THE COMMISSIONER OF INLAND REVENUE v CIT HOLDINGS LIMITED [2015] NZHC 3207 [16 December 2015]

THE COMMISSIONER OF INLAND REVENUE v CIT HOLDINGS LIMITED [2015] NZHC 3207[16 December 2015]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYCIV 2015-404-000997[2015] NZHC 3207BETWEEN THE COMMISSIONER OF INLANDREVENUEPlaintiffAND CIT HOLDINGS LIMITEDDefendantHearing: 8 December 2015Appearances: C Van Der Merwe for the PlaintiffM Pascariu for the DefendantJudgment: 16 December 2015JUDGMENT OF ASSOCIATE JUDGE CHRISTIANSENThis judgment was delivered by me on16.12.15 at 11:30am, pursuant toRule 11.5 of the High Court Rules.Registrar/Deputy RegistrarDateApplication[1] The defendant (CIT) filed an interlocutory application seeking an extension oftime or special leave to file a statement of defence.Background[2] On 7 May 2015 the plaintiff (Commissioner) filed a proceeding to put CIT intoliquidation. That document recorded a statutory demand had been served on CIT on31 March 2015 demanding payment of $548,226.52 largely for unpaid goods andservices tax (GST) in the period 31 March 2009 to 31 October 2013.[3] The matter was first called on 26 June 2015 when Mr Pascariu appeared forCIT. The Court was advised that CIT had put a settlement proposal to theCommissioner. By consent the liquidation list call of this matter was adjourned to 21August 2015. The Court noted that any defence was to be filed by 14 August 2015.[4] When the matter was called on 21 August 2015 the Court noted Mr Pascariu'scomment that "many companies had become involved".[5] Upon Mr Pascariu's request on behalf of CIT, the Court adjourned the matterfor call on 14 October 2015.[6] When the matter was recalled on the liquidation list on 14 October 2015 theCommissioner sought to proceed upon a liquidation application. The day before CITfiled an application seeking an extension of time or special leave to file a statement ofdefence. The affidavit of Mr Olliver was filed in support.[7] The Commissioner did not consent to that leave application. After discussionwith counsel it was agreed the Court would schedule a hearing upon the leaveapplication alone.The leave application[8] It is advanced upon grounds, inter alia:(a) The proceeding was twice adjourned to enable settlement negotiationsto occur but these did not result in a settlement.(b) That at the Commissioner's request CIT filed GST returns with theassistance of PricewaterhouseCoopers (PWC).(c) Upon its review of CIT's affairs PWC formed the view that CITHoldings' overall liability for GST as at 31 July 2015 was $39,455.10and not $548,266.52.(d) The sum of $39,455.10 was or was to be placed in CIT's solicitor's trustaccount to be held pending determination of this dispute either byagreement or by the Court.(e) At a previous mention hearings the timing for filing a statement ofdefence was not addressed explicitly with the Court, albeit theadjournments occurred by consent, so the initial 10 working day periodfor filing a defence had passed.(f) In the circumstances it is in the interests of justice that CIT be permittedto file a statement of defence because they have a reasonably arguabledefence including that there is a substantial dispute whether or not theclaim owed is due; and the Commissioner will not suffer prejudice bythe later filing of a defence.The applicant's evidence[9] It has been provided by an affidavit of Mr Olliver, the sole director of CIT. MrOlliver deposes Ms Sparks was a co-director of CIT until 21 February 2013 and thatwhilst CIT was under Ms Spark's control says Mr Olliver, the Commissioner assessedCIT's liability in relation to 12 intended developments on Waimarie Street, St Heliers,Auckland.[10] Mr Olliver advises the assessment was made for reasons which are now subjectto substantive proceedings in the High Court between companies under his control andMs Sparks' interests.[11] Mr Olliver says although the liquidation proceeding was served on CIT'sformer registered office he did not become aware of the proceedings until 19 June2015 when they were publicly advertised. He said CIT's registered office had movedprior to the liquidation proceedings commencing.[12] A day prior to the first court hearing call of the matter CIT made a settlementoffer to the Commissioner when it was agreed all outstanding income tax and GSTreturns would be filed by 31 August 2015. For that purpose PWC was engaged.[13] Mr Olliver says PWC formed the view that the Commissioner's assessment ofCIT's GST liability was based on erroneous information. A copy of PWC's letterreporting to that effect is attached to Mr Olliver's affidavit.[14] Mr Olliver considered therefore there were strong reasons to dispute theCommissioner's claim.CIT's case[15] It focuses upon claims no agreement as to liability was ever reached with theCommissioner and therefore proper processes have not been followed when theliquidation proceeding was initiated.