Commissioner of Inland Revenue v Super Turf Limited
[2018] NZHC 1269
•31 May 2018
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2018-404-00188
[2018] NZHC 1269
BETWEEN THE COMMISSIONER OF INLAND REVENUE
Plaintiff
AND
SUPER TURF LIMITED
Defendant
Hearing: 25 May 2018 Appearances:
C Van Der Merwe for the Plaintiff
M Taylor for the Defendant (given leave to withdraw)
Judgment:
31 May 2018
JUDGMENT OF ASSOCIATE JUDGE SMITH
Solicitors:
Inland Revenue Department – Legal Services, Manukau
THE COMMISSIONER OF INLAND REVENUE v SUPER TURF LIMITED [2018] NZHC 1269 [31 May 2018]
[1] In her statement of claim in this liquidation proceeding, the Commissioner says that the defendant failed to comply with a statutory demand served on it on 16 March 2018, in which the Commissioner claimed the sum of $286,856.73. The failure to comply with the statutory demand (or apply to this Court to set aside the demand under s 290 of the Companies Act 1993 (the Act)), provided prima facie evidence of the defendant’s inability to pay its debts,1 a ground on which a defendant company may be put into liquidation under s 241(1)(4)(a) of the Act.
[2] The Commissioner did not need to wait for the expiry of the 15 working days for payment referred to in the statutory demand; an existing liquidation claim against the defendant had been filed by Hirepool Limited, and an order was made substituting the Commissioner as plaintiff in the Hirepool Limited proceeding on 27 March 2018.
[3] The Commissioner’s liquidation claim was served on the defendant on 4 April 2018. The liquidation proceeding had already been advertised in accordance with r 31.9 of the High Court Rules, and the Commissioner was entitled to rely on that advertising.
[4] The Commissioner’s statement of claim states that the amount now owing by the defendant is $323,009.98, being the assessed amount of the tax outstanding, including penalties and interest, to 27 March 2018. By far the greatest part of the debt is said to be unpaid PAYE of $269,975.95, going back as far as 30 June 2016. In addition, the claim refers to unpaid student loan employer deductions ($29,640.64), unpaid Kiwisaver employer contributions ($14,666.67), and three other smaller sums.
[5] The defendant did not file a statement of defence to the Commissioner’s claim within 10 working days after service, as required by r 31.17 of the High Court Rules. However, when the Commissioner’s claim was called for the first time on 27 April 2018 I granted an extension of time for the defendant to file a statement of defence, to 11 May 2018.
[6] The defendant did not file any statement of defence complying with the directions made on 27 April 2018. Instead, a letter dated 3 May 2018 was sent to the
1 Companies Act 1993, s 287(1).
presiding judge in another proceeding in which a related company of the defendant, Super Turf Bowls Ltd, is facing a liquidation claim. The letter appears to have been submitted on behalf of a Maori Incorporation known as Nga Uri Whakatupuranga Nga O Maukoro. I will refer to this entity “the Maori Incorporation”. It appears from the 3 May letter that the Maori Incorporation is the responsible trustee of an Ahuwhenua Trust under the Te Ture Whenua Maori Land Act 1993 (the Land Act), known as “Maukoro Watercare Ahuwhenua”.
[7]I will refer below to the letter of 3 May 2018.
[8] The case was called again on 25 May 2018. Mr Taylor appeared for the defendant, but he was without instruction. Notwithstanding the defendant’s failure to file any statement of defence in the proceeding within the time allowed by my direction given on 27 April 2018, I advised that I would consider the letter of 3 May 2018. I also advised that I would allow Mr Taylor to make any oral submissions he might be instructed to make, and I stood the matter down to allow him to take instruction. When the case was recalled Mr Taylor advised that he had no instructions to make further submissions, beyond tendering to the Court a further letter from the Maori Incorporation, dated 24 May 2018. The letter of 24 May 2018 was specifically directed to this proceeding and, Mr Van Der Merwe having no objection, I advised counsel that I would receive and consider the letter, together with a memorandum submitted by Mr Van Der Merwe prior to the hearing.
