Commissioner of Inland Revenue v John Mill & Associates Limited

[2012] NZHC 1039

IN THE HIGH COURT OF NEW ZEALAND WANGANUI REGISTRY

CIV-2011-483-284 [2012] NZHC 1039

IN THE MATTER OF     the Companies Act 1993

BETWEEN  THE COMMISSIONER OF INLAND REVENUE

Plaintiff

ANDJOHN MILL & ASSOCIATES LIMITED Defendant

Hearing:         16 May 2012

(Heard at Wanganui (By Videolink))

Counsel:         J M Woodcock - Solicitor for Plaintiff

S. Burlace - Counsel for Defendant

Judgment:      16 May 2012

ORAL JUDGMENT OF ASSOCIATE JUDGE D.I. GENDALL

Solicitors:           Inland Revenue Department, PO Box 1462, Wellington

Treadwell Gordon, Solicitors, PO Box 4084, Wanganui

THE COMMISSIONER OF INLAND REVENUE V JOHN MILL & ASSOCIATES LIMITED HC WANG CIV-

2011-483-284 [16 May 2012]

[1]      Before the Court is an application seeking an order to place the defendant company into liquidation.

[2]      The debt in question which is owed to the plaintiff now stands at the sum of

$252,527.92.  A certificate that this debt remains unpaid has been provided to the

Court today.

[3]      A statutory demand was served on the defendant some 10 months ago on 14

July 2011.

[4]      The plaintiff did not respond to this statutory demand and on 9 September

2011 the current proceeding seeking an order for liquidation was filed.

[5]      Service of this proceeding took place on 23 September 2011 and advertising occurred in the Wanganui Chronicle on 16 November 2011 and the New Zealand Gazette on 17 November 2011.

[6]      No formal Notice of Opposition to the liquidation application has been filed by the defendant.

[7]      Notwithstanding this, Ms Burlace has appeared for the defendant company on each occasion in which this matter has been called before this Court.

[8]      The first call was on 30 November 2011 at which time Ms Burlace indicated the company was not trading but it claimed to be solvent on the basis that it had an amount owed to it by an outstanding debtor Mr John Mill of $326,000.00.  Mr Mill apparently was living and working at the time on Christmas Island.

[9]      Ms Burlace indicated that there were section sales in New Zealand underway by Mr Mill and in her words “other financing in place” to repay the debt to the company which was to occur shortly.

[10]     On this basis, the matter was adjourned from this call on 30 November 2011 to a new call on 8 February 2012 but it was noted this was to be a final adjournment.

[11]     The matter was called then on 8 February 2012 when counsel for the parties indicated a settlement proposal had been put forward and was to be considered by the plaintiff.

[12]     On that basis by consent the matter was adjourned to a new call on 14 March

2012.

[13]     On 14 March 2012 Ms Burlace again appeared as counsel for the defendant. She confirmed again that the company had not been trading since 2011 and that Mr Mill continued to be on Christmas Island and was not due back in New Zealand until mid-April 2012.  As to the issue of section sales, Ms Burlace indicated that some sales had been undertaken but no monies appeared to be forthcoming to reduce the debt owing to the plaintiff.

[14]     Nevertheless, effectively without opposition from the plaintiff at the time, this matter was adjourned to a call today at 10.00 am on 16 May 2012 to await Mr Mill’s return to New Zealand and to sort out the entire position.

[15]     At the call of this matter before me today, 16 May 2012, Ms Burlace who appeared again indicated that Mr Mill had been unable to “sort out matters” and he was back in Christmas Island not returning to New Zealand until June 2012. Accordingly, Ms Burlace for the defendant sought yet another adjournment of this matter for two months to await Mr Mill’s return.

[16]     Ms Woodcock for the plaintiff opposed this adjournment application and sought an order for liquidation of the defendant today.

[17]     As to this, Ms Woodcock advised the Court that when Mr Mill had returned to New Zealand presumably in April 2012 as indicated earlier he had made no contact of any kind with the plaintiff.  On that basis Ms Woodcock contended that the plaintiff had no faith at all first, that the defendant is solvent and secondly, that it

would be in a position to clear the growing Inland Revenue Department debt at some point.

[18]     So  far  as  that  debt  is  concerned,  as  I  understand  the  position,  of  the

$252,527.92 outstanding today the core debt includes Goods and Services Tax of

$48,233.48 dating back to 30 November 2005, $98,729.46 and Income Tax assessments dating back to 31 March 2006.  This core debt totals $146,962.94.  The balance of the debt outstanding obviously represents penalties and interest which are continuing to climb.

[19]     It goes without saying that these taxation debts have been outstanding for some considerable time.  It is clear too that the defendant company has put before the Court no evidence of any kind to show that it is solvent and in support of its suggestion that an order for liquidation should not be made.

[20]     The contention advanced in submissions from Ms Burlace on behalf of the defendant that the company’s sole asset being the debt due from Mr Mill is good and properly collectible, is unsupported by evidence of any kind.

[21]     Further, the defendant was made aware on 30 November 2011 that this matter was adjourned only to 8 February 2012 and this was to be a final adjournment.

[22]   Since that time the defendant company has had two further significant indulgences in that this matter was adjourned from 8 February 2012 first, to 14

March 2012 and then to today, 16 May 2012.

[23]     It is of concern also to hear that when Mr Mill returned to New Zealand in

April of this year no contact appeared to have been made with the plaintiff.

[24]     For all these reasons, I am satisfied that this matter cannot be allowed to drift further.  If indeed Mr Mill is successful in arranging funds to settle his outstanding debt to the defendant and this can be paid to a liquidator, then there is no reason why at that point the liquidation could not be terminated and the company continue its operations if it chooses to do so.

[25]     For all these reasons I am satisfied that the application before the Court must be granted.

[26]     An  order  is  now  made  placing  the  defendant  company  John  Mill  and

Associates Limited into liquidation.

[27]     John  Howard  Ross   Fisk   and  Jeremy  Michael   Morley  are  appointed liquidators.

[28]     Costs are awarded to the plaintiff on a 2B basis together with disbursements as fixed by the Registrar.

[29]     An  order  is  made  approving  the  liquidator’s  rates  of  remuneration  in accordance with the affidavit of Jeremy Michael Morley dated 21 November 2011 filed herein subject to s 284 of the Companies Act 1993.

[30]     A further order is made allowing the liquidators to exercise their powers individually pursuant to s 242 of the Companies Act 1993 and these orders are timed today, 16 May 2012 at 10.43 am.

‘Associate Judge D.I. Gendall’