The Commissioner of Inland Revenue v Resolution Digital Print Wellington Limited HC WN CIV 2008-485-1213

[2008] NZHC 2279

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV 2008-485-1213

IN THE MATTER OF     the Companies Act 1993

BETWEEN  THE COMMISSIONER OF INLAND REVENUE

Plaintiff

ANDRESOLUTION DIGITAL PRINT WELLINGTON LIMITED Defendant

Appearances: Ms. Padmanabhan - Plaintiff

Mr. Dorrans - Defendant

Judgment:      29 April 2008

REASONS FOR DECISION

OF ASSOCIATE JUDGE D.I. GENDALL

Solicitors:           Denise K Evans, Barrister & Solicitor, PO Box 2156, Raumati

THE COMMISSIONER OF INLAND REVENUE V RESOLUTION DIGITAL PRINT WELLINGTON LIMITED HC WN CIV 2008-485-1213  29 April 2008

Introduction

[1]      This matter was called before me yesterday, 28 July 2008.

[2]      Ms Padmanabhan for the plaintiff indicated that payment of the core debt had been made and she sought leave to withdraw the proceeding.

[3]      Leave to withdraw the proceeding was granted.  This order is confirmed here. [4]      This left a question of costs outstanding, however.

[5]      The plaintiff sought costs (and disbursements) with respect to this matter calculated on a 2B basis.  This was essentially on the grounds that the debt had only been paid as a result of the issue of this proceeding and therefore costs should be awarded in favour of the plaintiff.

[6]      Mr Dorrans appeared on behalf of counsel for the defendant, Ms Evans to present her submissions with respect to this costs issue.   The defendant’s position essentially is that there should be no award of costs made in this case.

[7]      Having considered the submissions advanced to me on behalf of the plaintiff and on behalf of the defendant I made a decision yesterday on this costs issue.  An order was made awarding costs to the plaintiff with respect to this proceeding upon a Category 2B basis together with disbursements as fixed by the Registrar.  In making that decision I indicated that my detailed reasons for the decision would follow.  I now set out those reasons.

Reasons for Decision

[8]      The debt claimed here by the plaintiff from the defendant totalled some

$7,380.65.   It represented $5,862.23 for assessments of PAYE tax deductions for periods ending 31 December 2007 and 31 January 2008 (together with penalties and interest),  $275.04  for  KiwiSaver  employee  deductions  for  the  period  ending  31

January 2008 (together with penalties and interest) and $280.00 for student loan employer deductions for the periods ending 31 December 2007 and 31 January 2008 (together with penalties and interest).

[9]      A  statutory demand  claiming the  outstanding sums  was  served  upon  the defendants on 10 April 2008.  As I understand the position no application to set aside that statutory demand or any communication to the plaintiff regarding the debt was made at that point by the defendant.

[10]     Accordingly  on  10  June  2008,  the  plaintiff  then  issued   the   current proceedings to place the defendant company into liquidation.

[11]     Those proceedings were then served upon the defendant company also on 10

June 2008.

[12]     As I understand the position it was once the proceedings were served upon the defendant company on 10 June 2008 that any effective discussions took place regarding payment.  These resulted in the core debt being settled.

[13]     The  plaintiff’s  position  is  that,  as  the  defendant  did  not  respond  to  the statutory demand within the period before the demand expired, there was no option but for the plaintiff to commence these liquidation proceedings and to incur the expense of doing so.

[14]   Although counsel for the defendant endeavoured to dispute whether the proceedings in fact should have been issued, I accept the submissions advanced on behalf of the plaintiff that he had no alternative.   I am satisfied that, given the defendant’s default in complying with the statutory demand and noting also that this related to core tax liability for monies which should have been paid for PAYE, KiwiSaver, employee deductions and student loan employer deductions which are effectively the monies of third party employees held by the Defendant under something akin  to  a Trust,  the plaintiff  acted  entirely properly in  issuing  these proceedings.

[15]     According to submissions advanced for the defendant, there were discussions at  some  point  between  the  plaintiff  and  a  director  of  the  defendant  company regarding the defendant’s need to make financial arrangements in order to pay the sums claimed.  It seems that those discussions may not have taken place until around the time the present proceedings were issued or shortly thereafter.  That said, in my view there can be no criticism levelled at the plaintiff in taking the usual step of issuing this proceeding following default under the statutory demand.  That is more so  in  my view  given  that  no  effective  response  of  any kind  was  made  by the defendant to the statutory demand served upon it.

[16]     For these reasons as I see the position the Court should exercise its discretion here to award costs and disbursements to the plaintiff with regard to these proceedings.  They have been successful in that they have resulted in a payment of the amount due from the defendant which included significant penalties and interest for late payment.

[17]     For all these  reasons,  costs are  awarded here to  the  plaintiff  against  the defendant  on  a  Category 2B basis  together  with  disbursements  as  fixed  by the Registrar.

‘Associate Judge D.I. Gendall’