ACCIDENT COMPENSATION CORPORATION V CHESTERTON HOLDINGS LIMITED HC NAP CIV-2010-441-112

ACCIDENT COMPENSATION CORPORATION V CHESTERTON HOLDINGS LIMITED HC NAP CIV- 2010-441-112 6 May 2010IN THE HIGH COURT OF NEW ZEALAND NAPIER REGISTRY CIV-2010-441-112IN THE MATTER OF the Companies Act 1993 BETWEEN ACCIDENT COMPENSATION CORPORATION Plaintiff AND CHESTERTON HOLDINGS LIMITED Defendant Hearing: 6 May 2010 Appearances: G.G. McKay - Counsel for Defendant D. Kerr - Counsel for plaintiff C. Hall for Durney Land Company (in liquidation) - a creditor in support E. Carpenter for Commissioner of Inland Revenue - a creditor in support Judgment: 6 May 2010ORAL JUDGMENT OF ASSOCIATE JUDGE D.I. GENDALLSolicitors: Maude & Miller, Solicitors, PO Box 50555, Porirua City Buddle Findlay, Solicitors, PO Box 2694, Wellington 6140 Inland Revenue Department, Legal & Technical Services, PO Box 1144, Napier 4140[1] Before the Court is an application by the plaintiff to have the defendant company placed into liquidation. [2] The application relates to a debt of $15,493.40 which was the subject of a statutory demand served on the defendant company on 16 December 2009. No application to set aside that statutory demand was made. [3] Mr McKay appeared today as counsel for the defendant. There was no indication from him that the debt to the plaintiff is in any way disputed. Quite properly, Mr McKay did indicate that in the scheme of things this debt is relatively modest. I say this bearing in mind that the debts claimed by creditors in support before me today are $3,878,200.00 by Durney Land Company Limited (in liquidation) and $347,176.00 by the Commisioner of Inland Revenue. [4] That the present debt owing to Accident Compensation Corporation is in Mr McKay's words relatively modest in my view does not assist the defendant company here. Given the large indebtedness of this company to other creditors, one would have thought that the debt to the Accident Compensation Corporation of what is described as a relatively modest amount could have been cleared during the time that the lengthy period of recovery proceedings has been underway by the plaintiff here. [5] Notwithstanding this, before me Mr McKay suggested that this matter might be adjourned to be dealt with at the same time as an application before the Court today to have Mr Raymond Durney (who I understand may be a director of the defendant company) adjudicated bankrupt. Mr Durney has, with respect to that bankruptcy application, proposed to the Court that a part 5 Insolvency Act 2006 proposal might be put to his personal creditors and matters adjourned for this purpose. [6] As I understand Mr McKay's argument, it is that once the affairs of the defendant, Chesterton Holdings Limited, are resolved it may well be there are some monies which could be available to Mr Durney's personal creditors and therefore there is some linkage between matters affecting the present defendant and Mr Durney.[7] The defendant in this proceeding is, however, a separate legal entity and individual company. Any linkage that there may be with Mr Durney personally, in my view, is a matter which may need to be properly investigated by the relevant authorities. [8] And, before me today, counsel for the Commissioner of Inland Revenue indicated a serious concern that this matter should be delayed any longer. Ms Carpenter for the Commissioner said that there have been a range of promises from the defendant company to make payments of long outstanding amounts owing to the Commissioner from the proceeds of crops sold but none of these have eventuated. A further concern is that a large part of the $347,176.00 debt to the Commissioner is outstanding PAYE. Finally, another matter of some concern, according to Ms Carpenter is that no returns have been filed for the defendant company for the years ending 2007, 2008, 2009 and 2010. This, of course, is quite unacceptable. [9] So far as the other creditor in support, Durney Land Company Limited (in liquidation) is concerned, the debt it claims being $3,878,200.00 is substantial. From a report for Durney Land Company Limited for the year ending 31 March 2008 provided to the Court, it is clear that this inter-company debt has been outstanding for some years and in particular between the years ending 31 March 2007 and 31 March 2008 it grew from some $2.7 million to nearly $3.4 million dollars. [10] The defendant and the creditors in support all urge that a liquidation order of the defendant be made today. [11] Under all these circumstances, I have no doubt that the appropriate course here is for an order to be made placing the defendant company into liquidation. It is clearly insolvent and it is important that the company's affairs are placed into the hands of liquidators in order that such investigations as those liquidators consider may be appropriate are commenced without delay. [12] A Consent to Act from liquidators proposed by the plaintiff Ian Bruce Shephard and Andrew Robert Croad has been provided to the Court. Mr McKay for the defendant requested that I advise who the proposed liquidators were.Apparently, he appeared to have some concern that these liquidators might be independent of earlier liquidators who had been appointed for another company which I presume is part of this group, Durney Land Company Limited (in liquidation). Mr McKay, however, indicated no concern as to the identity of the proposed liquidators here. [13] For all these reasons the application before me succeeds and the following orders are now made: (a) An order is made placing the defendant company Chesterton Holdings Limited into liquidation. (b) Ian Bruce Shephard and Andrew Robert Croad are appointed liquidators. (c) Costs are awarded to the plaintiff and to the supporting creditors, Durney Land Company Limited (in liquidation) and the Commissioner of Inland Revenue on a Category 2B basis together with disbursements as fixed by the Registrar. (d) These orders are timed at 11.08 am.'Associate Judge D.I. Gendall'