Commissioner of Inland Revenue v CIT Holdings Limited

[2015] NZHC 3207

IN THE HIGH COURT OF NEW ZEALAND

AUCKLAND REGISTRY

CIV 2015-404-000997

[2015] NZHC 3207

BETWEEN

THE COMMISSIONER OF INLAND REVENUE
Plaintiff

AND

CIT HOLDINGS LIMITED

Defendant

Hearing:	8 December 2015
Appearances:	C Van Der Merwe for the Plaintiff M Pascariu for the Defendant
Judgment:	16 December 2015

JUDGMENT OF ASSOCIATE JUDGE CHRISTIANSEN

This judgment was delivered by me on

16.12.15 at 11:30am, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar Date……………

THE COMMISSIONER OF INLAND REVENUE v CIT HOLDINGS LIMITED [2015] NZHC 3207

[16 December 2015]

Application

[1]        The defendant (CIT) filed an interlocutory application seeking an extension of time or special leave to file a statement of defence.

Background

[2]        On 7 May 2015 the plaintiff (Commissioner) filed a proceeding to put CIT into liquidation. That document recorded a statutory demand had been served on CIT on 31 March 2015 demanding payment of $548,226.52 largely for unpaid goods and services tax (GST) in the period 31 March 2009 to 31 October 2013.

[3]        The matter was first called on 26 June 2015 when Mr Pascariu appeared for CIT. The Court was advised that CIT had put a settlement proposal to the Commissioner. By consent the liquidation list call of this matter was adjourned to 21 August 2015. The Court noted that any defence was to be filed by 14 August 2015.

[4]        When the matter was called on 21 August 2015 the Court noted Mr Pascariu’s comment that “many companies had become involved”.

[5]        Upon Mr Pascariu’s request on behalf of CIT, the Court adjourned the matter for call on 14 October 2015.

[6]        When the matter was recalled on the liquidation list on 14 October 2015 the Commissioner sought to proceed upon a liquidation application. The day before CIT filed an application seeking an extension of time or special leave to file a statement of defence. The affidavit of Mr Olliver was filed in support.

[7]        The Commissioner did not consent to that leave application. After discussion with counsel it was agreed the Court would schedule a hearing upon the leave application alone.

The leave application

[8]It is advanced upon grounds, inter alia:

(a)The proceeding was twice adjourned to enable settlement negotiations to occur but these did not result in a settlement.

(b)That at the Commissioner’s request CIT filed GST returns with the assistance of PricewaterhouseCoopers (PWC).

(c)Upon its review of CIT’s affairs PWC formed the view that CIT Holdings’ overall liability for GST as at 31 July 2015 was $39,455.10 and not $548,266.52.

(d)The sum of $39,455.10 was or was to be placed in CIT’s solicitor’s trust account to be held pending determination of this dispute either by agreement or by the Court.

(e)At a previous mention hearings the timing for filing a statement of defence was not addressed explicitly with the Court, albeit the adjournments occurred by consent, so the initial 10 working day period for filing a defence had passed.

(f)In the circumstances it is in the interests of justice that CIT be permitted to file a statement of defence because they have a reasonably arguable defence including that there is a substantial dispute whether or not the claim owed is due; and the Commissioner will not suffer prejudice by the later filing of a defence.

The applicant’s evidence

[9]        It has been provided by an affidavit of Mr Olliver, the sole director of CIT. Mr Olliver deposes Ms Sparks was a co-director of CIT until 21 February 2013 and that whilst CIT was under Ms Spark’s control says Mr Olliver, the Commissioner assessed CIT’s liability in relation to 12 intended developments on Waimarie Street, St Heliers, Auckland.

[10]      Mr Olliver advises the assessment was made for reasons which are now subject to substantive proceedings in the High Court between companies under his control and Ms Sparks’ interests.

