Commissioner of Inland Revenue v New Orleans Hotel (2011) Limited
[2017] NZHC 2500
•12 October 2017
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE
CIV-2016-409-000814 [2017] NZHC 2500
BETWEEN COMMISSIONER OF INLAND
REVENUE Judgment Creditor
AND
NEW ORLEANS HOTEL (2011) LIMITED
Judgment Debtor
Hearing: 9 October 2017 Appearances:
P Saunders and G A S Y McGillivray for Judgment Creditor
R A Hearn for Judgment DebtorJudgment:
12 October 2017
JUDGMENT OF ASSOCIATE JUDGE OSBORNE [reasons for judgment]
Introduction
[1] The defendant (New Orleans) has a substantial tax debt. It failed to comply with a statutory demand which the Commissioner of Inland Revenue issued in July
2016.
[2] The Commissioner issued this proceeding, an application for liquidation, in September 2016. From October 2016, New Orleans obtained, on an unopposed basis, some six adjournments of the proceeding. The main reason for adjournment was a pending sale of some properties belonging to entities related to New Orleans. Sales
have yet to eventuate. Along the way New Orleans also offered security and said it
COMMISSIONER OF INLAND REVENUE v NEW ORLEANS HOTEL (2011) LIMITED [2017] NZHC 2500 [12 October 2017]
would arrange for GST refunds (of other parties) to be credited to New Orleans. In September 2017, the proceeding was further adjourned but this time upon the basis that the Commissioner now needed to advertise as she wished to proceed on her application.
[3] On 9 October 2017, I heard and dismissed an application of New Orleans. I reserved costs and ordered the debtor to pay to the creditor her disbursements to be fixed by the Registrar. I said that my reasons for judgment would follow. These are they.
New Orleans’s interlocutory applications
[4] New Orleans made application for orders:
(a) restraining publication of any advertisement under r 31.11(1)(a) High
Court Rules; and
(b) staying further proceedings in relation to the liquidation until 31
January 2018 pursuant to r 31.11(1)(b) High Court Rules; or
(c) in the alternative, granting New Orleans leave to file a statement of defence out of time pursuant to r 31.20 High Court Rules.
[5] The draft statement of New Orleans’ defence was submitted. New Orleans would deny that it was involved and unable to pay its debts. It would assert that it then provided security for the debt to a value of $115,000.
[6] The Commissioner opposed New Orleans’ application.
Undisputed background
The tax debt
[7] At the time of the statutory demand (July 2016) New Orleans owed the Commissioner $140,257.44. The debt related almost entirely to GST and PAYE tax deductions.
[8] By the time the Commissioner commenced this proceeding (in September
2016), New Orleans’ tax debt had increased to $168,351.48, comprising almost entirely GST and PAYE.
[9] Christine Astrella, a collections officer of the Inland Revenue Department
(IRD), has exhibited in evidence a statement of New Orleans’ account as at 4 October
2017. It shows that the balance owing now stands at $188,965.31. This sum still comprises mainly GST and PAYE. Ms Astrella deposes that of the total sums owed by New Orleans to the Commissioner, $54,117.29 represents employer deductions made by New Orleans but not accounted for to the Commissioner since the proceeding was filed.
[10] New Orleans has never asserted that it has a genuine and substantial dispute as to the existence of the debt. Nor has it asserted that it has an arguable cross-claim.
New Orleans’ financial position
[11] Peter Whittaker, the sole director of New Orleans, has deposed that the debt to the Commissioner arose as a result of New Orleans being unprofitable for the first five years of its existence (following purchase in 2011). He deposes that it became profitable “about 12 to 18 months ago”. He exhibits two “profit & loss statements” (unaudited) for the periods 1 April 2016 to 31 March 2017 and from 1 April 2017 to
31 August 2017. The net profit shown for the year ended 31 March 2017 is
$96,931.52. For the latter (six month) period (1 April – 31 August 2017) a net loss of
$37,966.77 is shown. Mr Whittaker explains that 95 per cent of New Orleans’ profit is made in the October – April period. By implication, the current financial year will, once the next six months’ business accrues, be profitable (as occurred last financial year).
