Commissioner of Inland Revenue v NSTK Investments Limited (formerly Khanda Developments Limited)

[2021] NZHC 514

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2021-404-242

[2021] NZHC 514

UNDER

the Companies Act 1993, Section 329 and Rule 19.2 of the High Court Rules

BETWEEN

COMMISSIONER OF INLAND REVENUE

Applicant

AND

NSTK INVESTMENTS LIMITED (formerly KHANDA DEVELOPMENTS LIMITED)

Respondent

Hearing:	12 March 2021
Appearances:	Nick Malarao for the Applicant No appearance for the Respondent
Judgment:	12 March 2021

ORAL JUDGMENT OF ASSOCIATE JUDGE R M BELL

Solicitors:

Vallant Hooker (J Bruce Murray), Auclkand, for the Plaintiff

Vicki Amundsen Trust Law (Mike Phillipps), Auckland, for the Defendants

COMMISSIONER OF INLAND REVENUE v NSTK INVESTMENTS LIMITED (formerly KHANDA DEVELOPMENTS LIMITED) [2021] NZHC 514 [12 March 2021]

[1]        The Commissioner of Inland Revenue has applied under s 329 of the Companies Act 1993 for NSTK Investments Ltd to be restored to the register.

[2]        The company went into liquidation by shareholders’ special resolution on   17 October 2019. The liquidator was Mr Craig Young. He filed his final report on  21 April 2020 and the company was removed from the register on 28 May 2020.

[3]        The Commissioner says that she is a creditor of the company for $206,168.40. The main component is a claim for GST of $199,910.00 but that is a default assessment. The Commissioner says that she filed a claim in the liquidation but the liquidator did not take any action in response to it. The liquidator’s final report shows that there were no realisations and no distributions to creditors.

[4]        The Commissioner believes that there are matters that warrant investigation. The company changed its name from Khanda Developments Ltd to NSTK Investments Ltd on the day it went into liquidation. The liquidation was not advertised under the company’s former name, as it should have been.1

[5]        Shortly before the company went into liquidation it made substantial payments to related persons: $250,000 to a company associated with one of the shareholders,

$200,000 to one shareholder, and $708,000 to another shareholder. Those shareholders were also former directors. The Commissioner is concerned that the liquidator has done nothing to investigate these matters.

[6]        Accordingly, the Commissioner wants the company restored, and the final liquidator’s report set aside so that the liquidation can be resumed. The Commissioner has applied for restoration under s 329 of the Companies Act and to set aside the final report. As a creditor, the Commissioner needs leave to apply under s 284(1) of the Companies Act, but the Commissioner has not expressly sought leave.

1      Companies Act 1993, s 25(4).

Notwithstanding that, there is good reason for the Commissioner to apply and I grant leave.

[7]        I am also satisfied that there are good grounds for restoring the company to the register. The Commissioner has shown proper grounds for concern. The Commissioner has standing to apply under s 329(2)(a)(ii) of the Companies Act. The fact that the company was in liquidation is a ground for the company to be restored, as is the fact that the Commissioner is a creditor.2 Aside from those matters, it is also just and equitable to restore the company to enable the Commissioner’s concerns to be investigated.3

[8]        The Commissioner has served the shareholders and directors of the company, the Registrar of Companies,  the  Secretary  of  the  Treasury  and  the  liquidator,  Mr Young, who agreed to accept service by email.

[9]        Mr Young has indicated that on the company being restored, he will resign as liquidator to allow another liquidator to be appointed. Under s 283(2) of the Companies Act, a liquidator may resign by appointing another person to be his or her successor. I take it, therefore, that a change in liquidator can be carried out smoothly. But if there are difficulties there may be resort to the court under s 283(4).

[10]Accordingly, I make these orders:

(a)NSTK Investments Ltd is restored to the Register.

(b)Leave is granted to the Commissioner to apply under s 284.

(c)The liquidator’s final report under s 257 of the Companies Act is set aside.

…………………………….

Associate Judge R M Bell

2      Companies Act 1993, ss 329(1)(a)(iii) and (iv).

3      Companies Act 1993, s 329(1)(b).