GE BURNS AND RD AGNEW V THE COMMISSIONER OF INLAND REVENUE HC AK CIV-2010-404-7387

GE BURNS AND RD AGNEW V THE COMMISSIONER OF INLAND REVENUE HC AK CIV-2010-404-7387

The GST refund mistakenly paid post‑liquidation must be returned to the Commissioner under equitable principles (Re Condon); the statutory term "accounts receivable" as defined in the PPSA is broad and not limited to traditional 'book debts', and the collected funds (development contributions refund, bonds, solicitors' client funds and related amounts) constituted monetary obligations/accounts receivable or their proceeds at the date of liquidation, giving the Commissioner priority under s 312 and Schedule 7; liquidators' reasonable costs of gathering/preserving the collected funds and obtaining directions are payable from those funds; costs between the respondents to lie where they fall.

Citation
openlaw-28e175f2_13cf_429d_9258_c413a1430983.pdf
Parties
Applicant (liquidator): Grant Edward Burns; Applicant (liquidator): Richard Dale Agnew; First Respondent (preferential Creditor): The Commissioner of Inland Revenue; Second Respondent (secured Creditor): Strategic Finance Limited (in receivership and in liquidation); Second Respondent (secured Creditor): Strategic Nominees Limited (in receivership)
Court
High Court
Jurisdiction
New Zealand
Judgment Date
10 August 2011
Procedural Posture
Application for Directions Under S 284 Companies Act 1993 in Liquidation / Judgment on Application for Directions (high Court)
Outcome
Directions made: Commissioner of Inland Revenue entitled to collected funds as preferential creditor; mistakenly paid GST refund to be returned; liquidators' reasonable costs to be paid from collected funds in priority; costs between respondents to lie where they fall.
Legal Topics
Preferential Claims, Accounts Receivable Definition, PPSA Interpretation, Mistaken Payment/restitution, Priority of Secured Creditors, Liquidators' Costs
Insolvency Company Law Personal Property Securities Tax Law Preferential Claims Accounts Receivable Definition PPSA Interpretation Mistaken Payment/restitution +2 more

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Parties

Grant Edward Burns

Applicant (liquidator)

Richard Dale Agnew

Applicant (liquidator)

The Commissioner of Inland Revenue

First Respondent (preferential Creditor)

Strategic Finance Limited (in receivership and in liquidation)

Second Respondent (secured Creditor)

Strategic Nominees Limited (in receivership)

Second Respondent (secured Creditor)

Procedural Posture

Application for Directions Under S 284 Companies Act 1993 in Liquidation / Judgment on Application for Directions (high Court)

Legal Issues

  1. 1 Whether a GST refund paid to the company in liquidation in error must be returned to the Commissioner and on what basis
  2. 2 Whether the term "accounts receivable" in Schedule 7 Companies Act 1993 (as defined in the PPSA) is limited to book debts/trade credit accounts or is broader
  3. 3 Whether the various collected funds held by the liquidators constitute accounts receivable or proceeds such that the Commissioner has priority over secured creditors

Ratio Decidendi

The GST refund mistakenly paid post‑liquidation must be returned to the Commissioner under equitable principles (Re Condon); the statutory term "accounts receivable" as defined in the PPSA is broad and not limited to traditional 'book debts', and the collected funds (development contributions refund, bonds, solicitors' client funds and related amounts) constituted monetary obligations/accounts receivable or their proceeds at the date of liquidation, giving the Commissioner priority under s 312 and Schedule 7; liquidators' reasonable costs of gathering/preserving the collected funds and obtaining directions are payable from those funds; costs between the respondents to lie where they fall.

Court Disposition

Directions made: Commissioner of Inland Revenue entitled to collected funds as preferential creditor; mistakenly paid GST refund to be returned; liquidators' reasonable costs to be paid from collected funds in priority; costs between respondents to lie where they fall.

Orders

  • Applicant liquidators are to pay to the Commissioner the entire collected funds as preferential creditor entitled to those funds in priority to Strategic as secured creditor.
  • Applicants are to return to the Commissioner the wrongly paid GST refund of $169,349.36.