[11]      Mr Olliver says although the liquidation proceeding was served on CIT’s former registered office he did not become aware of the proceedings until 19 June 2015 when they were publicly advertised. He said CIT’s registered office had moved prior to the liquidation proceedings commencing.

[12]      A day prior to the first court hearing call of the matter CIT made a settlement offer to the Commissioner when it was agreed all outstanding income tax and GST returns would be filed by 31 August 2015. For that purpose PWC was engaged.

[13]      Mr Olliver says PWC formed the view that the Commissioner’s assessment of CIT’s GST liability was based on erroneous information. A copy of PWC’s letter reporting to that effect is attached to Mr Olliver’s affidavit.

[14]      Mr Olliver considered therefore there were strong reasons to dispute the Commissioner’s claim.

CIT’s case

[15]      It focuses upon claims no agreement as to liability was ever reached with the Commissioner and therefore proper processes have not been followed when the liquidation proceeding was initiated.

[16]      CIT is a bare trustee for trusts associated with Mr Olliver who is the current director of CIT and Ms Sparks, his former wife. A GST liability arose from CIT’s transactions with the properties CIT had purchased with the intention of being developed.

[17]      On 6 November 2013 CIT received a notice of assessment for GST liability from the Commissioner. In response CIT submitted a notice of proposed adjustment. On 29 January 2014 the Commissioner advised CIT it had rejected the proposed adjustment.

[18]      On 19 May 2014 the Commissioner sent CIT a letter stating the dispute moved to the “conference phase of the disputes resolution process”. Negotiations ensued.

[19]      On 27 February 2015 Mr Ryan solicitor for CIT sent an email under the heading:

The PBG Trust/Greg Olliver/The Bankhouse Trust/CIT Holdings Limited – Settlement Meeting

It noted:

Greg Olliver and I would like to meet you to progress the settlement discussions from last year, with a view to entering into a settlement agreement as soon as reasonably practicable. You have proposed meeting at our offices on Tuesday, 10 March for a facilitated conference regarding the personal income dispute with Greg Olliver. Could we please meet with you at that time to instead discuss settlement, with the facilitated conference deferring pending that discussion.

Our proposed agenda is as follows:

1.The PBG Trust (GST debt and tax losses).

2.Greg Olliver (income tax dispute).

3.The Bankhouse Trust (tax losses/adjudication report and GST debt).

4.CIT Holdings Limited (GST debt and reassessment).

Could you please let me know if you are available to meet and who from Inland Revenue Department will attend.

[20]      By letter dated 8 October 2014 the Commissioner advised CIT that in her view the issues in dispute between the parties had been resolved and the Commissioner enclosed a proposed agreement to amend assessment. In response on 20 October 2014 CIT says its solicitor Mr Ryan notified the Commissioner that there was no agreement in place and that CIT would provide a formal response at a meeting to be held between the parties.

[21]On 2 March 2015 the Commissioner advised CIT that:

(a)Inland Revenue wanted to have a further conference to discuss tax liability disputes with Mr Olliver’s company; and

(b)A statement of position would be prepared if Mr Olliver did not require a further conference.

[22]      CIT claims that unbeknown to it the Commissioner issued a statutory demand dated 5 March 2015 but which was not served until 30 March 2015. Because at the time CIT was negotiating with the Commissioner a commercial resolution of the GST claim, CIT says no steps were taken to set aside the statutory demand.

[23]      CIT says on 5 June 2015 its solicitors provided voluntary disclosure of documents to the Commissioner the purpose of which was to assist what CIT believed were ongoing settlement negotiations.

[24]      On 25 June 2015 CIT’s solicitors requested the Commissioner to reassess CIT’s tax liability under s 113 of the Tax Administration Act 1994 (the Act). On 20 August 2015 the Commissioner advised CIT’s request had been rejected.

Commissioner’s case in opposition

[25]      The Commissioner’s case is that an agreement was reached regarding liability and amount when CIT was advised its reassessment information was accepted; despite CIT’s belated claims this was not so.

