The Pro Team Limited (in liq) v Commissioner of Inland Revenue

[2024] NZCA 99

IN THE COURT OF APPEAL OF NEW ZEALAND

I TE KŌTI PĪRA O AOTEAROA

 CA531/2023
 [2024] NZCA 99

BETWEEN	THE PRO TEAM LIMITED (IN LIQ) Appellant
AND	COMMISSIONER OF INLAND REVENUE Respondent

Court:	Gilbert and Courtney JJ
Counsel:	T Mukorombindo (applicant) in person GAD Neil and RMG Hindriksen for Appellant A B Goosen for Respondent
Judgment: (On the papers)	10 April 2024 at 11 am

JUDGMENT OF THE COURT

The application to substitute Tazvitya Mukorombindo for the appellant in CA531/2023 is declined for want of jurisdiction.

____________________________________________________________________

REASONS OF THE COURT

(Given by Courtney J)

1. Tazvitya Mukorombindo is the sole director and sole shareholder of The Pro Team Ltd (Pro Team).  Pro Team was placed in liquidation on 1 September 2023 on the application of the Commissioner of Inland Revenue.  Mr Mukorombindo had attempted to oppose the liquidation proceedings by filing a statement of defence on behalf of Pro Team.  He had appeared at two calls of the application but did not appear at the third, the date on which the order was made.

2. On 13 September 2023 Mr Mukorombindo filed a notice of appeal, again purportedly on behalf of Pro Team.  He also filed an application seeking leave to represent the company in the appeal.  However, Mr Mukorombindo had no power to authorise an appeal on behalf of the company — that step could only be taken by the liquidator.  Following directions by this Court, Mr Mukorombindo filed an application that he be substituted as the appellant so that he can advance the appeal against the liquidation order.

3. Mr Mukorombindo’s application is brought under r 48 of the Court of Appeal (Civil) Rules 2005 which confers on this Court a wide jurisdiction, including the power to make orders that could have been made by the court of first instance.[1]  The relevant principles to be observed in making an order under r 48 were discussed in Ngāti Whātua Ōrākei Trust v Attorney-General.[2]  However, for the reasons that follow, we conclude that Mr Mukorombindo has no standing to be substituted as an appellant and his application must be declined.

   [1]Court of Appeal (Civil) Rules 2005, r 48(2).

   [2]Ngāti Whātua Ōrākei Trust v Attorney-General [2017] NZCA 183, [2017] NZAR 627 at [11].

4. Section 56(4) of the Senior Courts Act 2016 confers a right of appeal without leave on “[a]ny party to any proceedings” in respect of any order or decision of the High Court.  However, Mr Mukorombindo was not a party to the liquidation proceedings in the High Court.  He could have become a party, either by filing a statement of defence under r 31.16 of the High Court Rules 2016 in his capacity as a shareholder or an appearance under r 31.18.[3]  He could even have applied after the order was made to recall the decision and be joined as a party to the proceeding.[4] Conceivably, that course is still open to him, though on the facts available to us it seems very unlikely that such as an application would succeed.

   [3]Aotearoa Kiwifruit Export Ltd v ANZ National Bank Ltd, HC Tauranga CIV 2011-470-697, 3 February 2012 at [15].  This case was decided under s 66 of the Judicature Act 1908, which conferred a corresponding right to that of s 56(4) of the Senior Courts Act 2016. 

   [4]Commissioner of Inland Revenue v Chesterfields Preschools Ltd (in liq) [2015] NZHC 2667 at [3]; and High Court Rules 2016, r 11.9.

5. Since Mr Mukorombindo was not a party to the High Court proceeding, he did not acquire any right of appeal under s 56 of the Senior Courts Act.  We note that in Hubbard v Kiwirail Ltd this Court accepted that the directors of the appellant company had standing to appeal, apparently on the basis that the directors had an independent right to challenge a liquidation order.[5]  It is to be noted, however, that those directors had, in fact, filed a statement of defence in the High Court and were therefore parties in that court, with a right of appeal under s 56 of the Senior Courts Act.  That is not the position in this case. 

   [5]Hubbard v Kiwirail Ltd [2019] NZCA 244 at [6].

6. Mr Mukorombindo does not have a right of appeal because he was not a party to the proceeding in the High Court.  There is no extant proceeding in this Court to which he could be added as a party.  There is, therefore, no jurisdiction to consider the application.

7. For completeness, we add that, even if we had the discretion to make an order allowing Mr Mukorombindo to bring an appeal against the liquidation order, we would not exercise it.  It is evident from Mr Mukorombindo’s notice of appeal that he wishes to challenge the liquidation proceeding on the basis that, in his opinion, liquidation is not the best outcome for the company, that he made genuine efforts to comply with the company’s obligations and was in negotiations with the IRD for the company’s recovery.  However, the tax debt at the time of liquidation was $973,984.13 and it is not in dispute that the company is insolvent.  While there is a discretion to not place a company in liquidation, it will generally not be exercised unless there are good reasons to do so.[6]  There are no apparent grounds for concluding that an insolvent company should, potentially, be permitted to continue trading and incur further debt, rather than be placed in liquidation.

   [6]CIR v Newmarket Trustees Ltd [2012] NZCA 351, [2012] 3 NZLR 207 at [64].

8. The application to substitute Mr Mukorombindo for the appellant in CA531/2023 is therefore declined for want of jurisdiction.

Solicitors:
Meredith Connell, Auckland for Appellant
Te Tari Ture o te Karauna | Crown Law Office, Wellington for the Respondent