the present case it would be wrong to say there is much about the Insolvent's proposal which "excites suspicion", nevertheless, there are aspects of his proposal, particularly given that he is a practising barrister and solicitor, which do raise some concerns.[57] It may well be that in a general sense there are instances where, notwithstanding the approval of a proposal by the creditors of an insolvent solicitor, the Court in taking a broader view will refuse an application to approve a proposal which would have the effect of creditor clients not being repaid in full. Notwithstanding these concerns, in my view for the following reasons I find, but only by a fine margin, that this is not such a case. I now set out those reasons: (a) In Re Lowndes an application by a young solicitor with total debts of almost $2.5 million was approved, even though the proposal was to return the creditors only five or six cents in the dollar as opposed to a virtual certainty of nothing on a bankruptcy. In the present case the applicant proposes a payment of twenty cents in the dollar as against significantly less or nothing on bankruptcy. (b) Given the Insolvent's profession, and his present unenviable asset and liability position, it is difficult to see any different sort of proposal which might be put forward which would provide even a measure of payment to the Creditors. No alternatives other than income from the Insolvent's continued work as a solicitor would appear to be available. (c) As earlier authorities have noted, it is not unreasonable that an insolvent should be allowed some incentive to provide funds by continuing a professional practice in preference to bankruptcy, particularly where as here there is no substantiated allegation of an extravagant personal life style or living allowance. (d) The concept of inexpediency has been interpreted to include serious misconduct by the Insolvent seeking approval on the rationale that such a person warrants the censure and stigma of bankruptcy – Re Trott & Joy (unreported High Court Auckland, 14 April 1989, Tompkins J. B1471/88). Here, there was little advanced by the Law Society to suggest misconduct on the part of the Insolvent other than the complaint that, before the Disciplinary Tribunal, Mr Lal promotedhimself as being capable of trading his way out of insolvency and clearing all his creditors, when now he suggests that he is hopelessly insolvent and can pay only 20 cents in the dollar to creditors. On this question of misconduct, the Insolvent accepts that at the proceedings before the Disciplinary Tribunal he expressed the desire to be able to pay all his creditors including former clients. He notes, however, that at that time no creditor had issued a statutory demand or bankruptcy notice. He contends also that in its findings, the Disciplinary Tribunal suggested that the conduct of the Insolvent did not fall into the first band of offending that is dishonesty but rather fell into the middle category spoken of in Bolton v Law Society [1994] 2ALLER486. The Disciplinary Tribunal determined that Mr Lal should continue in practice and that his practising certificate should not be cancelled but rather subject to a short suspension. It made this determination because first it found Mr Lal took advice at the relevant times from the Law Society itself and secondly because he was seen as a"muddler" and not as a fraudster or someone acting otherwise with dishonest intent towards his clients. These factors, in my view, indicate that the Insolvent could not be said to be guilty here of serious and irresponsible misconduct in the terms outlined in Re Trott & Joy and that, there is no public interest here in ensuring that the Insolvent should not escape the stigma of bankruptcy. (e) I turn now to the policy question noted in Re Lowndes as to whether an "official" investigation of the Insolvent's past conduct and current life style should be undertaken by the Official Assignee in bankruptcy in the present case. As I see it, given the Insolvent's conduct there is no particular reason why such an investigation is critical and should be required here. And, on this, it is noted too that the proposed trustee, Ms Finnigan is an independent and experienced insolvency practitioner. (f) As I have noted above, from the Schedule of the Insolvent's client creditors attached to submissions made to me by Mr Collins, itappears that although three of the Insovent's former clients voted against the proposal three voted in favour of it. Of the remaining seventeen client creditors, as I have already noted, it is difficult to reach any other conclusion but that they chose not to oppose the Insolvent's proposal at his Creditors Meeting, or indeed before this Court. (g) With regard to the suggestion that the Insolvent changed his position over settlement of his creditors between that taken at his Disciplinary Tribunal Hearing to that advanced in the present proposal, under the circumstances here in my view, this is not conclusive and indeed it followed the specific invitation to the Insolvent from the Chairman of the Disciplinary Tribunal to explore this particular avenue. (h) Finally, as I have already noted, no real issue was raised before me as to the imminent need for any financial investigation of the Insolvent's affairs. Further, it is somewhat unclear what the Law Society is seeking by its opposition to the present proposal. If it is that the Insolvent is to be made bankrupt (and Mr Collins before me was at pains to make clear that the Law Society has no vendetta against Mr Lal but simply wishes the higher public interest elements to ensure the integrity of the legal profession to be maintained) then it is apparent that refusing approval of this proposal will lead to bankruptcy and be likely to prevent the Insolvent from continuing to practise. In this event, his creditors are likely to receive little, if anything, rather than the promised twenty cents in the dollar. I am satisfied that upholding the Law Society's objection to the proposal here, in the words of Wylie J. in Re Lowndes, (High Court Auckland, 17 December 1990 B1879/90):" would almost certainly be to the disadvantage of the general body of creditors."[58] For these reasons also, I find in terms of S.143(3)(c) Insolvency Act 1967, but only by a reasonably fine margin, that the Law Society has been unable to show here that it is not expedient the present Part 15 proposal should be approved. As an aside, I need to say however that it is unfortunate that the Insolvent has found himself in a situation where he feels unable to honour the intention he stated to the Disciplinary Tribunal that he would pay all his client creditors in full at least. Circumstances do change however.Conclusion[59] Before me at the outset, Mr Collins for the Law Society acknowledged quite properly the considerable challenge the Society as sole objector faced here. He noted that the established authorities must favour the Court granting its approval to the present proposal. That said and for the reasons given above, it will be apparent that in my view, none of the provisions provided for the refusal of an approval pursuant to S.143(3) Insolvency Act 1967 are sufficiently made out here, to require the Court to refuse the present application for approval of the proposal. [60] The proposal in the Insolvent's application dated 16 July 2007 is approved pursuant to S.143 Insolvency Act 1967.[61] As to costs, if these are in issue, then in my view given the circumstances here they should be left to lie where they fall. There is to be no order as to costs.'Associate Judge D.I. Gendall'