[16] CIT is a bare trustee for trusts associated with Mr Olliver who is the currentdirector of CIT and Ms Sparks, his former wife. A GST liability arose from CIT'stransactions with the properties CIT had purchased with the intention of beingdeveloped.[17] On 6 November 2013 CIT received a notice of assessment for GST liabilityfrom the Commissioner. In response CIT submitted a notice of proposed adjustment.On 29 January 2014 the Commissioner advised CIT it had rejected the proposedadjustment.[18] On 19 May 2014 the Commissioner sent CIT a letter stating the dispute movedto the "conference phase of the disputes resolution process". Negotiations ensued.[19] On 27 February 2015 Mr Ryan solicitor for CIT sent an email under theheading:The PBG Trust/Greg Olliver/The Bankhouse Trust/CIT Holdings Limited –Settlement MeetingIt noted:Greg Olliver and I would like to meet you to progress the settlementdiscussions from last year, with a view to entering into a settlement agreementas soon as reasonably practicable. You have proposed meeting at our officeson Tuesday, 10 March for a facilitated conference regarding the personalincome dispute with Greg Olliver. Could we please meet with you at that timeto instead discuss settlement, with the facilitated conference deferring pendingthat discussion.Our proposed agenda is as follows:1. The PBG Trust (GST debt and tax losses).2. Greg Olliver (income tax dispute).3. The Bankhouse Trust (tax losses/adjudication report and GST debt).4. CIT Holdings Limited (GST debt and reassessment).Could you please let me know if you are available to meet and who fromInland Revenue Department will attend.[20] By letter dated 8 October 2014 the Commissioner advised CIT that in her viewthe issues in dispute between the parties had been resolved and the Commissionerenclosed a proposed agreement to amend assessment. In response on 20 October 2014CIT says its solicitor Mr Ryan notified the Commissioner that there was no agreementin place and that CIT would provide a formal response at a meeting to be held betweenthe parties.[21] On 2 March 2015 the Commissioner advised CIT that:(a) Inland Revenue wanted to have a further conference to discuss taxliability disputes with Mr Olliver's company; and(b) A statement of position would be prepared if Mr Olliver did not requirea further conference.[22] CIT claims that unbeknown to it the Commissioner issued a statutory demanddated 5 March 2015 but which was not served until 30 March 2015. Because at thetime CIT was negotiating with the Commissioner a commercial resolution of the GSTclaim, CIT says no steps were taken to set aside the statutory demand.[23] CIT says on 5 June 2015 its solicitors provided voluntary disclosure ofdocuments to the Commissioner the purpose of which was to assist what CIT believedwere ongoing settlement negotiations.[24] On 25 June 2015 CIT's solicitors requested the Commissioner to reassessCIT's tax liability under s 113 of the Tax Administration Act 1994 (the Act). On 20August 2015 the Commissioner advised CIT's request had been rejected.Commissioner's case in opposition[25] The Commissioner's case is that an agreement was reached regarding liabilityand amount when CIT was advised its reassessment information was accepted; despiteCIT's belated claims this was not so.[26] In his first affidavit dated 16 November 2015 on behalf of the CommissionerMr Smith, a recovery and enforcement officer with the Inland Revenue Departmentstates that the statutory demand was properly served on an accountant for CIT. Hesaid there could be no dispute of the Commissioner's assessment for under s 109 ofthe Act the amount of tax demand is deemed to be correct and cannot be disputed. Hesaid CIT did not disclose a defence in any of its documentation that no instalmentarrangement has been entered into by the parties and no evidence has been providedthat CIT was in a position to pay the tax.[27] By his second affidavit dated 1 December 2015 Mr Smith deposes that theCommissioner's claim of (then) $610,989.24 is undisputed and is unrelated to anyfigure that the Department of Investigations within Inland Revenue may now beclaiming from CIT.[28] By an affidavit dated 2 December 2015 Mr Singh a specialist investigator withthe IRD deposed that he was familiar with his department's files relating to CIT. Herefers to the affidavit of Mr Olliver sworn of the present application. He responds:(a) On 6 November 2013 the Commissioner sent an email to CIT attachinga tax shortfall assessment calculation table.(b) The Commissioner acknowledged the proposed adjustment received on20 January 2014 in response.(c) The following day an email was sent to CIT advising that the notice ofproposed adjustment was rejected in full.(d) On 19 May 2014 CIT was advised the dispute had moved to theconference phase of the disputes process and for that purpose aconference was scheduled for 6 August 2014.