[12] In addition to the two “profit & loss statements”, Mr Whittaker exhibited a “balance sheet” stated to be as of August 2017 (also unaudited). The balance sheet shows a negative equity of $390,639.35. That figure is achieved after goodwill is included as an asset at $600,000. Mr Whittaker observes that the balance sheet also includes a debt of $772,530.54 owed to a related entity, 3H Ltd (3H). Mr Whittaker deposes that:
I do not intend to take any funds from the company to pay 3H until all the company’s other creditors (including IRD) are paid in full.
Mr Whittaker explains that therefore, after putting 3H’s debt to one side, New Orleans can be seen as having a net equity of $132,121.
[13] To achieve that calculation, Mr Whittaker assumes a goodwill adjustment down from $600,000 to $350,000 (as well as the ignoring of the 3H debt). He asserts that a sale of the business at $350,000 would therefore clear IRD’s debt entirely (as there would be equity remaining for the shareholders and/or partial payment of the 3H debt).
New Orleans’ business
[14] New Orleans operates a pub/restaurant with attached boutique accommodation. It leases its premises. The term of the leases is to November 2021.
[15] Mr Whittaker deposes that the leases are essential to the operation of the business. He refers to the right of the landlord to re-enter the premises in the event of New Orleans’ insolvency or liquidation. He deposes to a belief that the landlord would almost certainly re-enter and cancel the lease if this proceeding were advertised.
[16] Mr Whittaker deposes that New Orleans has 25 employees who would lose their jobs if the business closed.
New Orleans’ arrangements to settle the debt
[17] As noted, the Court adjourned this proceeding repeatedly to enable New
Orleans to clear the debt.
[18] Mr Whittaker identifies New Orleans’ key intentions and achievements during this period as being:
(a) In September 2016, New Orleans obtained the Commissioner’s agreement to clearance of the debt by 22 December 2016 with related entities to provide mortgages over four properties as security. New
Orleans defaulted on the payment arrangement as the properties did not sell by December 2016.
(b)In January 2017, there was a contract for the sale of one of the properties which was intended to produce funds for the tax debt (and the sale of which eventually settled in June 2017).
(c) In January 2017, the Commissioner agreed to a further adjournment of the proceeding to allow time for sale of the properties.
(d) Two payments were made on account of New Orleans’ debt:
(i) First, in May 2017, Mr Whittaker assigned a personal GST
refund of approximately $56,000;
(ii)Secondly, in June 2017, the sale of the sold property settled and approximately $50,000 was paid to IRD.
(e) There is a further (Rapaki) property to be sold – Mr Whittaker had expected that to be sold by October 2017 and had advised IRD of that. There was delay in building a house on the property. The sale is now not expected to occur before Christmas 2017. Mr Whittaker predicts that $50,000-$80,000 will be available from that date to reduce the tax debt.
(f) Mr Whittaker agreed with IRD to assign a personal GST refund for the March 2017 period of approximately $6,000 to the Department (but his tax agent has since taken that money).
Sale of New Orleans’ business
[19] Mr Whittaker deposes that he is at present working through the sale of the hotel business, and has asked two separate brokers to present offers. At the time he swore his affidavit (29 September 2017), Mr Whittaker expected any offers from two
particular interested parties “within the next fortnight”. If the brokers introduce further buyers, those parties are not likely to make their offers before early-November.
[20] Mr Whittaker expects that any purchaser would take possession of the business prior to Christmas 2017. He expects that a sale of the business would fetch $350,000 at an absolute minimum. He states that earlier in 2017 he rejected an offer of $350,000 (plus stock at value). He deposes that on a sale price of $350,000 (plus stock), there would be net equity of $132,121 (this calculation being summarised above at [12]).
Security
[21] Mr Whittaker deposes that as part of the arrangement entered into with IRD in September 2016, the associated entities provided agreements to mortgage so as to secure the Commissioner’s position. Mr Whittaker executed (on behalf of New Orleans) a Financial Relief Agreement and (on behalf of the related entities) an agreement to mortgage four properties. Mr Whittaker states that the IRD has not executed the security documents and has doubts as to their validity because of that. Mr Whittaker deposes that he has always considered the documents valid and still does.
[22] New Orleans conceded through Mr Hearn, as reflected in New Orleans’ draft statement of defence, that the value of security offered was $115,000 and not the full level of the debt. With that recent recognition, Mr Whittaker deposed in his affidavit that he is:
… happy to provide a second ranking mortgage over the Rapaki property.