[26]      In his first affidavit dated 16 November 2015 on behalf of the Commissioner Mr Smith, a recovery and enforcement officer with the Inland Revenue Department states that the statutory demand was properly served on an accountant for CIT. He said there could be no dispute of the Commissioner’s assessment for under s 109 of the Act the amount of tax demand is deemed to be correct and cannot be disputed. He said CIT did not disclose a defence in any of its documentation that no instalment arrangement has been entered into by the parties and no evidence has been provided that CIT was in a position to pay the tax.

[27]      By his second affidavit dated 1 December 2015 Mr Smith deposes that the Commissioner’s claim of (then) $610,989.24 is undisputed and is unrelated to any

figure that the Department of Investigations within Inland Revenue may now be claiming from CIT.

[28]      By an affidavit dated 2 December 2015 Mr Singh a specialist investigator with the IRD deposed that he was familiar with his department’s files relating to CIT. He refers to the affidavit of Mr Olliver sworn of the present application. He responds:

(a)On 6 November 2013 the Commissioner sent an email to CIT attaching a tax shortfall assessment calculation table.

(b)The Commissioner acknowledged the proposed adjustment received on 20 January 2014 in response.

(c)The following day an email was sent to CIT advising that the notice of proposed adjustment was rejected in full.

(d)On 19 May 2014 CIT was advised the dispute had moved to the conference phase of the disputes process and for that purpose a conference was scheduled for 6 August 2014.

(e)On 7 August 2014 a letter was sent to CIT referring to the conference held the previous day. The letter set out the information CIT had agreed would be provided by 8 September 2014 including the value of the residential property at 22 – 24 Waimarie Street, related expenses for GST returns filed for periods March 2009 to-date, and details of related expenses for the ‘Kapiti’ project. A letter confirmed the conference phase would remain open until the parties reached agreement on GST inputs to be allowed; that it was necessary to remove all GST inputs claimed in relation to 22 – 24 Waimarie Street as this was accepted by Mr Olliver as an exempt supply as it was his residential dwelling.

(f)On 4 September 2014 an email was sent to CIT reminding it of the due date of 8 September 2014.

(g)On 8 September 2014 CIT sent:

(i)A valuation report from Colliers International.

(ii)An apportionment of the purchase price of various Waimarie Street properties.

(iii)Apportionment of GST and tax on the expenses incurred by CIT.

(h)On 8 October 2014 the Commissioner confirmed that the analysis of inputs for 22 Waimarie Street was accepted as submitted. The Commissioner stated that all analysis under dispute was now resolved and requested advice regarding how CIT intended to pay its GST tax debt. Attached to the letter was the CIR’s assessment of outstanding liability in the sum of $671,983.86 including a use of money interest (UOMI) of $208,584.36.

(i)By a letter dated 9 October 2014 the Commissioner advised that the analysis and valuation material supplied had been accepted and that all matters previously in dispute in that regard had now been resolved or that the conference phase had come to a close.

(j)On 20 October 2014 Mr Ryan for CIT advised that it would provide a formal response at the meeting agreed to be held on 28 October 2014.

(k)Previously on 7 October 2014 CIT had emailed the Commissioner’s Mr Singh to request a meeting to discuss the settlement of all outstanding matters for various taxpayers including CIT.

(l)During that meeting CIT agreed to provide a settlement offer for it and for other taxpayers. This agreement was confirmed on 31 October 2014 but no settlement offer was ever since made.

(m)On 14 November 2014 a letter from the Commissioner confirmed again that the CIT disputed amounts were agreed and that the Commissioner

would carry out the reassessment process to correct the GST returns for the periods ended 31 March 2009 and 31 March 2014.

(n)On 27 February 2015 CIT sent Mr Singh an email requesting a discussion about GST debt, reassessments and payment involving other associated taxpayers and CIT, with a view to entering into a settlement deed.