[9] Having considered the Commissioner’s claim, and the letters submitted by the Maori Incorporation on behalf of the defendant on 3 May 2018 and 24 May 2018, I now give judgment on the Commissioner’s liquidation claim.
The letters of 3 May 2018 and 24 May 2018
[10] Both letters appear to challenge the jurisdiction of this Court to make the liquidation order sought.2 The letter of 3 May 2018 referred to the Treaty of Waitangi, numerous provisions of the Land Act, and the Imperial Laws Application Act 1998.
2 For example, the letter of 24 May 2018 referred to a Maori Customary Appellate Court (Te Kooti Rangatiratanga Ateha), and a Maori Customary Supreme Court (Te Kooti Paremata Maori), which are said to stand “independent at law, mandated by forty hapu from seven districts”. The 24 May
[11] The letter of 3 May 2018 advised that it had been made clear to a representative of the Commissioner that the matter of the defendant and a number of related companies was before “TE KOOTI RANGATIRATANGA MARAE MAORI INCORPORATION O NGAPUHI & MAUKORO”, under s 18(1)(a), “for the purposes of correcting all accounts of these companies and implementing them under the care and protection of MAUKORO WATERCARE AHUWHENUA in a s 215 Joint Venture & Requisition partnership.” Reference was also made to ss 219 and 284(2)(t) of the Land Act and its amendments.
[12] The letter asked for an order striking out the affidavit sworn in support of the liquidation claim in the liquidation proceeding against the related company, Super Turf Bowls Limited. It complained of allegedly unilateral action taken by the officer of the Department in that proceeding, and the alleged absence of any opportunity for dialogue with the Maori Incorporation and/or the Ahu whenua Trust (as the legal owners of the defendant and Super Turf Bowls Limited).
[13] The letter also asked the Court to require the Commissioner of Inland Revenue to meet with the Hapu Whanau O Maukoro to discuss the matter, “to clearly dismiss any misapprehensions and or misunderstandings between our peoples and our structures …”.
[14] The letter of 24 May 2018 was specifically directed to this proceeding. It began by referring to s 18 of the Land Act, and the statement in s 18(1)(a) that the Maori Land Court is to have jurisdiction to “(a) hear and determine any claim, whether at law or in equity, to … any right … or interest … in the proceeds of the alienation of any such right, title, estate, or interest.”
[15] The letter then made reference to the Imperial Laws Application Act 1988, ss 5 and 6(2), and to the Tax Administration Act 1994 (the TAA) (both described as “subordinate legislation”).
2018 letter also referred to “the creation of our own Act, namely the Maori Incorporations Constitution Regulations Act 1995, by an act of conquest as recognised under international law whereby our tupuna flag topped the flagstaff at the national treaty grounds at Waitangi on the 6th day of February 1995…”.
[16] The letter went on to refer to s 253 of the Land Act, dealing with the capacity and powers of a Maori incorporation. Those powers are said to include full capacity in the discharge of the obligations of the trust in the best interests of the (Hapu Whanau) shareholders, and to carry on or undertake any business or activity, or do any act, or enter into any transaction.
[17] The letter advised that the shareholders, being hapu and whanau, had passed special resolutions establishing a “law of court”, in addition to the creation of their own Act, namely the Maori Incorporations Constitution Regulations Act 1995. The Hapu Whanau was said to have “imposed control of the land Aotearoa with royal approval as per the Imperial Laws Application Act 1988”.
[18] The letter of 24 May 2018 went on to assert that this Act derives from and is under s 215 of the Land Act (which is concerned with Ahu whenua trusts), and is therefore subject to that Act, including in particular ss 2, 12, 18, 19, 20, 79, and 85.
