The Commissioner of Inland Revenue v Paulmen Seals Limited HC Auckland CIV 2008-404-001376

[2008] NZHC 2600

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2008-404-001376

UNDER  the Companies Act 1993

BETWEEN  THE COMMISSIONER OF INLAND REVENUE

Plaintiff

ANDPAULMEN SEALS LIMITED Defendant

Hearing:         26 September 2008

Appearances: N H Malarao/K Wendt for Plaintiff

R Hucker for Defendant
M J Tingey for Proposed liquidators

Judgment:      29 September 2008 at 11 am

JUDGMENT OF ASSOCIATE JUDGE ROBINSON

This judgment was delivered by me on 29 September 2008 at 11 am

Pursuant to Rule 540(4) of the High Court Rules

Registrar/Deputy Registrar

Date……

Solicitors:           Hucker & Associates, PO Box 3843, Shortland Street, Auckland

Bell Gully, PO Box 4199, Auckland

THE COMMISSIONER OF INLAND REVENUE V PAULMEN SEALS LIMITED HC AK CIV 2008-404-

001376  29 September 2008

[1]      The claim by the plaintiff for an order that the defendant company be put into liquidation  is  not  opposed.  The  evidence  clearly establishes  the  company to  be insolvent.

[2]      The creditor seeks an order appointing Miss Vivian Judith Fatupaito and Mr Colin Thomas McCloy liquidators. In their memorandum endorsed on their consent to act as liquidators, they have quite properly advised the Court that they know of no bar under section 280 Companies Act  1993 which  would  disqualify them  from acting as liquidators other than a potential continuing relationship with the following parties who have registered security interests on the Personal Properties Securities Register:

a)       ANZ National Bank Limited has collateral security interests over all present and after acquired personal property of the company. The liquidators firm, namely PriceWaterhouseCoopers provide non-audit services to ANZ National Bank Limited.

b)Bank of New Zealand has collateral security interests over specified goods and/or present and other required personal property of the company. PriceWaterhouseCoopers provide accounting and other advice to Bank of New Zealand.

c)       General Motors Acceptance Corporation (NZ) Limited has collateral security interest over specified goods of the company. General Motors Acceptance Corporation (NZ) Limited is an affiliate of a PriceWaterhouseCoopers audit client.

[3]      As a result of such disclosure, the Court has become aware that pursuant to s

280(1)(cb), the proposed liquidators would not qualify for appointment as liquidators unless the Court under s 280 Companies Act 1993 authorises the appointment.

[4]      When  this  matter  was  drawn  to  the  Court’s  attention,  Mr  Hucker  who appeared for the defendant indicated that the defendant opposed the appointment of Miss Fatupaito and Mr McCloy as liquidators. In those circumstances, the proceedings were adjourned to today for submissions and further evidence.

[5]      In decisions such as in Re Fatupaito & McCloy CIV 2007-404-7330, HC Auckland, 29 November 2007 and McCloy & Fatupaito v Titan Foundation Limited HC Auckland 23 April 2008 CIV 2008-404-2243, I have adopted a procedure of appointing  the  liquidators  in  circumstances  where  s  280  (1)(cb)  could  apply reserving leave to any creditor to apply to vary or set aside the order within seven days of service of notice of the appointment on the creditors.

[6]      I am satisfied that the Court must have regard to the attitude of the creditors when considering approving the appointment of a liquidator in the exercise of the Court’s discretion under s 280. At this stage, the only creditor who has expressed an opinion is the plaintiff who clearly supports the appointment of Miss Fatupaito and Mr McCloy as liquidators. The proceedings have been advertised. No other creditor has given an indication of intention to support the application.

[7]      In the circumstances, I have decided not to make a final decision until the creditors have had an opportunity of being heard in respect of this application. Notice of the appointment, the reasons why the Court’s approval is required under s

280 to the appointment, and the right to be heard in respect of an application for the exercise of the Court’s discretion under s 280 can be provided by the liquidators to the creditors along with the reports and notice the liquidators must supply under s

255(2)(c) Companies Act 1993. Therefore, the company will be placed into liquidation and Miss Fatupaito and Mr McCloy appointed liquidators subject to leave being reserved to any creditor to apply to vary or set aside the appointment of Miss Fatupaito and Mr McCloy as liquidators within seven days of the receipt by the creditors of the first report of the liquidators to be supplied under s 255(2)(c)(ii). That report to include the fact that the liquidators appointment must be approved by the Court under s 280 and the reasons why such approval is required. Advice to the creditors of their right to apply to the Court within seven days of receipt of the report

to be heard with regard to the appointment of the liquidators should also accompany the report.

[8]      Mr  Hucker  submitted  that  the  Court  should  initially  appoint  the  official assignee as liquidator on the basis that any creditor could, if disagreeing with that appointment,  apply for  the  appointment  of  another  person  as  liquidator.  I  have decided that it would not be appropriate to appoint the official assignee as quite clearly, one creditor namely the plaintiff does not agree to such appointment. The amount owing by the company to the plaintiff is $336,000. The plaintiff’s views therefore are of some significance.

[9]      Consequently, having placed the company into liquidation, having appointed Miss Fatupaito and Mr McCloy as liquidators and directing that appropriate notice of such appointment be given to the creditors, I will now reserve my judgment on the basis that if any creditor within seven days of service of the report indicates a desire to be heard on the issue of the appointment of liquidators then the registrar is to arrange a further hearing before me so that I can hear from and take into account the wishes of those creditors who desire to be heard. In the event of none of the creditors indicating a wish to be heard by 31 October 2008, then the proceedings shall be

referred to me for a decision.

Associate Judge Robinson