(e) On 7 August 2014 a letter was sent to CIT referring to the conferenceheld the previous day. The letter set out the information CIT had agreedwould be provided by 8 September 2014 including the value of theresidential property at 22 – 24 Waimarie Street, related expenses forGST returns filed for periods March 2009 to-date, and details of relatedexpenses for the 'Kapiti' project. A letter confirmed the conferencephase would remain open until the parties reached agreement on GSTinputs to be allowed; that it was necessary to remove all GST inputsclaimed in relation to 22 – 24 Waimarie Street as this was accepted byMr Olliver as an exempt supply as it was his residential dwelling.(f) On 4 September 2014 an email was sent to CIT reminding it of the duedate of 8 September 2014.(g) On 8 September 2014 CIT sent:(i) A valuation report from Colliers International.(ii) An apportionment of the purchase price of various WaimarieStreet properties.(iii) Apportionment of GST and tax on the expenses incurred byCIT.(h) On 8 October 2014 the Commissioner confirmed that the analysis ofinputs for 22 Waimarie Street was accepted as submitted. TheCommissioner stated that all analysis under dispute was now resolvedand requested advice regarding how CIT intended to pay its GST taxdebt. Attached to the letter was the CIR's assessment of outstandingliability in the sum of $671,983.86 including a use of money interest(UOMI) of $208,584.36.(i) By a letter dated 9 October 2014 the Commissioner advised that theanalysis and valuation material supplied had been accepted and that allmatters previously in dispute in that regard had now been resolved orthat the conference phase had come to a close.(j) On 20 October 2014 Mr Ryan for CIT advised that it would provide aformal response at the meeting agreed to be held on 28 October 2014.(k) Previously on 7 October 2014 CIT had emailed the Commissioner's MrSingh to request a meeting to discuss the settlement of all outstandingmatters for various taxpayers including CIT.(l) During that meeting CIT agreed to provide a settlement offer for it andfor other taxpayers. This agreement was confirmed on 31 October 2014but no settlement offer was ever since made.(m) On 14 November 2014 a letter from the Commissioner confirmed againthat the CIT disputed amounts were agreed and that the Commissionerwould carry out the reassessment process to correct the GST returns forthe periods ended 31 March 2009 and 31 March 2014.(n) On 27 February 2015 CIT sent Mr Singh an email requesting adiscussion about GST debt, reassessments and payment involving otherassociated taxpayers and CIT, with a view to entering into a settlementdeed.(o) Mr Singh responded on 2 March 2015 advising the Commissioner wasnot prepared to have a settlement meeting but invited a paymentsettlement offer be emailed.(p) On 23 March 2015 CIT sent an offer involving it and other taxpayers.(q) On 15 April Mr Singh advised CIT that a settlement offer for CIT andother taxpayers had been rejected in full.(r) CIT responded on 15 April 2015 requesting a meeting to discuss thebasis of the offer and settlement options.(s) Mr Singh responded on 20 April advising the Commissioner was notprepared to have a meeting. Mr Singh agreed to discuss the matter withhis team leader and to call back.(t) CIT called that same day and enquired if the team leader had beenspoken to and asked what minimum amount the Commissioner wouldsettle on to which the response was given that full payment of the debtwas required.(u) On 5 June 2015 CIT telephoned and requested a conference; a meetingwas arranged for 25 June 2015.(v) At the conclusion of that meeting CIT emailed Mr Singh a settlementoffer for CIT and other taxpayers.(w) On 18 August 2015 Mr Ryan emailed Mr Singh to enquire on progressregarding its settlement offer because the Commissioner's claim wasdue for call in the High Court on 21 August 2015 and CIT wanted toupdate the court on the progress made.(x) On 20 August 2015 Mr Singh responded by email advising:(i) The Commissioner disagreed with the reversing of the GST re-assessments in respect of payments to Todd Corporation;(ii) The Commissioner declined the request under s 113 of the Actto amend the GST returns to "regretted choice";(iii) The Commissioner was going to proceed with the liquidationaction against CIT;(y) On 27 August 2015 CIT sent an email confirming a meeting for 2September 2015 to discuss other matters and the Commissioner'scounteroffer in relation to CIT and associated taxpayers.(z) On 27 August 2015 Mr Ryan emailed Mr Singh to arrange anothermeeting to discuss the Commissioner's counteroffer of 20 August 2015(aa) On 2 September 2015 Ms Douglas (a new in-house accountant for CIT)sent Mr Singh an email containing GST analysis of CIT from 14 April2009 to 22 July 2015 to be adjusted in the period ended 31 July 2015.Mr Singh said it was noted the GST claims included expenses on 22 –24 Waimarie Street which had been agreed was the residential dwellingof Mr Olliver and an exempt supply, and GST could not be claimed.