The Commissioner of Inland Revenue of Wellington Statutory Appointee v Berrytime Land Limited HC Tauranga CIV 2008-470-809

[2008] NZHC 2616

IN THE HIGH COURT OF NEW ZEALAND TAURANGA REGISTRY

CIV 2008-470-809

UNDER  the Companies Act 1993

BETWEEN  THE COMMISSIONER OF INLAND REVENUE, OF WELLINGTON, STATUTORY APPOINTEE

Plaintiff

ANDBERRYTIME LAND LIMITED Defendant

Hearing:         6 October 2008 (Heard at Rotorua)

Appearances: Mr Winsett for plaintiff

Mr Patterson for defendant

Judgment:      9 October 2008 at 12.30 p.m

JUDGMENT OF ASSOCIATE JUDGE DOOGUE

This judgment was delivered by me on

09.10.08 at 12.30 pm, pursuant to

Rule 540(4) of the High Court Rules.

Registrar/Deputy Registrar

Date……………

Solicitors:

Meredith Connell, P O Box 2213, Auckland

Mr K J Patterson, P O Box 13006, Tauranga

THE COMMISSIONER OF INLAND REVENUE V BERRYTIME LAND LIMITED HC TAU CIV 2008-470-

809  9 October 2008

[1]      The  statement  of  claim  seeking  an  order  placing  the  defendant  into liquidation came before me 6 October 2008.  Prior to that date the plaintiff filed an application for ‘urgent fixture’.  The application was made upon the grounds:

A:       The manner in which the defendant is being operated is a threat to

New Zealand’s tax system.

B.       The  urgent  appointment  of  competent  liquidators  is  required  to minimise this threat.

[2]      The grounds upon which the Commissioner has founded his application for liquidation order is non-compliance with obligations to file company’s returns and the ‘just and equitable’ ground.

[3]      The defendant has not filed a statement of defence.  Mr Patterson says that it has until 10 October 2008 to do so.  It is not yet known if the defendant is going to file a statement of defence but the indications are that it will.   Nonetheless, the defendant has filed a notice of opposition to the application.

[4]      The defendant denies that the way it has been operated is a threat to the New Zealand tax  system; it says  there  are  no  compelling  reasons  to  suggest  that  an abridgement of time will assist given the time frames that already exist are relatively short  and  the  urgent  appointment  of  a  competent  liquidator  will  not  have  a significant impact on the alleged threat.

[5]      The evidence in support of the application was filed by an employee of the

Inland Revenue and an independent expert chartered accountant witness.

[6]      In  summary  the  Inland  Revenue  was  concerned  about  the  fact  that  the defendant has not maintained the required records that he is supposed to keep in New Zealand; it has not filed returns of GST and income tax as required and it owes, even by the self-assessments that it has filed, very considerable amounts of GST and income tax.  As to GST it accepts that an amount of $3,300,000 approximately is

owed which is now increased to over $5,000,000 because of interest and penalties. Against that, the defendant has made only one payment of approximately $88,000.

[7]      While no definite figure is available for income tax, but the best estimates of the expert, Mr Robert Walker, is that the defendant owes between $88,000 and

$7,000,000.

[8]      The defendant has filed evidence.  Essentially it accepts fault and says that it has now instructed accountants to put its house in order in New  Zealand.   An affidavit has been filed by Mr Lomas who is the director of the company.  He resides in Queensland, Australia.   He says that he is the director of numerous companies including a listed Australian company.  He says that his private worth is estimated to be approximately $AU 135,000,000.  He intends that the company should meet its obligations.

[9]      My grasp of the overall fact position is rather limited given the material that I have been referred.  One dimension of the matter which is a little surprising is the considerable time that went by after the Commissioner became aware that very substantial amounts of tax were accruing and before any enforcement was taken. While there may be a good reason for it in the case, I understand that even at this date no assessment has been carried out which is binding upon the company.

[10]     My overall  assessment  is  that  the  company is  not  a  ‘threat  to  the  New Zealand tax system’.  I think it is more accurate to say that large amounts of tax are accruing, that payments have been minimal and that the Inland Revenue are likely to have limited prospects of success of enforcing the taxation liability, at least in this country.

[11]     I consider that the appropriate course is to wait until the time is expired to see whether a statement of defence is filed.   If it has been, then the file should be referred to me in Auckland.  My present view is that given the large amounts of tax that are unpaid and are accruing it would be appropriate in the public interest to make an order for a priority hearing of the proceeding.  However I will defer coming to a concluded on that matter until the 10 October 2008.

J.P. Doogue

Associate Judge