THE COMMISSIONER OF INLAND REVENUE V AER'AQUA MEDICAL SERVICES LTD HC AK CIV 2005-404-5903

THE COMMISSIONER OF INLAND REVENUE V AER'AQUA MEDICAL SERVICES LTD HC AK CIV 2005-404-5903 29 June 2006IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY CIV 2005-404-5903IN THE MATTER OF the Companies Act 1993 BETWEEN THE COMMISSIONER OF INLAND REVENUE Plaintiff AND AER'AQUA MEDICAL SERVICES LIMITED Defendant Hearing: 29 June 2006 Appearances: J. Ridling for Plaintiff D. Greig for Defendant Judgment: 29 June 2006 at 2.50pmORAL JUDGMENT OF ASSOCIATE JUDGE D.H. ABBOTTSolicitors: Inland Revenue, PO Box 76 198, Manukau City, Auckland Jones Fee, PO Box 1801, Auckland[1] The plaintiff has applied for liquidation of the defendant in respect of outstanding tax, including interest and penalties. The application for liquidation was filed on 18 October 2005. It followed statutory demand made on the defendant on 23 August 2005. [2] The application was first called in this Court on 2 February 2006. Mr Greig appeared for the defendant and sought an adjournment to allow the parties to pursue negotiations that were then underway. Adjournment was granted first to the 2 March 2006 and then again to the 6 April 2006. On 6 April 2006 the Court was advised that the negotiations had stalled and a timetable was set for a defended hearing of the application for liquidation. Under that timetable, the defendant was to file affidavits in opposition by 15 May 2006. The application was set down to be heard today. [3] Mr Greig appears for the defendant company today. No affidavits have been filed. Mr Greig has filed a memorandum requesting a three month adjournment to pursue further negotiations, not with the plaintiff but with a Crown entity, Agriquality Limited, with which the defendant is in dispute. [4] The basis of the application for adjournment is that the defendant claims to be entitled to a sum of money in the order of $115,000 from Agriquality in respect of the provision of community health monitoring and advice services relating to the painted apple moth project in West Auckland. Although the memorandum refers to a dispute over payments due under that contract there is no evidence produced detailing the amount claimed, nor the strength of that claim. What is clear from the memorandum is that the defendant has no resources and apparently is no longer operating other than conducting what is described as "minimal work". Attached to the memorandum are three documents, essentially comprising correspondence between an insolvency practitioner and Agriquality referring to the dispute, but giving no specific detail about it. [5] Mr Ridling for the Commissioner opposes the adjournment. He advises that two proposals have been put to the Commissioner by the defendant but both have been unacceptable. He points to the time that this matter has been outstanding.[6] I note from the statutory demand that the debt covers income tax arrears for the year ending 31 March 2003 and GST for periods ending 31 July 2004 and 31 January 2005. There has been no step taken to set aside the statutory demand. The defendant filed a defence to the application for liquidation but that says no more than that the defendant disputes the amount claimed. There is no evidence that any steps had been taken to exercise dispute resolution processes under the Tax Administration Act. [7] The defendant company may well have a basis for dispute with Agriquality Limited. However, it has put forward no specific evidence either to substantiate that dispute, nor to show when that may be resolved, on what basis, or how much could be expected to be recovered from it. [8] Mr Greig tells me that this is because the company has no assets or resources from which to meet the costs of preparing the defence. I do not find that compelling in terms of the application for adjournment, quite the reverse. [9] I am not satisfied that the adjournment will achieve anything. I am satisfied that the defendant is insolvent. I am concerned that the defendant appears to have deferred its tax liabilities in favour of other commitments. [10] Weighing all these matters, I have declined the application for adjournment. [11] I am satisfied on the evidence before me that the defendant has failed to comply with a statutory demand, and otherwise failed to produce any evidence to rebut the presumption that follows from non-compliance with the demand. The Commissioner has produced a certificate that the debt of $127,576.77 remains outstanding.Orders[12] I make an order placing the defendant company into liquidation. This order is timed at 2.50pm today.[13] Richard Dale Agnew and Vivian Judith Fatupaito are appointed as liquidators. [14] The Commissioner is entitled costs of and incidental to the application for liquidation, including the cost of today's appearance, on a 2B basis with disbursements as fixed by the Registrar. ________________________________Associate Judge D.H. Abbott