[23] Mr Hearn has explained that the Rapaki property has two mortgages against it in favour of Mr Whittaker’s ex-wife but that Mr Whittaker anticipates being able to have the second mortgage released. Mr Whittaker deposes that a mortgage to IRD would secure $50,000 – $80,000 more of the debt.
[24] In his affidavit, Mr Whittaker also addressed New Orleans’ ongoing tax liabilities as will accrue from now to clearance of the debt. Mr Whittaker gave a global
statement of the profitability and turnover of other hospitality businesses in which he has “interests”. He deposes:
I am happy to personally guarantee the company’s ongoing obligations for taxes payable between now and the sale of the business.
[25] In his reply affidavit, Mr Whittaker confirmed his offer of a guarantee for debt accruing after 6 October 2017. He exhibited a form of guarantee which includes on its terms a guarantee not only of the debt to the Commissioner but also debt to any creditor incurred after 6 October 2017.
[26] Finally, Mr Whittaker records that 3H holds a (first ranking) General Security Agreement in relation to New Orleans’ property interests up to $800,000 which Mr Whittaker can arrange to have assigned to IRD as further security.
New Orleans’ grounds of application
[27] Against the background of Mr Whittaker’s evidence, New Orleans asserts the following grounds in support of its application:
(a) Proceeding with the liquidation application savours of unfairness as the debt owed to the Commissioner is secured over a third-party’s assets and New Orleans has offered additional security to ensure the Commissioner is paid in full.
(b)New Orleans is in the process of selling its business and all creditors will be paid in full within 12 weeks (that is by 22 December 2017).
(c) Advertisement of the proceeding would destroy the value of New Orleans’ business and result in nil recoveries to the Commissioner and to unsecured creditors while still allowing the Commissioner to recover the debt through the third-party securities.
(d)It is in the interests of creditors generally that New Orleans should be permitted to sell its assets in an orderly fashion.
(e) New Orleans did not file a statement of defence within the time permitted as the parties had agreed terms as to payment of the debt in full and the defendant has since reserved its position in respect of filing a defence.
(f) New Orleans has a reasonably arguable case that the Court’s discretion would not be exercised in favour of liquidation in all the circumstances.
The Commissioner’s opposition
[28] The Commissioner opposes the making of any of the orders sought in New
Orleans’ application.
[29] The Commissioner’s grounds of opposition may be summarised as follows:
(a) Increasing debt and failure to account – in the period since September
2017 the debt has increased from $168,351.48 to $188,965.31. New
Orleans has failed in that period to account to the Commissioner for
$54,117.29 of employer deductions which were held on trust for the
Commissioner.
(b)Failure to achieve settlement – the arrangement entered into in September 2016 required New Orleans to effect full settlement of the debt by 22 December 2016. New Orleans was to provide security and to pay $1500 per week until settlement in December. The parties agreed that advertising could occur if the debt was not settled in full by
22 December 2016. The debt was not so settled and has not been since. The interim payments were not made.
(c) Lack of security – the debt has not been fully secured over third-party assets. To the extent that New Orleans is now offering additional security, it has not provided evidence as to the value of assets to be secured. Arranging additional security would unacceptably delay the proceeding.
[30] Additionally, the Commissioner relies on the following matters:
(a) Presumption of insolvency
The Commissioner relies on the presumption of New Orleans’ inability to pay its debts through not meeting the statutory demand by 17 August
2016.
(b) Failure to file a defence
The Commissioner observes that New Orleans failed to comply with the requirements of r 31.17 in relation to the time for filing a defence.
(c) Indisputably owing debt
The Commissioner notes that there is no genuine substantial dispute as to the existence of the debt owed by New Orleans. Mr Whittaker acknowledges in his affidavit that New Orleans was indebted (as at 26
September 2017) in the sum of $188,413.31. Relying on Fresh Cut Flower Wholesalers Ltd v The Living and Giving Gift Company Ltd, Mr Saunders submits that leave should not be granted to file the defence as New Orleans cannot show on the papers an arguable basis upon which it is not liable for the amount claimed.1
(d) Exercise of the discretion
The Commissioner asserts that New Orleans has no arguable case that the Court would exercise its discretion not to liquidate the company.2
1 Fresh Cut Flower Wholesalers Ltd v The Living and Giving Gift Company Ltd (2001) 16 PRNZ
173 at [9].