(bb) On 15 September 2015 Mr Singh sent a letter to Ms Douglas setting outconcerns in relation to her 2 September 2015 letter including, inter alia:(i) That CIT had already filed GST returns for 31 March 2009 to31 July 2013 which were subject to a dispute which was settledon the basis that input deductions for the purchase of 22 – 24Waimarie Street would be disallowed; that those figures hadbeen used in the Commissioner's assessment on 18 November2014 to which no further challenge was received;(ii) That the apportionments to 18, 22 and 28 Waimarie Street werenot consistent at the time the input claim had been made by CIT;that the Commissioner therefore initiated a dispute in relationthe value of those properties and that dispute was settled basedon the valuation provided by CIT.(iii) When CIT filed its GST return for the period 30 August 2014 itadvised it was currently developing townhouses in WaimarieStreet.(iv) Included in the GST return for the period 31 July 2015 wereexpenses from 14 April 2009 to 22 July 2015 in respect of whichclaims had already been made and accepted by theCommissioner and that no further amendments could be lodged.Legal principles[29] Rule 31.20 of the High Court Rules provides:If a person who is entitled to file a statement of defence or an appearance in aproceeding commenced by the filing of a statement of claim under Rule 31.3fails to file a statement of defence or an appearance within the time prescribed,that person must not, without an order for extension of time granted onapplication made under Rule 31.22 or the special leave of the Court, beallowed to appear at the hearing of the proceeding.[30] Mr Pascariu refers to the decision of the High Court in Sayer v Capital AviationLimited1 as authority for the position that an applicant for special leave mustdemonstrate a convincing reason for it to be granted, a lack of prejudice, andjustification for the indulgence.1 (1993) 6 PRNZ 401.[31] CIT's defence is advanced upon claims of ineffective service of the proceedingand a failure by the Commissioner to follow due process.Ineffective service[32] Section 387 of the Companies Act 1993 requires delivery of any legalproceedings upon a company to be by delivery to a director, or to an employee at theprincipal place of business, or by leaving it at the company's registered office.[33] In this case the proceeding was served on the company's registered office.[34] Mr Pascariu submits service was not effective because on 19 May 2015 (andbefore 27 May 2015 when service of the statement of claim was effected at thecompany's registered office at 26 St Heliers Bay Road), CIT vacated its office andmoved to 237/c Tamaki Drive, Kohimarama. Mr Pascariu states "and due to anoversight, the change of office was not promptly recorded on the Companies OfficeRegister website".[35] Also Mr Pascariu submits it would have been apparent to the service agent thatthe office at 26 St Heliers Bay Road was vacant.[36] The deadline for filing a statement of defence expired on 10 June 2015 but CITsays it only became aware of these proceedings on 19 June 2015 when they werepublicly advertised.[37] It is conceded that service of the proceeding was valid, it having been effectedat the nominated address for the registered office recorded at the time. However MrPascariu submits service was not effected in a manner which would ensure notice ofthe documents being received by service on a director or employee. He submitstherefore service was ineffective and the Court should exercise its discretion to enablea statement of defence to be filed.Failure to follow due process[38] On 20 January 2014 CIT filed a Notice of Proposed Adjustment seeking anadjustment in relation to the Commissioner's assessment. The Commissioner rejectedthis and the dispute resolution process provided under the Act commenced.2[39] The Standard Practice Statement (SPS): Disputes Resolution SPS 11-06Disputes Resolution process commences when a taxpayer challenges theCommissioner's assessment.[40] Pursuant to the SPS, unless the statutory exceptions apply, the Commissionermust go through the dispute resolution process before an assessment can issue.[41] If the dispute remains unresolved after the conference phase has beencompleted, the Commissioner must issue a disclosure notice under s 89(M)(1) of theAct. The dispute will then usually be referred to adjudication, which involves InlandRevenue independently considering the dispute and as a final phase in the disputesprocess before the taxpayers assessment is amended following the exchange ofstatements of position.[42] Regarding the Commissioner's position that CIT cannot challenge theassessment because of s 109 of the Act, CIT argues that the legitimacy of the processused by the Commissioner to make the assessment, on which the statutory demandwas based, is flawed. Mr Pascariu submits that according to the SPS theCommissioner was obliged to prepare the statement of position and engage in theadjudication process in the Act; that the Commissioner failed to do so but insteadelected to issue the statutory demand and, subsequently, liquidation proceedings.