THE COMMISSIONER OF INLAND REVENUE V ALL WORKS WELLINGTON LIMITED HC WN CIV-2007-485-1222

THE COMMISSIONER OF INLAND REVENUE V ALL WORKS WELLINGTON LIMITED HC WN CIV- 2007-485-1222 23 July 2007IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY CIV-2007-485-1222IN THE MATTER OF the Companies Act 1993 BETWEEN THE COMMISSIONER OF INLAND REVENUE Plaintiff AND ALL WORKS WELLINGTON LIMITED Defendant Hearing: 23 July 2007 Appearances: F M Vining for Plaintiff No appearance for Defendant Judgment: 23 July 2007ORAL JUDGMENT OF ASSOCIATE JUDGE D.I. GENDALL[1] Before me are two applications: (a) an application by the Commissioner of Inland Revenue for leave and a declaration under s 284(1)(g) Companies Act 1993 that Mr Yousong (Frank) Zhang was not validly appointed as liquidator of the defendant company when the defendant company on 30 May 2007 endeavoured to pass a shareholders' resolution placing the company into liquidation. (b) an application by the plaintiff Commissioner of Inland Revenue to place the defendant into liquidation today. [2] I will deal first with the application under s 284(1)(g) Companies Act 1993.[3] Section 284 Companies Act requires a creditor such as the Commissioner of Inland Revenue to obtain the leave of the Court to bring an application under that section including an application pursuant to s 284(1)(g) for an order "declaring whether or not the liquidator was validly appointed or validly assumed custody or control of property". [4] That application has been served upon the defendant company All Works Wellington Limited and also upon Mr Zhang. There is no opposition to that application nor has there been any contact made by Mr Zhang or any other party on behalf of the defendant company as I understand the position. And there has been no appearance for or on behalf of Mr Zhang or the company today. [5] Under all the circumstances here I am satisfied that leave should be granted to the Commissioner of Inland Revenue as a creditor to bring this application. An order granting leave is now made. [6] Turning now to the substantive application, it is clear from s 282 Companies Act 1993 that:"The appointment of a person, other than an Official Assignee, as liquidator is of no effect unless that person has consented in writing to the appointment."[7] In the present case in response to questions from the Commissioner of Inland Revenue after some delay Mr Zhang provided a copy of the company resolution dated 30 May 2007 purporting to place the company into liquidation together with a document headed "Consent to Act" signed by Mr Zhang by which he consented to be appointed as liquidator of the company. This "Consent to Act" form, however, was dated 5 June 2007 at 10.30am. As I have noted the company resolution was dated 30 May 2007 at 5pm. [8] It is clear that under s 241(5) Companies Act 1993 the liquidation of a company commences on the date on which a liquidator is appointed and at the time that this occurs – Commissioner of Inland Revenue v Service Equipment Ltd [2000] 19 NZTC 15,832.[9] As Master Faire (as he then was) stated in the Service Equipment Ltd case at p15,834:"A resolution of shareholders appointing a liquidator will not be effective if, at the time of its passing, there is not a consent in writing of the liquidator proposed to be appointed by the resolution at the time the resolution is passed."[10] It is clear that in this case the shareholders' resolution purporting to place the company into liquidation was ineffective as the liquidator's written consent to the appointment had not been obtained prior to the passing of the resolution. Indeed, Mr Zhang has confirmed by providing a copy of his "Consent to Act" dated 5 June 2007 that this consent was not provided until some six days after the company resolution was passed. [11] I find therefore in terms of s 284(1)(g) Companies Act 1993 that a declaration that Mr Zhang was not validly appointed as liquidator of the defendant company and that the company resolution dated 30 May 2007 purporting to place the company into liquidation was ineffective is appropriate here. A declaration to this effect is now made. [12] That said the plaintiff Commissioner of Inland Revenue now seeks an order placing the defendant company into liquidation. [13] As to this, the plaintiff's statutory demand for $41,082.04 was served upon the defendant company on 26 April 2007. This met with no response. [14] The plaintiff's statement of claim seeking an order placing the defendant company into liquidation was filed on 12 June 2007. The proceedings were served on 18 June 2007. [15] Advertising of the proceedings took place in the "Dominion Post" on 11 July 2007 and in the "New Zealand Gazette" on 12 July 2007. This met with no response from the defendant company.[16] The defendant company is therefore presumed to be insolvent and unable to pay its debts. And I am satisfied that an order should now be made placing the defendant company into liquidation.Orders[17] An order is now made that the defendant company All Works Wellington Limited is placed into liquidation. [18] John Howard Ross Fisk and Craig Alexander Sanson are appointed liquidators. (A signed Consent to Act from the liquidators dated 19 July 2007 was filed in this Court on that date). [19] Costs are awarded to the plaintiff with respect to both applications before the Court on a category 2B basis together with disbursements as fixed by the Registrar. [20] An order is made approving the liquidators' remuneration in accordance with the affidavit of John Howard Ross Fisk filed herein and dated 19 July 2007 subject to s 284 Companies Act 1993. [21] An order is also made allowing the liquidators to exercise their powers individually pursuant to s 242 Companies Act 1993. [22] This order is timed at 11.02am today, 23 July 2007. Associate Judge D.I. GendallSolicitors: Inland Revenue Department, Wellington