2 Invoking Plumbing World Ltd v Supreme Construction Civil and Drainage Works Ltd [2015] NZHC 2330.
Discussion
Overview
[31] The predominant feature of the setting in which New Orleans makes this application is that New Orleans has been unable to pay its debts since mid-2016, with the debt to the Commissioner in fact increasing in that period, despite New Orleans receiving (in response to assurances of imminent settlement) repeated adjournments of this proceeding.
[32] It is unsurprising that the Commissioner, as the most significant arms-length creditor and one with responsibilities under the Tax Administration Act 1994, has little or no confidence in Mr Whittaker’s ability to achieve the revised outcome he now foresees (clearance of the full debt through settlement of an intended sale of the business before Christmas 2017). Equally unsurprising is the Commissioner’s conclusion that the security offered by New Orleans is not satisfactory.
Particular considerations
[33] A number of particular considerations inform my judgement.
(a) Indisputably owing debt
[34] It is beyond dispute (and acknowledged by Mr Whittaker) that New Orleans is indebted to the Commissioner for more than $188,000. That debt is now 35 per cent more than that when the Commissioner served her statutory demand in mid-2016. On the track record of New Orleans, interest and penalties accruing while New Orleans
pursues a realisation of assets will significantly add to the debt.
(b) Inability to pay debts [35]
New Orleans is presumed to be unable to pay its debts.3
Mr Whittaker’s
unaudited balance sheet (as of August 2017) identifies net liabilities of $390,639.35. Mr Whittaker by his evidence, including his recasting of the 3H debt and his recalculation of equity, invites a conclusion that New Orleans is solvent on a balance
sheet basis. That is not the case. The debt to 3H remains owing. If New Orleans is put into liquidation, 3H will share pro rata in any distribution to unsecured creditors.
[36] Mr Hearn submitted that New Orleans is to be treated as solvent because it is able to pay its debts to all creditors in full within a reasonably short time. The Court of Appeal’s judgment in Yan v Mainzeal Property & Construction Ltd (in rec and in liq) is authority for the proposition that a temporary lack of liquidity may not amount to insolvency if the debtor is able to realise assets or borrow funds within a relatively short time in order to meet its liabilities as they fall due.4 The Yan concept of temporary lack of liquidity cannot apply here. At best it may have been an argument open to New Orleans in September 2016 when Mr Whittaker foretold the repayment of the debt in full by Christmas 2016 through realisation of related parties’ assets. Such a period may fall within the “relatively short timeframe” recognised by the Court of Appeal in Yan.
[37] Here, the lack of liquidity has been unaltered for more than a year since the proceeding was issued. The evidence of failures to repay through that year constitutes incontrovertible evidence of New Orleans’ inability to pay its debts and of its insolvency. New Orleans has no substantial argument of solvency to take to trial.
(c) The relevance of security offered
[38] The Commissioner did not accept New Orleans’ offered security (mortgages) in late-2016. That decision is vindicated by New Orleans’s recent recognition (above [22]) that the value of the security offered was $115,000. New Orleans’ offer of inadequate security may be viewed as having resulted from a combination of Mr Whittaker’s over-optimism and a lack of appropriately qualified advice as to the value of assets.
[39] The very recent proposals of additional security are not accompanied by adequate supporting information. Mr Whittaker’s ascribed value of the Rapaki property (offered as security worth $50,000 to $80,000) is not supported by admissible valuation evidence. The property already carries two mortgages, one of which Mr
Whittaker recognises would need to be dealt with before an effective security could be given to the Commissioner.
[40] Mr Whittaker’s offer of a personal guarantee is supported by neither a statement of his approximate net worth nor a verified statement of his assets and liabilities. It is not an offer of guarantee to which any weight could be attached.
[41] Mr Whittaker has also offered the Commissioner an assignment of 3H’s general security agreement (GSA). Given the history of New Orleans’ non-reduction of debt over the last 18 months and the state of its balance sheet, the assignment of the GSA does not offer an assurance of the Commissioner’s full recovery of the debt in the event that New Orleans itself remains unable to meet the debt. Resort by the secured creditor to the company’s assets is not likely to involve the optimal recovery which Mr Whittaker seeks through having New Orleans trade on.
[42] Standing back, the eclectic mix of securities offered by New Orleans counts strongly against viewing them as satisfactory. The Court would need very strong grounds (which have not been shown to exist) for effectively overruling a creditor’s conclusion that the bundle of securities offered in this case is not an acceptable interim measure on any realistic commercial analysis.