[43] Mr Pascariu submits the authorities recognize a distinction between thevalidity of an assessment and the correctness of that assessment,3 that when the processfollowed and the character of the resulting decision are challenged, the Court hasjurisdiction on traditional administrative law grounds to consider the legitimacy orvalidity of the process actually adopted by the Commissioner.2 Section 89N(1).3 Commissioner of Inland Revenue v Canterbury Frozen Meats Co Limited [1994] 2 NZLR 681 at 688.[44] Mr Pascariu submits that judgment of the Court of Appeal in the CanterburyFrozen Meats case also provides jurisdiction to intervene when there is evidence ofprocedural impropriety as he submits there as is here because the Commissionerdeparted from the due process when the statutory demand was issued rather than theissue of a disclosure notice as is required under s 89(M)(1).[45] Therefore Mr Pascariu submits that on the material before the Court there is anarguable case that the Commissioner has not followed the proper process in arrivingat the decision as to CIT's GST liability.[46] Further for reasons addressed in PWC's advice CIT believes the GST liabilitydemanded by way of statutory demand is well in excess of its true tax liability but therequest to the Commissioner to amend the assessment has been declined. Mr Pascariusubmits CIT would suffer irrefutable harm if the application for leave is declined. Hesubmits there would be no prejudice suffered by the Commissioner if leave to file astatement of defence is granted.ConsiderationsProper process[47] It is CIT's case that the Commissioner prematurely terminated negotiations andissued a statutory demand. The Commissioner's position is that this is not correct asthe figures and taxes claimed in the statutory demand are distinct from those that wereinvolved in the disputes procedure.[48] Mr Van Der Merwe does not accept Mr Olliver's claim that CIT had not beengiven an adequate opportunity to challenge the Commissioner's assessment of its GSTliability. That, he says is incorrect. Mr Olliver deposes that at the time the statutorydemand was served he believed a negotiated solution could be reached and that waswhy no steps were taken to set aside the statutory demand. Mr Olliver said that on 5June 2015 CIT's solicitors provided voluntary disclosure of documents to theCommissioner, the purpose of which was to assist with what he believed were ongoingsettlement negotiations.[49] Mr Olliver states in conclusion that CIT had not been given an adequateopportunity to challenge the Commissioner's assessment of its GST liability. Mr VanDer Merwe disputes that claim. He refers to the fact that in paragraph 5.2 of thevoluntary disclosure, CIT acknowledges a total tax shortfall of $228,749.20 in respectof the GST periods from 31 March 2009 to 30 April 2014.[50] Regarding CIT's solicitors request on 25 June 2015 to the Commissioner for areassessment of CIT's tax liability under Section 113 of the Act and theCommissioner's purported rejection of that invitation, Mr Van Der Merwe commentsthat the rejection contained a counteroffer which confirmed Inland Revenue'sagreement to receive the sum of $268,605.89 within 30 days.[51] Mr Van Der Merwe submits the counteroffer implies that an indisputableamount of tax exists from which the Commissioner is not prepared to deviate.[52] It is CIT's case that proper process has not been taken; that following its issueof a notice of proposed adjustment the matter of its GST debt was not appropriatelydisposed of by way of the disputes process – conference phase.[53] There is no issue but that negotiations ensued. Those had focused on anundisputed debt due because CIT had claimed GST deductions in respect of residentialproperty for which those deductions were not claimable.[54] In the outcome of the parties' correspondence and communication theCommissioner advised CIT of her view that issues in dispute between the parties hadbeen resolved. A proposed agreement to amend assessment was sent.[55] It was the submission of Mr Pascariu that in response it was asserted there wasno agreement in place. However Mr Ryan's email of 20 October 2014 is not thatexplicit. It noted:I refer to your letter of 8 October enclosing an agreement to amendassessments. You have asked for a response today, but after receiving yourletter we arranged a settlement meeting on 28 October with Trevor Strang andothers from Inland Revenue in respect of a number of taxpayers including CITHoldings Limited. Accordingly CIT Holdings Limited will provide a formalresponse to your letter at that meeting.[56] What is clear is that on 8 October 2014 the Commissioner confirmed theanalysis of inputs for 22 Waimarie Street was accepted as submitted. Effectivelymatters raised by CIT's notice of proposed adjustment had been reviewed. In theoutcome the Commissioner's analysis confirmed acceptance of the material CIT hadsupplied.