[19] The letter asserted that the United Kingdom Crown has a reciprocal duty of care and protection under the Treaty of Waitangi. It repeated the allegation in the 3 May letter that the officer of the Inland Revenue Department who verified the statement of claim in this proceeding did not have first hand knowledge of the claim, including the defendant’s position. Information was sought under the Official Information Act 1982 requiring disclosure of the basis on which the supporting affidavit was signed.
[20] The 24 May 2018 letter referred to s 19 of the Land Act, which confers certain jurisdiction on the Maori Land Court in respect of injunctions, including in respect of any “actual or threatened trespass or other injury to any Maori … wahi tapu”. The document then referred to s 284(2)(t) and (u) of the Land Act, and to s 247 of the Land Act relating to the incorporation of Maori incorporations. (Section 284(2) sets out a number of matters which may be the subject of regulations made under the Land Act. Subparagraph (t) of s 284(2) is concerned with transitional provisions in respect of Maori incorporations in existence at the commencement of the Land Act, and subparagraph (u) permits the making of regulations for “such other matters as are not inconsistent with [the Land Act] or with law”).
[21] A similar order was sought as that sought in the 3 May letter, requiring the Commissioner to meet directly with the Hapu Whanau O Maukoro.
Discussion and conclusions
[22] In my view there is nothing in the letters of 3 May 2018 and 24 May 2018 that would provide a defence to the Commissioner’s claim.
[23] It is apparent from the statement of claim that the defendant is not a Maori incorporation, but a limited liability company incorporated under the Act. As such, it is subject to the same obligations to pay PAYE and other relevant taxes as other New Zealand citizens, and I can discern nothing in the Land Act or the Treaty of Waitangi that would suggest anything to the contrary.
[24] Mr Van Der Merwe referred me to the decision of the Court of Appeal in R v Mitchell3 in which the Court said:
[12] In the High Court Mr Mitchell argued that he was outside the jurisdiction of the High Court and “Pakeha laws”. He presented extensive submissions … on this issue.
[13] In considering the leave application the Judge carefully explained, by reference to relevant authorities including the decision of this Court in Knowles v Police (CA146/98 12 October 1998), that Mr Mitchell’s proposition was untenable. He explained that our Courts are subservient to Parliament and must apply an Act of Parliament in the terms in which it has been enacted. The issues which Mr Mitchell was seeking to raise could not be “resolved by the Courts [they] being a matter for public and political processes and not a judicial one”. Notwithstanding the care the Judge took over this aspect of the case, Mr Mitchell does not accept that explanation.
[14] This Court has made it plain on a number of occasions now that arguments that are based upon an assertion that the Parliament of New Zealand was not authorised to make law affecting some or all of the persons living in New Zealand cannot succeed before it. Our courts are bound to accept the validity of Acts of Parliament … Although this issue does involve a point of law, Mr Mitchell’s proposition has been squarely rejected on many occasions in the High Court and Court of Appeal. No useful purpose would be served in retraversing the authorities. Mr Mitchell was perfectly familiar with them … He just does not accept them. He is not entitled to put himself outside the law of New Zealand.
3 R v Mitchell CA68/04, 23 August 2004.
[25] I have considered the various provisions of the Land Act on which the Maori Incorporation appears to be placing emphasis. Section 18 of the Land Act relates to the general jurisdiction of the Maori Land Court. I see nothing in the section that would suggest that the Commissioner was not entitled to bring the present liquidation claim in this Court. Not surprisingly, the section is primarily concerned with issues relating to Maori land, and there is nothing of that sort involved in this liquidation claim, which is concerned with the defendant’s failure to pay a substantial sum in PAYE and other taxes.
[26] Nor does s 19 of the Land Act appear to assist the defendant. It is concerned with the Maori Land Court’s jurisdiction in respect of injunctions, and I can see nothing in it that could possibly affect the Commissioner’s right to pursue the present liquidation claim.
