Comptroller of Customes in respect of the Customs Service v Shaky Bridge Wines Limited

[2017] NZHC 986

IN THE HIGH COURT OF NEW ZEALAND DUNEDIN REGISTRY

CIV-2016-412-000122 [2017] NZHC 986

UNDER

the Companies Act 1993

IN THE MATTER

of SHAKY BRIDGE WINES LIMITED

BETWEEN

THE COMPTROLLER OF CUSTOMS IN RESPECT OF THE CUSTOMS SERVICE

Plaintiff

AND

SHAKY BRIDGE WINES LIMITED Defendant

Hearing:	15 May 2017 (Determined on the papers)
Counsel:	R P Bates for Plaintiff D J More for Defendant
Judgment:	15 May 2017

COSTS JUDGMENT OF ASSOCIATE JUDGE MATTHEWS

[1]      In this proceeding the Comptroller of Customs sought an order placing Shaky Bridge Wines Limited into liquidation.   The basis of the application was that the company had not complied with a demand issued under s 289 of the Companies Act

1993.

[2]      The debt relied on by the Comptroller was $349,464.86.   This comprised unpaid  excise  duty  of  $154,515.02,  together  with  a  modest  unpaid  levy  and additional  duty  imposed  under  s  87  of  the  Customs  and  Excise  Act  1996  of

$192,348.56.

[3]      The company filed a statement of defence in which it said that it had paid

$80,000 towards the unpaid excise duty, and that the additional duty imposed by the

Comptroller was disputed.

THE COMPTROLLER OF CUSTOMS IN RESPECT OF THE CUSTOMS SERVICE v SHAKY BRIDGE WINES LIMITED [2017] NZHC 986 [15 May 2017]

[4]      The company applied for an order restraining advertising of the application. After hearing from counsel the Court made an interim order restraining advertising on  31  October  2016.    The  Court  recorded  that  there  was  to  be  a  fixture  in Queenstown on 8 December 2016 before the Customs Appeal Authority in relation to the additional duties.  That hearing duly took place.  The effect of the decisions of the Authority, issued on an interim basis on 18 January 2017 and a final basis on 23

March 2017, was that the majority of the additional duty of which payment was sought in the statutory notice was remitted.  In the meantime the company had paid the  core  debt.    Counsel  for  the  Comptroller  advised  the  Court  of  this  on  15

December 2016.  The Court noted this that day and adjourned the case to 29 March

2017.  On that day the case was discontinued, as in its final decision the Authority had set out a 24 month instalment payment programme for the penalty which it found should be paid.

[5]      Costs  were  reserved  by  the  Court.     I  have  received  and  considered memoranda from the Comptroller and the company.  The defendant company seeks costs, and the plaintiff opposes.

[6]      At  the  time  the  proceeding  was  issued  the  core  debt  was  owing.    The company made a payment of just over half, promptly, and has since paid the balance. Proceedings were on foot in relation to review by the Customs Appeal Authority of the balance of the debt claimed.  Under s 92(1) of the Customs and Excise Act 1996 the entire sum was, however, owing.

[7]      I am therefore satisfied  that the Comptroller was justified in  issuing the proceeding.  It had the effect of ensuring that the entire amount of the core debt was paid.  There was a substantial dispute going back over a period of years in relation to remission of penalties.  Had the notice been issued only in relation to additional duty there may have been room for an argument about whether, notwithstanding the provisions of s 92, there was still a substantial dispute to a claim for appointment of liquidators.  There would have been a sound basis for a submission that the Court should not appoint liquidators, despite s 92, until the remission application was decided.  I need not decide that point on this application.  The response of the Court to the position it faced was in line with the response the Court normally makes where

liability for payment of the sum owing is being reconsidered in another court or authority, as here – to adjourn the case until the decision on that proceeding has been released.

[8]      However,  it  is  clear  that  the  Comptroller  was  justified  in  bringing  the application in relation to the core debt.  I do not accept Mr More’s submission that the decision by the Comptroller to withdraw the application was an admission that it would fail if the application went to a hearing.   It simply recognised that the differences between the parties had been resolved and there was a payment order in place in relation to the balance of the additional duty, the core debt having been paid. Nor do I accept that the Comptroller was in error in issuing the proceeding.  There was a significant core debt owing in respect of which there does not appear to have been any defence.   Leaving aside any question about whether the additional duty should have been the subject of the proceeding, as it is not necessary to decide the point, the Comptroller was justified in bringing the application.

[9]      For these reasons costs will lie where they fall.

J G Matthews

Associate Judge

Solicitors:

RPB Law, Dunedin

Scholefield Cockroft Lloyd, Alexandra