[57] Mr Ryan's email of 20 October indicates no suggestion of a dispute with thatposition. The clear indication given by the email of 20 October 2015 from Mr Ryanwas that the meeting arranged for 28 October would serve the purpose of reviewingthe position in relation to a number of taxpayers i.e. others as well as CIT.[58] Mr Ryan's letter dated 5 June 2015 provides a voluntary disclosure pursuant tos 141G of the Act. The purpose of the voluntary disclosure was to request a reductionin the penalty for voluntary disclosure of a shortfall in payment of tax. But it is clearthe form of that document provided that no dispute was raised regarding liability forthe tax that ensued in the result. Indeed a tax shortfall was specifically acknowledged.[59] In none of these events post 8 October 2014 has any challenge been raised tothe Commissioner's assessment of the tax payable in respect of 18 – 22 WaimarieStreet. Rather, as Mr Ryan's voluntary disclosure letter of 5 June 2015 shows CITwanted to capture 18 and 28 Waimarie Street as well in respect of any paymentagreement.[60] CIT says it never signed the agreement document attached to theCommissioner's letter of 8 October 2014. In the Court's view the reason is clear. Asappears from Mr Singh's facsimile to Mr Ryan dated 2 March 2015 CIT wanted thetax position of related entities to be considered also.[61] It seems clear throughout that neither process nor assessment was challengedexcept in regard to the overall purpose to expand the settlement base in respect of thetaxation liabilities of other entities.[62] Latterly it was a letter from PWC dated 13 October 2015 which provided CIT'sbasis for claiming a debt of $39,455.10 was all that was payable.[63] Regarding that letter the Court comments that it is quite uninformative. Itrefers to procedures undertaken by the review of transactions concerned and GSTreturns filed. The letter concluded that the amount in question determined by themwas to be held in the solicitor's trust account:For payment once an agreement had been reached with IR that this amountis an appropriate full and final settlement, in order to achieve an accurate GSTposition for the company".[64] In the Court's view this all comes too late to serve CIT's purposes ofdisclaiming now the acknowledgements previously made regarding the extent to CIT'stax liability. Regardless there is an acknowledgement of a present liability albeit in anamount which it is promised will be paid if the Commissioner agrees with CIT's claimsof present liabilities.[65] The evidence is there has been no dispute as to liability or the Commissioner'scalculations, save with regard to serving CIT's purpose of having other property andthe debt of other companies also being considered. It is not even clear from CIT'sevidence who owns those other properties in respect of which further considerationand/or assessment is sought.[66] By the Commissioner's letter dated 9 October 2014 Mr Ryan was advised thatthe investigations team accepted the analysis and valuation material that had beensupplied on behalf of CIT and hence why the Commissioner considered all matterspreviously in dispute had been resolved. There was not in response, the filing of anyfresh notice of proposed adjustment or any indication of dissatisfaction of thatoutcome. The meeting arranged to execute a settlement agreement was delayed incircumstances already identified in this judgment, but not by any reference to achallenge to the Commissioner's agreement to accept the reassessment materialprovided on behalf of CIT.[67] It has been submitted that if issues were unresolved after the conference phasethat a s 89(M) disclosure notice was required to be issued. That is of course correctbut in the Court's view an agreement was reached and the conference phase was endedby Inland Revenue's facilitator Mr Hutchins and his advice that the dispute had beenresolved for those reasons he then explained.[68] Therefore, there was no requirement for the issue of a s 89 notice.Service[69] CIT claims service was ineffective. No issue is apparently taken regardingservice earlier of the statutory demand.[70] The Court does not accept CIT's issues with service of the liquidationproceeding. It was delivered to the registered office. CIT says it had moved from thatoffice before then. Only CIT could have been responsible for not notifying theRegistrar of Companies regarding appropriate notification of any change of address.Solvency[71] No evidence has been provided regarding CIT's ability to meet payment of theCommissioner's debt which as at 8 December 2015 amounted to $611,994.45.Summary[72] Claims of procedural default by the Commissioner are not accepted.Information provided by CIT for consideration upon reassessment was accepted. Anyenduring disagreement thereafter concerned factors and issues of other entities and didnot affect the Commissioner's claims of resolution having been affected andcompleted.Result[73] CIT's application for special leave to file a statement of defence is refused.[74] This matter will be adjourned for call in the liquidation list on 29 January 2016at 10:45am.Associate Judge Christiansen