[27] Section 253 of the Land Act is concerned with the capacity and powers of a Maori incorporation, and again, I do not discern anything in the section that might affect the Commissioner’s duty to recover outstanding tax. Indeed, the powers conferred on Maori incorporations by s 253 are expressly subject to “… any other enactment, and the general law.” The section is therefore subject to the provisions of all relevant statutes enacted by Parliament, including this case the Companies Act 1993 and the TAA.
[28] The letters refer to s 284 of the Land Act, which empowers the Governor-General to make regulations, including in respect of transitional provisions required in relation to Maori incorporations in existence at the commencement of the Land Act (s 284(2)(t), and “such other matters as are not inconsistent with the [Land] Act” (s 284(2)(u)). My attention has not been drawn to any relevant regulations which may have been made by the Governor-General under either of those provisions.
[29] Section 215 of the Land Act is generally concerned with the constitution of Ahu whenua trusts, and I cannot discern how it might affect the defendant’s obligations to pay the PAYE and the other unpaid taxes relied upon by the Commissioner. Similarly, s 217 (referred to in the letter of 24 May 2018) is concerned with the constitution of Kai tiaki trusts, and appears to have no relevance to the
Commissioner’s claim. Likewise s 214, which relates to the constitution of Whanau trusts, does not appear to be relevant.
[30] The letter of 24 May 2018 also referred to s 271 of the Land Act, which is concerned with the effect of a Maori incorporation’s exercise of its powers. The section is primarily concerned with the validity of decisions taken by the Maori incorporation’s committee of management, and in particular whether particular decisions were authorised by resolution of shareholders, or whether there may have been an irregularity in the mode of election of any member of the committee. In short, the subject matter of the section appears to be irrelevant to the Commissioner’s liquidation claim against the defendant.
[31] The references in the letters to the Imperial Laws Application Act 1988 do not assist the defendant either. Section 5 of that Act is concerned with the common law of England “so far as it was part of the laws of New Zealand immediately before the commencement of this Act”, and it is not clear from the letters what English common law is considered to be relevant. But even if the common law relied upon had been adequately identified, I do not think it could have been “part of the laws of New Zealand” to the extent that it was inconsistent with New Zealand statutes, including the Act and the TAA. Section 6(2) of the Imperial Laws Application Act is concerned with subordinate legislation made under any Imperial enactment (ie an Act of the British Parliament), and again it cannot assist the defendant.
[32] In summary, I am not persuaded by the argument apparently advanced for the defendant in this case that, because of particular provisions of the Land act or the Treaty, or particular aspects of tikanga Maori, it is not subject to the ordinary obligation to pay the PAYE and other taxes the defendant has failed to pay.
[33] There is no legal basis on which the Court could accede to the requests made in the letters to strike out the affidavit verifying the Commissioner’s statement of claim, or direct the Commissioner to meet with the hapu. Also, a request for information under the Official Information Act is not something this Court sitting it its insolvency jurisdiction has the power to address.
[34] The defendant has not provided any evidence that it is solvent, and it has not raised any other tenable argument in opposition to the liquidation claim.
[35] Mr Van Der Merwe having produced the appropriate certificate of non-payment of the debt, I make the following orders:
(1)The defendant is put into liquidation.
(2)Vivien Judith Madsen-Ries and David Sean Webb are appointed liquidators.
(3)Costs are reserved, pending receipt from the Commissioner of advice as to whether an appeal is being pursued in The Commissioner of Inland Revenue v New Orleans Hotel (2011) Ltd,4 and if so, what steps (if any) are being taken to obtain an early hearing of the appeal.
(4)The rates of remuneration of the liquidators and staff working under their supervision and control are fixed at the rates set out in the liquidators’ consent dated 16 April 2018.
(5)The liquidators are to apply at the conclusion of the liquidation for approval of their overall remuneration.
[36]The foregoing orders are timed 4.00 pm on 31 May 2018.
Associate Judge Smith
4 The Commissioner of Inland Revenue v New Orleans Hotel (2011) Ltd [2018] NZHC 971.
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