THE COMMISSIONER OF INLAND REVENUE V CENTURY CITY HUNTER STREET LIMITED HC WN CIV-2010-485-2085

THE COMMISSIONER OF INLAND REVENUE V CENTURY CITY HUNTER STREET LIMITED HC WN CIV-2010-485-2085 19 April 2011IN THE HIGH COURT OF NEW ZEALANDWELLINGTON REGISTRYCIV-2010-485-2085IN THE MATTER OF the Companies Act 1993BETWEEN THE COMMISSIONER OF INLANDREVENUEPlaintiffAND CENTURY CITY HUNTER STREETLIMITEDDefendant(Heard at Wellington)Counsel: Y. Meng - Solicitor for PlaintiffJ. Toebes - Solicitor for DefendantJudgment: 19 April 2011ORAL JUDGMENT OF ASSOCIATE JUDGE D.I. GENDALLSolicitors: Inland Revenue Department, PO Box 1462, WellingtonJ.T. Law, Solicitors, PO Box 25443, Wellington[1] Before the Court is an application by the plaintiff, Commissioner of Inland Revenue, to place the defendant company into liquidation.[2] The application is based upon a debt of some $804,061.06 originally owing for goods and services tax, penalties and interest by the defendant company.[3] The present proceeding was brought in this Court on 21 October 2010. It related to a statutory demand for around this amount which was served upon the defendant company on 28 September 2010.[4] This is the seventh call of this matter.[5] On previous occasions this matter has been adjourned principally at the request of the plaintiff, Commissioner of Inland Revenue to endeavour to make arrangements with the defendant company to settle the outstanding debt. In this regard I refer to a decision I have given this morning in a related proceeding, CIV- 2010-485-2098, Commissioner of Inland Revenue v Century City Management Limited and the reasons outlined in that decision. Those reasons in large measure apply to the present proceeding.[6] Notwithstanding that comment, before me in the present proceeding is an application today by the plaintiff Commissioner for leave to withdraw the present proceeding. That is on the basis, as I understand it from Mr Meng for the Commissioner, that this defendant is to pay the outstanding debt in full over a period of six months from now. As I understand the position there is to be no payment made of any part of this debt today.[7] This must be a matter of concern to the Court.[8] On a number of earlier occasions I had indicated that this proceeding is adjourned only on the basis that the debt owing by this defendant was to be cleared in full by the adjourned date. I refer in particular to a Minute I issued on 10 March 2011 stating just that, with the effect that the debt was to be cleared in full by yesterday, 18 April 2011.[9] When the matter was called before me yesterday, 18 April 2011 I adjourned it to today, again on the basis that the debt would be cleared in full by today. That has not occurred.[10] Instead, clearly there have been eleventh hour settlement discussions between the plaintiff and the defendant which for his own reason the plaintiff Commissioner has chosen to accept.[11] This has the result, however, that this not insubstantial debt owing by the defendant company will not be fully cleared for a period of six months from now.[12] Dealing with the Commissioner's application for leave to withdraw thepresent proceeding, in my view this is not an appropriate application to make here. The debt outstanding remains and although I was assured by counsel today that the defendant company is substantial, it owns a 14 storey building in Wellington (subject to existing first and second mortgages), it has no employees, no other unsecured debts and is able to meet any new debts incurred as they fall due, these matters must remain of concern to the Court.[13] This is particularly so bearing in mind the length of time that this debt to the Commissioner has been outstanding, the nature of the debt, the various promises made in the past to arrange finance to clear the debt and the current position in which the Court finds itself.[14] That said, as I have noted, in my view the application for leave to withdraw this proceeding is inappropriate and is refused.[15] The proceeding is to remain on foot.[16] Having said that, I am of the view but only by a fine margin that an order placing the defendant company into liquidation today is not appropriate.[17] If, however, there is any default in making payment of this debt over the next six month period as promised by the defendant then that would be viewed obviously with serious concern.[18] Given all these matters, in my view, it is appropriate here to adjourn the present proceeding for a period of about 6 months to ensure that the promised payment arrangements are met.[19] That said an order is now made that this proceeding is adjourned to a new call in the List at 10.00 am on 26 September 2011 to monitor compliance with the repayment arrangements.[20] Leave is reserved, however, for any party to approach the Court further on 48 hours notice to request that this matter be brought before the Court again if required.'Associate Judge D.I. Gendall'