COMMISSIONER OF INLAND REVENUE v NATIONAL CR LIMITED [2014] NZHC 1716

COMMISSIONER OF INLAND REVENUE v NATIONAL CR LIMITED [2014] NZHC 1716 [21 July 2014]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYCIV-2014-404-425[2014] NZHC 1716BETWEEN COMMISSIONER OF INLANDREVENUEPlaintiffAND NATIONAL CR LIMITED(FORMERLY KNOWN AS ENVIROCLEAN & RESTORATION NEWZEALAND LTD)DefendantHearing: 21 July 2014Counsel: Mr C Van Der Merwe for PlaintiffMr R B Hucker and Ms A K Prasad for DefendantM Singh for DC's Carpet Services Ltd and Tasman PropertyServices LtdJudgment: 21 July 2014ORAL JUDGMENT OF ASSOCIATE JUDGE DOOGUE[Application to amend statement of claim]Amendment of statement of claim[1] When the plaintiff commenced these winding up proceedings, it filed a statement of claim which alleged that the defendant was indebted to it in the sum of $248,629.15. As is usual in cases of this kind, the Commissioner annexed to the statement of claim the account between itself and the plaintiff setting out assessments, penalties and interest payments as the main items. The total allegedly owed was then carried forward at $248,629.15. The Commissioner's position todaywas that the operative amount she claims to be owed in her application for liquidation was the amount set out in the affidavit of the employee, Mr Tremain dated 17 July 2014, that is the $300,000 approximately. The position summarised then is that the Commissioner is now alleging that after receipting of payments made by the defendant and adding to the liabilities additional assessments, interest and penalties, the account showing the liability of the defendant on the basis of the net effect of the entries shown has gone up by something in the order of $50,000.[2] Mr Van Der Merwe, for the Commissioner, proposed that the Court should proceed on the assumption that the amount owing was $300,000. Mr Hucker raised the question of whether the plaintiff ought to be restricted to proving only the amount set out in the original statement of claim.[3] Mr Van Der Merwe submitted that the Commissioner ought not to be so limited and that, even on the basis of the statement of claim in its original form, the Commissioner was entitled to prove that she was owed approximately $300,000. Alternatively, Mr Van Der Merwe sought leave to amend the statement of claim to plead that the current indebtedness was $300,854.44.[4] Mr Hucker opposed the grant of leave to amend.[5] The usual approach that is taken in these cases is to grant such amendments as are necessary to ensure that the real dispute is determined providing, of course, that such a course does not work injustice to the defendant.[6] Mr Hucker submitted that injustice would be caused to the defendant arising from the fact that it now faced a claim for a larger amount than it did previously. He broadly submitted that it was far too late for an application to amend to be brought.[7] In my view, the question is whether granting an amendment would cause injustice to the defendant in procedural terms. That is to say, it is necessary to consider whether allowing the amendment would result in some procedural unfairness to the plaintiff. Having heard Mr Hucker on the point, I am not satisfied that there would be any such procedural unfairness. There was no submission, for example, that if the defendant were given more time, evidence would be forthcoming to dispute either the original amount of the debt or the augmented amount which the plaintiff now seeks to include in the statement of claim.[8] Secondly, it is obvious to any party in the position of the defendant that as it continues to trade and, as time goes by maintains a negative balance in the Commissioner's accounts, penalties and interest are going to be added. The relevance of the fact that it continues to trade is that additional liabilities such as PAYE payments and GST tax will accrue as well.[9] The Commissioner has, as I say, filed an affidavit not long before the hearing but long enough for the defendant to at least be in a position to demonstrate and outline what sort of additional evidence it would like to call to show that theCommissioner's calculations are in error. It would, of course, need to do that if itwere to make anything of the point that the Commissioner was apparently now claiming an additional unjustified increase in the amount of the liability that it alleged against the defendant. But there has been no indication of any such procedural unfairness brought about by the increased figure. There is simply an assertion that it would be unjust to allow the amount to be increased.[10] I was referred to authority on this point about whether leave should be granted on the eve of the trial in liquidation proceedings to permit an amendment, in particular, the decision of Associate Judge Osborne in CIR v The Fish and Chip ShopCo Ltd1 was brought to my attention. In that case there was an application to file an amended statement of claim and the Judge said the following: 2[57] I note that my conclusion as to the Commissioner's continuedstanding in law introduces a certain common sense and practicality to the workability of the winding up regime. Creditors will frequently be demanding from debtors either judgment debts or contractual debts which carry interest as of right The creditor continues to be a creditor for those sums. The submissions of counsel for the defendant invite the conclusion 9expressly recognised by co9unsel) that the plaintiff creditor should be left to its rights through debt collection or otherwise to later pick up the balance, notwithstanding that the plaintiff remains a creditor on the hearing date (for more than $2000.00) and the defendant is presumed to be insolvent. In my view, the Court should be reluctant to conclude that Parliament intended such an unwieldy and inconvenient outcome.[11] It will be noted that the Associate Judge accorded weight to the considerations of whether the outcome suggested by the debtor in that case would be unwieldy and inconvenient. In this case, Mr Hucker suggests that an amendment to the statement of claim should be refused and the Commissioner restricted to enforcing the original lesser amount that was inserted in the statement of claim, and then she be left to take separate liquidation or other proceedings to recover the balance. In my view, that would be an unwieldy and inconvenient outcome. It would also, without any proper justification for so doing being put forward, have the effect of diverting the Court away from dealing with the real dispute between the parties.[12] For all of those reasons, I consider that the application to amend ought to be granted and I rule accordingly._____________J.P. DoogueAssociate Judge1 CIR v The Fish and Chip Shop Co Ltd CIV-2009-404-672.2 At [57].