[43] I conclude that the content of New Orleans’ current offer of securities does not provide reasonable assurance that the Commissioner will recover the debt from those securities should New Orleans itself prove unable to discharge the debt over the period of an adjournment.
The stay and restraint jurisdiction
Rule 31.11 High Court Rules
[44] Rule 31.11 High Court Rules empowers the Court to make orders staying a liquidation proceeding and restraining the advertising of the proceeding. These powers are in addition to the Court’s inherent jurisdiction to make such orders.
[45] The approach which this Court takes in relation to the Court’s power under the High Court Rules, in keeping with the approach previously adopted as a matter of inherent jurisdiction, was settled by 1989 in the decisions in Nemisis Holdings Ltd v North Harbour Industrial Holdings Ltd and Taxi Trucks Ltd v Nicholson.5 The Court of Appeal in Taxi Trucks recognised that the governing consideration can only be whether presenting or proceeding with the liquidation application savours of unfairness or undue pressure, a stigma which must depend on the particular facts.6
The jurisdiction exists in order to prevent abuse of process.7 This Court in Hewlett-
Packard (NZ) Ltd v Compu Sales Software and Hardware Ltd recognised that where a debt is undisputed it is not an abuse of process for the creditor to file liquidation proceedings.8
[46] For New Orleans, Mr Hearn noted that the order of stay which may be made under r 31.11 may be an order of temporary stay.9 Mr Hearn submitted that where the stay sought is temporary, the usual test in relation to interim injunctions should be applied.
[47] Wallace J, in Nemisis Holdings Ltd, observed that in an application under this rule the onus is on the applicant to demonstrate something more than the balance of convenience considerations which are usually considered on an application for an interim injunction.10
Discussion
[48] I am not persuaded by Mr Hearn’s submission that a different standard ought to be applied under r 31.11 if the defendant elects to seek only a “temporary” stay. Mr
5 Nemisis Holdings Ltd v North Harbour Industrial Holdings Ltd (1989) 1 PRNZ 379 (HC) and
Taxi Trucks Ltd v Nicholson [1989] 2 NZLR 297, (1989) 1 PRNZ 390 (CA).
6 Taxi Trucks Ltd v Nicholson, above n 5, at 392, adopting Exchange Finance Co Ltd v Lemmington
Holdings Ltd [1984] 2 NZLR 242 (CA) at 245.
7 Nemisis Holdings Ltd v North Harbour Industrial Holdings Ltd, above n 5, at 385.
8 Hewlett-Packard (NZ) Ltd v Compu Sales Software and Hardware Ltd (1990) 5 NZCLC 66,281 (HC) at 66,283.
9 Mr Hearn referred to Camanda Boy Pty Ltd v Bierton Downs Ostriches Ltd HC Rotorua M349/97,
21 May 1997 in which Master Kennedy-Grant granted a temporary stay order and restraint on advertising to enable the defendant to review its position when the Master had dismissed the defendant’s application for restraint and stay orders.
10 Nemesis Holdings Ltd v North Harbour Industrial Holdings Ltd, above n 5, at 385.
Hearn cited no authority for the suggestion of a different standard. I was not referred
to any case law supporting a different standard.
[49] In any event, nothing in the Commissioner’s approach to this proceeding smacks of abuse of process. The proceeding does not savour of unfairness or undue pressure. Far from it as New Orleans has benefitted from indulgence upon indulgence, none of which has seen its indebtedness to the Commissioner reduce. A stay cannot be justified through application of the principles applicable to the jurisdiction under r
31.11. New Orleans has throughout the proceeding owed the (increasing) debt. It was insolvent at the outset and remains insolvent.
[50] Mr Hearn, moving to matters beyond the interests of these particular parties, invited the Court to have regard to the interests of other unsecured creditors. He submitted, as identified in the interlocutory application, that:
Advertisement of the proceedings would destroy the value of the defendant’s business and result in nil recoveries to the plaintiff and to unsecured creditors, while still allowing the plaintiff to recover the debt via the third party securities.
[51] The later part of that submission fails in that the Commissioner has never accepted the offered securities and will have no ability to enforce them.
[52] The focus on the interests of other creditors is not an appropriate focus in relation to stay. The interest of creditors, if they seek to raise them through an appearance either in support or opposition, can be properly addressed after advertising at the hearing of the Commissioner’s application. Concern for the interests of other creditors serves to reinforce the appropriateness of allowing advertising to proceed so that other creditors may have their right of engagement in this proceeding if they choose.