(o)Mr Singh responded on 2 March 2015 advising the Commissioner was not prepared to have a settlement meeting but invited a payment settlement offer be emailed.

(p)On 23 March 2015 CIT sent an offer involving it and other taxpayers.

(q)On 15 April Mr Singh advised CIT that a settlement offer for CIT and other taxpayers had been rejected in full.

(r)CIT responded on 15 April 2015 requesting a meeting to discuss the basis of the offer and settlement options.

(s)Mr Singh responded on 20 April advising the Commissioner was not prepared to have a meeting. Mr Singh agreed to discuss the matter with his team leader and to call back.

(t)CIT called that same day and enquired if the team leader had been spoken to and asked what minimum amount the Commissioner would settle on to which the response was given that full payment of the debt was required.

(u)On 5 June 2015 CIT telephoned and requested a conference; a meeting was arranged for 25 June 2015.

(v)At the conclusion of that meeting CIT emailed Mr Singh a settlement offer for CIT and other taxpayers.

(w)On 18 August 2015 Mr Ryan emailed Mr Singh to enquire on progress regarding its settlement offer because the Commissioner’s claim was due for call in the High Court on 21 August 2015 and CIT wanted to update the court on the progress made.

(x)On 20 August 2015 Mr Singh responded by email advising:

(i)The Commissioner disagreed with the reversing of the GST re- assessments in respect of payments to Todd Corporation;

(ii)The Commissioner declined the request under s 113 of the Act to amend the GST returns to “regretted choice”;

(iii)The Commissioner was going to proceed with the liquidation action against CIT;

(y)On 27 August 2015 CIT sent an email confirming a meeting for 2 September 2015 to discuss other matters and the Commissioner’s counteroffer in relation to CIT and associated taxpayers.

(z)On 27 August 2015 Mr Ryan emailed Mr Singh to arrange another meeting to discuss the Commissioner’s counteroffer of 20 August 2015

(aa)On 2 September 2015 Ms Douglas (a new in-house accountant for CIT) sent Mr Singh an email containing GST analysis of CIT from 14 April 2009 to 22 July 2015 to be adjusted in the period ended 31 July 2015. Mr Singh said it was noted the GST claims included expenses on 22 – 24 Waimarie Street which had been agreed was the residential dwelling of Mr Olliver and an exempt supply, and GST could not be claimed.

(bb)On 15 September 2015 Mr Singh sent a letter to Ms Douglas setting out concerns in relation to her 2 September 2015 letter including, inter alia:

(i)That CIT had already filed GST returns for 31 March 2009 to 31 July 2013 which were subject to a dispute which was settled

on the basis that input deductions for the purchase of 22 – 24 Waimarie Street would be disallowed; that those figures had been used in the Commissioner’s assessment on 18 November 2014 to which no further challenge was received;

(ii)That the apportionments to 18, 22 and 28 Waimarie Street were not consistent at the time the input claim had been made by CIT; that the Commissioner therefore initiated a dispute in relation the value of those properties and that dispute was settled based on the valuation provided by CIT.

(iii)When CIT filed its GST return for the period 30 August 2014 it advised it was currently developing townhouses in Waimarie Street.

(iv)Included in the GST return for the period 31 July 2015 were expenses from 14 April 2009 to 22 July 2015 in respect of which claims had already been made and accepted by the Commissioner and that no further amendments could be lodged.

Legal principles

[29]Rule 31.20 of the High Court Rules provides:

If a person who is entitled to file a statement of defence or an appearance in a proceeding commenced by the filing of a statement of claim under Rule 31.3 fails to file a statement of defence or an appearance within the time prescribed, that person must not, without an order for extension of time granted on application made under Rule 31.22 or the special leave of the Court, be allowed to appear at the hearing of the proceeding.

[30]      Mr Pascariu refers to the decision of the High Court in Sayer v Capital Aviation Limited1 as authority for the position that an applicant for special leave must demonstrate a convincing reason for it to be granted, a lack of prejudice, and justification for the indulgence.

