Commissioner of Inland Revenue v Century City Hunter Street Limited HC Wellington CIV-2010-485-2085

[2011] NZHC 379

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV-2010-485-2085

BETWEEN  THE COMMISSIONER OF INLAND REVENUE

Judgment Creditor

ANDCENTURY CITY HUNTER STREET LIMITED

Judgment Debtor

CIV-2010-485-2087

AND BETWEEN            THE COMMISSIONER OF INLAND REVENUE

Judgment Creditor

ANDCENTURY CITY INVESTMENTS LIMITED

Judgment Debtor

CIV-2010-485-2088

AND BETWEEN            THE COMMISSIONER OF INLAND REVENUE

Judgment Creditor

ANDCENTURY CITY FOOTBALL LIMITED Judgment Debtor

CIV-2010-485-2089

AND BETWEEN            THE COMMISSIONER OF INLAND REVENUE

Judgment Creditor

ANDCENTURY CITY DEVELOPMENTS LIMITED

Judgment Debtor

THE COMMISSIONER OF INLAND REVENUE V CENTURY CITY HUNTER STREET LIMITED & ORS HC WN CIV-2010-485-2085 7 March 2011

CIV-2010-485-2098

AND BETWEEN            THE COMMISSIONER OF INLAND REVENUE

Judgment Creditor

ANDCENTURY CITY MANAGEMENT LIMITED

Judgment Debtor

Hearing:         7 March 2011

(Heard at Wellington)

Counsel:         Y. Meng - Counsel for Judgment Creditors

J. Toebes - Counsel for Judgment Debtors
D. Lester - Creditor in Support - Accident Compensation Corporation

Judgment:      7 March 2011

ORAL DECISION OF ASSOCIATE JUDGE D.I. GENDALL

Solicitors:         Inland Revenue Department, PO Box 1462, Wellington

J.T. Law, Solicitors, PO Box 25443, Wellington

Maude & Miller, Solicitors, PO Box 50555, Porirua City

[1]      Before the Court are applications by the plaintiff to place each of the above defendant companies into liquidation.

[2]      The debts concerned are substantial.

[3]      There are no  formal  notices  of opposition  to  the applications  before the

Court.

[4]      Instead, today Mr Toebes who appears on behalf of the defendant companies, filed in Court an affidavit of Elefterious (Terry) Serepisos (Mr Serepisos) a director of all five companies, dated 7 March 2011 which outlined a broad proposal for settlement of each of the debts in question.

[5]      That  proposal  made  reference  to  funding  of  US$100  million  which  Mr

Serepisos says “has been obtained and security and guarantee documents signed”.

[6]      He goes on to indicate, however, that it is a question of timing as to when these funds will be available.

[7]      In addition, Mr Serepisos in his affidavit refers to a second  limb of the settlement proposal.  This relates to the provision of securities in the meantime in favour of the plaintiff and the creditor in support over apartments and car parks in the  Lone Star Apartment  Building  and  the  Century City Apartment  Building,  a security over a property at 20 Thane Road, Roseneath and a security over a property at 15 Robieson Street, Roseneath.  Mr Serepisos and in his submissions before me Mr Toebes suggested that there was adequate security in these properties to cover both the debt to the plaintiff, Commissioner of Inland Revenue and also the debt to the supporting creditor, Accident Compensation Corporation.

[8]      In response, before me, Mr Meng for the plaintiff Commissioner queried, however, whether the securities offered were, in fact, adequate to cover the total debts owed.

[9]      In  addition,  Mr  Meng  confirmed  that  the  Commissioner  does  not  have confidence that the US$100 million loan referred to at para [3] of Mr Sereposis’ affidavit will be forthcoming to clear the debt.   Mr Meng confirmed that the Commissioner had sought confirmation that this loan was to be made available but as yet, as I understand the position, the Commissioner’s questions regarding this had remained unanswered.

[10]     Finally, before me today Mr Toebes for the defendant sought an adjournment of this matter for a period of some 6 weeks to enable the securities in question to be put in place and the US$100 million loan to be made available in order that the debts to the judgment creditor and supporting creditor could be cleared.

[11]     In doing so, Mr Toebes confirmed that the defendant companies and Mr

Serepisos are fully committed to clearing the debts in question in full.

[12]     I note in passing that this is at least the fourth call of these matters and, in addition, an application made under urgency on 4 February 2011 by each of the

defendant companies for orders restraining publication of the plaintiff ’s liquidation advertising of these matters was dismissed in a judgment of His Honour Justice Miller dated 7 February 2011.

[13]     Mr Meng for the plaintiff today opposed the application by the defendants for a 6 week adjournment.  He sought orders that each of the defendant companies be placed into liquidation.

[14]     Ms Lester for the creditor in support, Accident Compensation Corporation, indicated that the Corporation would simply abide the decision of the Court in these matters.

[15]     The length of time that these matters have been before the Court is clearly of some concern today.

[16]     It is also of concern that there has been no formal Notice of Opposition to the applications filed in this Court which is in breach of r 31.17 of the High Court Rules. Effectively I take it from Mr Toebes’ submissions to me today that he is seeking the leave of the Court to the filing of a statement of defence out of time.  In fact the only information before me today regarding the defendant’s opposition to the current application is the late affidavit of Mr Serepisos sworn and filed only this morning 7

March 2011.

[17]     Under all these circumstances I take the view that these matters cannot be allowed to simply drift.  I say this  given the levels of debt involved, the fact that Mr Toebes suggested to me today that a number of these companies are continuing to trade,  and  the  strong  opposition  from  the  plaintiff  to  any  further  adjournments despite the Commissioner’s acknowledged patience in these matters up to now.

[18]     It must be noted though that, despite the recent high profile advertising of the applications against these five companies, there appears to be only one creditor in support of those applications, Accident Compensation Corporation.

[19]     In  my view,  however,  the  circumstances  here  require  that  each  of  these defendant companies should be given only a short additional period of time to satisfy the plaintiff that payment of these debts can be properly made.  A concern must be that, with continued trading there is likely to be additional debts which are being incurred which may prejudice the position of the existing creditors of each of the companies.

[20]     That said, I now direct that these five mattes are adjourned, but only to a call at 10.15 am on Thursday of this week, 10 March 2011.

[21]     I further direct that:

(a)      Any   formal   statements   of   defence   to   the   present   liquidation applications together with any further affidavit evidence in support of those defences are to be filed and served by 5.00 pm on 8 March

2011; and

(b)Any reply affidavit evidence from the plaintiff and/or the supporting creditor is to be filed and served by 5.00 pm on 9 March 2011.

[22]     In the meantime, at the request of Ms Lester for the Accident Compensation Corporation, an order is now made unopposed by the defendants adding Accident Compensation as a plaintiff with respect to proceeding CIV-2010-485-2088 (against Century City Football Limited as defendant) and with respect to proceeding CIV-

2010-485-2089 (against Century City Developments Limited as defendant).

‘Associate Judge D.I. Gendall’