[53] Mr Hearn has identified as the major concern for New Orleans, should advertising take place, the prospect that the landlord of New Orleans’ premises may re-enter and cancel the lease. Given that there is not a genuine and substantial dispute as to the debt owed to the Commissioner, and that it would be inappropriate to order a stay of the proceeding, it would not be appropriate that the Court effectively cut across
the entitlement of other creditors to learn of this proceeding (and engage in it if they so choose).
[54] Had New Orleans applied for both a stay and an order restraining advertising in September 2016, it is likely that the Court would have granted such orders on the basis of the time-frame agreed between the parties (namely until December 2016). What New Orleans seeks to achieve by the present application is a long-delayed consideration of principles relating to stay and restraint on advertising as if the proceeding had been recently commenced. Through the parties’ 2016 arrangements (and the Court’s adjournment of the proceeding at the request of the parties), New Orleans had in practical terms the benefit of a stay and restraint on advertising (albeit not ordered by the Court). If there is abusive conduct in the present case, it lies in the very recent application of New Orleans for the relief it now seeks.
New Orleans’ proposed defence
The application for leave to file a statement of defence
[55] New Orleans, in the alternative to orders staying the proceeding and restraining publication, sought leave to file a statement of defence out of time. The grounds on which the application was made were:
(a) New Orleans has a reasonably arguable case that the Court’s discretion would not be exercised in favour of liquidation in all the circumstances; and
(b)New Orleans did not file a statement of defence within the time permitted as the parties had agreed terms as to the payment of the debt in full and the defendant has since reserved its position in respect of filing a defence.
Procedural requirements
[56] Rule 31.20 High Court Rules provides for situations where a statement of defence has not been filed in time:
31.20 Effect of failure to file statement of defence or appearance
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.
[57] The application of the predecessor to r 31.20, (r 700T) was summarised by Paterson J in a passage in Fresh Cut Flower Wholesalers Ltd v The Living and Giving Gift Company Ltd, which I adopt:11
… There are several helpful decisions of Masters referred to in para HR700T.04 of McGechan on Procedure.12 With respect, I adopt the principles applied by the Masters. First, leave should not be granted unless the applicant can show on the papers an arguable basis upon which it is not liable for the amount claimed. Further, in my view, even if there is an arguable defence, leave should not be granted if the applicant is insolvent.
Arguable basis for asserting non-liability?
[58] New Orleans itself accepts that it is liable for the debt asserted by the
Commissioner. It cannot satisfy this first threshold test.
Insolvency?
[59] It is also established, as already discussed, that New Orleans is insolvent and has been for a lengthy period. New Orleans therefore fails in relation to this second test.
Explanation for delay
[60] As New Orleans has not satisfied the threshold tests for the granting of special leave to defend, it is strictly unnecessary that the Court consider the explanation of delay. New Orleans’ explanation was that a statement of defence was not filed as the parties had agreed terms as to payment of the debt in full and New Orleans had since
reserved its position in respect of filing a defence.
11 Fresh Cut Flower Wholesalers Ltd v The Living and Giving Gift Company Ltd, above n 1, at [9].
12 See now McGechan on Procedure (online looseleaf ed, Thomson Reuters) at [HR31.20.01].
[61] Had the threshold tests been satisfied, the September 2016 arrangements would still have counted against the granting of leave. Whether or not New Orleans had “reserved its position” at the time adjournments were granted is not a matter recorded on the Court file. In any event, if New Orleans had expressly reserved its right to pursue an application under r 31.20, it still needed to satisfy the Court that it was appropriate to grant special leave. If required, I would have found that New Orleans’ failure to achieve its agreed settlement by Christmas 2016 (or indeed in the following months) was a further factor which justified a refusal of leave. The defendant, while lacking any defence, had the benefit of a long period of time to settle the debt. In that period it failed both to pay the initially agreed regular weekly payments and the lump sum payment that Mr Whittaker had said would be possible.
Conclusion
[62] The defendant’s interlocutory applications were accordingly dismissed.
Hearing date
[63] I adjourn the proceeding for hearing in the List at 10.00 am, 2 November 2017.
Solicitors:
Inland Revenue Legal and Technical Services, Christchurch
Corcoran French, Christchurch
Associate Judge Osborne
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