1 (1993) 6 PRNZ 401.

[31]      CIT’s defence is advanced upon claims of ineffective service of the proceeding and a failure by the Commissioner to follow due process.

Ineffective service

[32]      Section 387 of the Companies Act 1993 requires delivery of any legal proceedings upon a company to be by delivery to a director, or to an employee at the principal place of business, or by leaving it at the company’s registered office.

[33]In this case the proceeding was served on the company’s registered office.

[34]      Mr Pascariu submits service was not effective because on 19 May 2015 (and before 27 May 2015 when service of the statement of claim was effected at the company’s registered office at 26 St Heliers Bay Road), CIT vacated its office and moved to 237/c Tamaki Drive, Kohimarama. Mr Pascariu states “and due to an oversight, the change of office was not promptly recorded on the Companies Office Register website”.

[35]      Also Mr Pascariu submits it would have been apparent to the service agent that the office at 26 St Heliers Bay Road was vacant.

[36]      The deadline for filing a statement of defence expired on 10 June 2015 but CIT says it only became aware of these proceedings on 19 June 2015 when they were publicly advertised.

[37]      It is conceded that service of the proceeding was valid, it having been effected at the nominated address for the registered office recorded at the time. However Mr Pascariu submits service was not effected in a manner which would ensure notice of the documents being received by service on a director or employee. He submits therefore service was ineffective and the Court should exercise its discretion to enable a statement of defence to be filed.

Failure to follow due process

[38]      On 20 January 2014 CIT filed a Notice of Proposed Adjustment seeking an adjustment in relation to the Commissioner’s assessment. The Commissioner rejected this and the dispute resolution process provided under the Act commenced.2

[39]      The Standard Practice Statement (SPS): Disputes Resolution SPS 11-06 Disputes Resolution process commences when a taxpayer challenges the Commissioner’s assessment.

[40]      Pursuant to the SPS, unless the statutory exceptions apply, the Commissioner must go through the dispute resolution process before an assessment can issue.

[41]      If the dispute remains unresolved after the conference phase has been completed, the Commissioner must issue a disclosure notice under s 89(M)(1) of the Act. The dispute will then usually be referred to adjudication, which involves Inland Revenue independently considering the dispute and as a final phase in the disputes process before the taxpayers assessment is amended following the exchange of statements of position.

[42]      Regarding the Commissioner’s position that CIT cannot challenge the assessment because of s 109 of the Act, CIT argues that the legitimacy of the process used by the Commissioner to make the assessment, on which the statutory demand was based, is flawed. Mr Pascariu submits that according to the SPS the Commissioner was obliged to prepare the statement of position and engage in the adjudication process in the Act; that the Commissioner failed to do so but instead elected to issue the statutory demand and, subsequently, liquidation proceedings.

[43]      Mr Pascariu submits the authorities recognize a distinction between the validity of an assessment and the correctness of that assessment,3 that when the process followed and the character of the resulting decision are challenged, the Court has jurisdiction on traditional administrative law grounds to consider the legitimacy or validity of the process actually adopted by the Commissioner.

2 Section 89N(1).

3 Commissioner of Inland Revenue v Canterbury Frozen Meats Co Limited [1994] 2 NZLR 681 at 688.

[44]      Mr Pascariu submits that judgment of the Court of Appeal in the Canterbury Frozen Meats case also provides jurisdiction to intervene when there is evidence of procedural impropriety as he submits there as is here because the Commissioner departed from the due process when the statutory demand was issued rather than the issue of a disclosure notice as is required under s 89(M)(1).

[45]      Therefore Mr Pascariu submits that on the material before the Court there is an arguable case that the Commissioner has not followed the proper process in arriving at the decision as to CIT’s GST liability.

