Commissioner of Inland Revenue v Kensington Developments Limited (in receivership)

[2016] NZHC 630

IN THE HIGH COURT OF NEW ZEALAND

AUCKLAND REGISTRY

CIV 2015-404-003092

[2016] NZHC 630

IN THE MATTER OF

the Companies Act 1993

BETWEEN

THE COMMISSIONER OF INLAND REVENUE

Plaintiff

AND

KENSINGTON DEVELOPMENTS LIMITED (IN RECEIVERSHIP)

Defendant

Hearing:	11April 2016
Appearances:	C Van Der Merwe for Plaintiff
Judgment:	11 April 2016

ORAL JUDGMENT OF ASSOCIATE JUDGE CHRISTIANSEN

THE COMMISSIONER OF INLAND REVENUE v KENSINGTON DEVELOPMENTS LIMITED (IN RECEIVERSHIP) [2016] NZHC 630 [11 April 2016]

[1]        The debenture holder wishes to oppose an application to liquidate a company and requests the receiver be given authority to represent it to oppose the liquidation application.

[2]        The Commissioner for Inland Revenue (the Commisioner) served a Statutory Demand upon the defendant (Kensington) on 28 October 2015 claiming payment of

$5,494,376.84.

[3]        There  being  no  application  to   set   aside   that   Statutory   Demand,  on 21 December 2015 the Commissioner filed an application for Kensington’s liquidation.

[4]        A statement of  defence  was  filed  on  5 February  2016.  An  affidavit  of Mr John G Russell dated 5 February 2016 was filed in support. Mr Russell deposed that until recently he was the receiver of the Kensington’s debenture holder [Downsview Finance Limited]; that in discussions with the Commissioner in 2011 an issue arose about whether a Bank of New Zealand loan existed, as Kensington said it did. It appears this may have had an impact on the Commissioner’s calculation of tax payable.

[5]        Mr Russell deposed having forwarded evidence of the existence of the Bank of New Zealand loan documents. He says, however, those were ignored and that instead the Commissioner made an application to transfer the dispute proceedings from the Taxation Review Authority (TRA) to the High Court. This, Mr Russell says, caused the defendant to abandon its challenges due to the cost.

[6]        Indeed, on 14 October 2105, Kensington filed a discontinuance of its own High Court proceeding which challenged the transfer of the Commissioner’s proceeding from the TRA to the High Court. Thereby Kensington abandoned its challenges to the Commissioner’s assessment of tax liability due for the income tax periods March 1997 through to and including March 2009.

[7]        On 19 November 2015, Mr Russell was adjudicated bankrupt. It was at about that time Mr Rogers was then appointed director and receiver of Downsview Finance

Limited (Downsview), Kensington’ debenture holder.  Also  at  about  that  time  Mrs Rogers was appointed a director of Downsview. It was clear from the Court’s discussion when considering Mr Rogers’s application for authority to represent Downsview (upon the Commissioner’s liquidation application) that the issues he wished to raise concerned those earlier years (1997-2009) in respect of which Kensington has now discontinued its claims.

[8]        In the Court’s view when Kensington withdrew its challenge in the High Court it thereby withdrew any opposition to the Commissioner’s assessments for the relevant taxation periods. In effect that concluded any challenge to the Commissioner’s process for recovery and the Commissioner’s application for liquidation.

[9]        Today, I heard Mr Rogers, with a view to understanding his purpose in requesting representation rights. In responding, he expressed reasons for rechallenging an action which, in effect, can no longer be done.

[10]      As advised to Mr Rogers the Court therefore saw no purpose in further considering his application to represent the debenture holder. The Court then declined Mr Rogers’ right to represent the debenture holder.

[11]      In that result the Court concluded there was no arguable defence to oppose the Commissioner’s application for liquidation.

[12]      The Court then adjourned the matter for call on 29 April 2017 at 10:45 am, to enable the liquidation application to be advertised.

[13]Mr Rogers was informed a liquidator may be appointed on that date.

Judgment

[14]      Application by receiver for right of representation of debenture holder to oppose a liquidation application was refused.

Associate Judge Christiansen