THE COMMISSIONER OF INLAND REVENUE V KELT CAPITAL LIMITED HC NAP CIV-2012-441-590

THE COMMISSIONER OF INLAND REVENUE V KELT CAPITAL LIMITED HC NAP CIV-2012-441-590 [13 December 2012]IN THE HIGH COURT OF NEW ZEALANDNAPIER REGISTRYCIV-2012-441-590[2012] NZHC 3386IN THE MATTER OF the Companies Act 1993BETWEEN THE COMMISSIONER OF INLANDREVENUEPlaintiffAND KELT CAPITAL LIMITEDDefendantHearing: 13 December 2012(Heard at Napier)Counsel: Ms. A. York - Counsel for PlaintiffMr. N. Russell - Counsel for DefendantDecision: 13 December 2012ORAL DECISION OF ASSOCIATE JUDGE D.I. GENDALLSolicitors: Inland Revenue Department, PO Box 1462, Wellington[1] Before the Court is an application to place the defendant company Kelt Capital Limited into liquidation.[2] On 26 July 2012 the defendant company was served with a statutory demand from the plaintiff demanding payment of $258,195.29. The demand related to outstanding taxation, interest and penalties due from the defendant. There was no response as I understand it to that statutory demand.[3] On 17 September 2012 the plaintiff filed a statement of claim in this proceeding seeking an order to place the defendant company into liquidation. That proceeding was served upon the defendant company on 3 October 2012. In addition, advertising of the application was published in the Hawkes Bay Today newspaper on 28 November 2012 and the New Zealand Gazette on 29 November 2012.[4] Today, 13 December 2012 this matter was called before the Court. Ms York appeared as counsel for the plaintiff. Mr Russell appeared as counsel for the defendant.[5] Mr Russell noted that no Notice of Opposition or Statement of Defence to the present proceeding had been filed by the defendant. In addition, he confirmed, as the Court is aware that no application to set-aside the original statutory demand had been made.[6] Notwithstanding this, Mr Russell indicated today that he has only just received instructions from the defendant company in this matter and seeks what he described as "a short adjournment" for negotiations regarding some payment to be made to the plaintiff to be concluded.[7] In response, Ms York for the plaintiff indicated that her instructions were that the plaintiff opposed any adjournment in this proceeding and sought an order placing the defendant company into liquidation today.[8] Ms York also confirmed that in the recent past there had been discussions between the plaintiff and the defendant regarding requests by the defendant to re-assess the taxation in question that may be due. As a result of those re-assessments which Ms York confirms have been undertaken, the debt in question owing by the defendant has now been increased to a sum of $335,160.65. This debt, as I understand it, represents outstanding goods and services tax which has been assessed at a total of $251,416.40 (less payments of $6,550.00 and other miscellaneous credits of $49,907.24) dating back to May 2009 (and even possibly September 2008), and smaller amounts for fringe benefit tax, income tax and employer contributions plus interest and penalties.[9] Both Ms York for the plaintiff and Mr Russell for the defendant also told the Court today that over the last few days there has been what might seem to be a flurry of activity on the part of the parties by way of offer and counter-offer to settle this matter. In this regard, the Court has been helpfully informed that a counter-offer from the plaintiff to resolve all issues at a figure of some $110,000.00 was made only a few days ago, but this offer was rejected by the defendant.[10] Notwithstanding this, Mr Russell before me today stated that "the negotiations are very much alive". Given, however, the indication from Ms York for the plaintiff that in fact an order for liquidation is sought today, the plaintiff may well have a rather different view of matters.[11] Where does that leave the Court?[12] There can be no doubt in this case that the application before the Court for an order to place the defendant company into liquidation is unopposed. Nor does there appear to be any real defence advanced here by the defendant. There is certainly no indication to the Court of any sort as to the financial position of the defendant and whether or not it may be solvent.[13] That said, I am not prepared to allow this matter to drift further, given the length of time that has elapsed since the debts in question were incurred and the original statutory demand issued.[14] It is, however, a serious matter to place any company which may be viable into liquidation. Given that in the last few days there has been an offer made by the Commissioner to resolve issues between the parties at a little over $100,000.00 (and taking into account what I am told by Mr Russell today that other offers in settlement have been made by the defendant to an amount of about $50,000.00), I am prepared here to give the defendant one last chance to resolve this issue). That, however, is to be a limited opportunity to reach a negotiated settlement with the plaintiff. In that respect I am prepared to allow 24 hours for arrangements to be put in place by the defendant to pay or satisfy the plaintiff, failing which there will be no alternative but for the Court to reach the view that the defendant as an insolvent company must be placed into liquidation.[15] That said, I direct that this matter is now adjourned to a new call at 1.00 pm tomorrow, 14 December 2012 strictly for the purposes I have outlined above. The application before me will be disposed of tomorrow and if prior to that time an acceptable settlement is not able to be reached and the defendant company proves to have no defence to the present application, then an order for liquidation is likely to follow.'Associate Judge D.I. Gendall'