[46]      Further for reasons addressed in PWC’s advice CIT believes the GST liability demanded by way of statutory demand is well in excess of its true tax liability but the request to the Commissioner to amend the assessment has been declined. Mr Pascariu submits CIT would suffer irrefutable harm if the application for leave is declined. He submits there would be no prejudice suffered by the Commissioner if leave to file a statement of defence is granted.

Considerations

Proper process

[47]      It is CIT’s case that the Commissioner prematurely terminated negotiations and issued a statutory demand. The Commissioner’s position is that this is not correct as the figures and taxes claimed in the statutory demand are distinct from those that were involved in the disputes procedure.

[48]      Mr Van Der Merwe does not accept Mr Olliver’s claim that CIT had not been given an adequate opportunity to challenge the Commissioner’s assessment of its GST liability. That, he says is incorrect. Mr Olliver deposes that at the time the statutory demand was served he believed a negotiated solution could be reached and that was why no steps were taken to set aside the statutory demand. Mr Olliver said that on 5 June 2015 CIT’s solicitors provided voluntary disclosure of documents to the Commissioner, the purpose of which was to assist with what he believed were ongoing settlement negotiations.

[49]      Mr Olliver states in conclusion that CIT had not been given an adequate opportunity to challenge the Commissioner’s assessment of its GST liability. Mr Van Der Merwe disputes that claim. He refers to the fact that in paragraph 5.2 of the voluntary disclosure, CIT acknowledges a total tax shortfall of $228,749.20 in respect of the GST periods from 31 March 2009 to 30 April 2014.

[50]      Regarding CIT’s solicitors request on 25 June 2015 to the Commissioner for a reassessment of CIT’s tax liability under Section 113 of the Act and the Commissioner’s purported rejection of that invitation, Mr Van Der Merwe comments that the rejection contained a counteroffer which confirmed Inland Revenue’s agreement to receive the sum of $268,605.89 within 30 days.

[51]      Mr Van Der Merwe submits the counteroffer implies that an indisputable amount of tax exists from which the Commissioner is not prepared to deviate.

[52]      It is CIT’s case that proper process has not been taken; that following its issue of a notice of proposed adjustment the matter of its GST debt was not appropriately disposed of by way of the disputes process – conference phase.

[53]      There is no issue but that negotiations ensued. Those had focused on an undisputed debt due because CIT had claimed GST deductions in respect of residential property for which those deductions were not claimable.

[54]      In the outcome of the parties’ correspondence and communication the Commissioner advised CIT of her view that issues in dispute between the parties had been resolved. A proposed agreement to amend assessment was sent.

[55]      It was the submission of Mr Pascariu that in response it was asserted there was no agreement in place. However Mr Ryan’s email of 20 October 2014 is not that explicit. It noted:

I refer to your letter of 8 October enclosing an agreement to amend assessments. You have asked for a response today, but after receiving your letter we arranged a settlement meeting on 28 October with Trevor Strang and others from Inland Revenue in respect of a number of taxpayers including CIT Holdings Limited. Accordingly CIT Holdings Limited will provide a formal response to your letter at that meeting.

[56]      What is clear is that on 8 October 2014 the Commissioner confirmed the analysis of inputs for 22 Waimarie Street was accepted as submitted. Effectively matters raised by CIT’s notice of proposed adjustment had been reviewed. In the outcome the Commissioner’s analysis confirmed acceptance of the material CIT had supplied.

[57]      Mr Ryan’s email of 20 October indicates no suggestion of a dispute with that position. The clear indication given by the email of 20 October 2015 from Mr Ryan was that the meeting arranged for 28 October would serve the purpose of reviewing the position in relation to a number of taxpayers i.e. others as well as CIT.

[58]      Mr Ryan’s letter dated 5 June 2015 provides a voluntary disclosure pursuant to s 141G of the Act. The purpose of the voluntary disclosure was to request a reduction in the penalty for voluntary disclosure of a shortfall in payment of tax. But it is clear the form of that document provided that no dispute was raised regarding liability for the tax that ensued in the result. Indeed a tax shortfall was specifically acknowledged.

[59]      In none of these events post 8 October 2014 has any challenge been raised to the Commissioner’s assessment of the tax payable in respect of 18 – 22 Waimarie Street. Rather, as Mr Ryan’s voluntary disclosure letter of 5 June 2015 shows CIT wanted to capture 18 and 28 Waimarie Street as well in respect of any payment agreement.

[60]      CIT says it never signed the agreement document attached to the Commissioner’s letter of 8 October 2014. In the Court’s view the reason is clear. As appears from Mr Singh’s facsimile to Mr Ryan dated 2 March 2015 CIT wanted the tax position of related entities to be considered also.

[61]      It seems clear throughout that neither process nor assessment was challenged except in regard to the overall purpose to expand the settlement base in respect of the taxation liabilities of other entities.

[62]      Latterly it was a letter from PWC dated 13 October 2015 which provided CIT’s basis for claiming a debt of $39,455.10 was all that was payable.

[63]      Regarding that letter the Court comments that it is quite uninformative. It refers to procedures undertaken by the review of transactions concerned and GST returns filed. The letter concluded that the amount in question determined by them was to be held in the solicitor’s trust account:

For payment… once an agreement had been reached with IR that this amount is an appropriate full and final settlement, in order to achieve an accurate GST position for the company”.

[64]      In the Court’s view this all comes too late to serve CIT’s purposes of disclaiming now the acknowledgements previously made regarding the extent to CIT’s tax liability. Regardless there is an acknowledgement of a present liability albeit in an amount which it is promised will be paid if the Commissioner agrees with CIT’s claims of present liabilities.

[65]      The evidence is there has been no dispute as to liability or the Commissioner’s calculations, save with regard to serving CIT’s purpose of having other property and the debt of other companies also being considered. It is not even clear from CIT’s evidence who owns those other properties in respect of which further consideration and/or assessment is sought.

[66]      By the Commissioner’s letter dated 9 October 2014 Mr Ryan was advised that the investigations team accepted the analysis and valuation material that had been supplied on behalf of CIT and hence why the Commissioner considered all matters previously in dispute had been resolved. There was not in response, the filing of any fresh notice of proposed adjustment or any indication of dissatisfaction of that outcome. The meeting arranged to execute a settlement agreement was delayed in circumstances already identified in this judgment, but not by any reference to a challenge to the Commissioner’s agreement to accept the reassessment material provided on behalf of CIT.

[67]      It has been submitted that if issues were unresolved after the conference phase that a s 89(M) disclosure notice was required to be issued. That is of course correct but in the Court’s view an agreement was reached and the conference phase was ended by Inland Revenue’s facilitator Mr Hutchins and his advice that the dispute had been resolved for those reasons he then explained.

[68]Therefore, there was no requirement for the issue of a s 89 notice.

Service

[69]      CIT claims service was ineffective. No issue is apparently taken regarding service earlier of the statutory demand.

[70]      The Court does not accept CIT’s issues with service of the liquidation proceeding. It was delivered to the registered office. CIT says it had moved from that office before then. Only CIT could have been responsible for not notifying the Registrar of Companies regarding appropriate notification of any change of address.

Solvency

[71]      No evidence has been provided regarding CIT’s ability to meet payment of the Commissioner’s debt which as at 8 December 2015 amounted to $611,994.45.

Summary

[72]      Claims of procedural default by the Commissioner are not accepted. Information provided by CIT for consideration upon reassessment was accepted. Any enduring disagreement thereafter concerned factors and issues of other entities and did not affect the Commissioner’s claims of resolution having been affected and completed.

Result

[73]CIT’s application for special leave to file a statement of defence is refused.

[74]      This matter will be adjourned for call in the liquidation list on 29 January 2016 at 10:45am.

Associate Judge Christiansen