COMMISSIONER OF INLAND REVENUE v NSTK INVESTMENTS LIMITED (formerly KHANDA DEVELOPMENTS LIMITED) [2021] NZHC 514
The Commissioner, as a creditor, demonstrated proper grounds for concern (company in liquidation, creditor claim including a substantial GST default assessment, unexplained substantial transfers to related parties, and procedural irregularity in name change and advertising) and it was just and equitable to restore...
Source-derived case information.
- Citation
- [2021] NZHC 514
- Parties
- Applicant: Commissioner of Inland Revenue; Respondent: NSTK Investments Limited (formerly Khanda Developments Limited)
- Court
- High Court
- Jurisdiction
- New Zealand
- Judgment Date
- 12 March 2021
- Procedural Posture
- Application Under Companies Act 1993 for Restoration to Register and to Set Aside Liquidator's Final Report / Hearing and Oral Judgment (12 March 2021)
- Outcome
- NSTK Investments Ltd restored to the Register; leave granted to the Commissioner to apply under s 284; the liquidator's final report set aside.
- Legal Topics
- Restoration to Register Under S 329, Setting Aside Liquidator's Final Report, Creditor Standing and Leave Under S 284, Related Party Transactions and Voidable Dispositions, Liquidator Resignation and Succession Under S 283
Source-derived case record
Summary, issues, holding and outcome
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Parties
Commissioner of Inland Revenue
Applicant
NSTK Investments Limited (formerly Khanda Developments Limited)
Respondent
Procedural Posture
Application Under Companies Act 1993 for Restoration to Register and to Set Aside Liquidator's Final Report / Hearing and Oral Judgment (12 March 2021)
Legal Issues
- 1 Whether the Commissioner as a creditor has standing to apply for restoration under s 329
- 2 Whether grounds exist to restore the company (company in liquidation, creditor claim, just and equitable)
- 3 Whether the liquidator's final report should be set aside to enable investigation and resumption of the liquidation
Ratio Decidendi
The Commissioner, as a creditor, demonstrated proper grounds for concern (company in liquidation, creditor claim including a substantial GST default assessment, unexplained substantial transfers to related parties, and procedural irregularity in name change and advertising) and it was just and equitable to restore the company; accordingly the court restored NSTK Investments Ltd, set aside the liquidator's final report and granted leave under s 284 to enable further proceedings and investigation.
Court Disposition
NSTK Investments Ltd restored to the Register; leave granted to the Commissioner to apply under s 284; the liquidator's final report set aside.
Orders
- NSTK Investments Ltd is restored to the Register.
- Leave is granted to the Commissioner to apply under s 284.
Full Case Text
Judgment text and source record
1 paragraphs
COMMISSIONER OF INLAND REVENUE v NSTK INVESTMENTS LIMITED (formerly KHANDADEVELOPMENTS LIMITED) [2021] NZHC 514 [12 March 2021]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV-2021-404-242[2021] NZHC 514UNDER the Companies Act 1993, Section 329and Rule 19.2 of the High Court RulesBETWEEN COMMISSIONER OF INLANDREVENUEApplicantAND NSTK INVESTMENTS LIMITED(formerly KHANDA DEVELOPMENTSLIMITED)RespondentHearing: 12 March 2021Appearances: Nick Malarao for the ApplicantNo appearance for the RespondentJudgment: 12 March 2021ORAL JUDGMENT OF ASSOCIATE JUDGE R M BELLSolicitors:Vallant Hooker (J Bruce Murray), Auclkand, for the PlaintiffVicki Amundsen Trust Law (Mike Phillipps), Auckland, for the Defendants[1] The Commissioner of Inland Revenue has applied under s 329 of theCompanies Act 1993 for NSTK Investments Ltd to be restored to the register.[2] The company went into liquidation by shareholders' special resolution on17 October 2019. The liquidator was Mr Craig Young. He filed his final report on21 April 2020 and the company was removed from the register on 28 May 2020.[3] The Commissioner says that she is a creditor of the company for $206,168.40.The main component is a claim for GST of $199,910.00 but that is a defaultassessment. The Commissioner says that she filed a claim in the liquidation but theliquidator did not take any action in response to it. The liquidator's final report showsthat there were no realisations and no distributions to creditors.[4] The Commissioner believes that there are matters that warrant investigation.The company changed its name from Khanda Developments Ltd to NSTKInvestments Ltd on the day it went into liquidation. The liquidation was not advertisedunder the company's former name, as it should have been.1[5] Shortly before the company went into liquidation it made substantial paymentsto related persons: $250,000 to a company associated with one of the shareholders,$200,000 to one shareholder, and $708,000 to another shareholder. Thoseshareholders were also former directors. The Commissioner is concerned that theliquidator has done nothing to investigate these matters.[6] Accordingly, the Commissioner wants the company restored, and the finalliquidator's report set aside so that the liquidation can be resumed. The Commissionerhas applied for restoration under s 329 of the Companies Act and to set aside the finalreport. As a creditor, the Commissioner needs leave to apply under s 284(1) of theCompanies Act, but the Commissioner has not expressly sought leave.1 Companies Act 1993, s 25(4).Notwithstanding that, there is good reason for the Commissioner to apply and I grantleave.[7] I am also satisfied that there are good grounds for restoring the company to theregister. The Commissioner has shown proper grounds for concern. TheCommissioner has standing to apply under s 329(2)(a)(ii) of the Companies Act. Thefact that the company was in liquidation is a ground for the company to be restored,as is the fact that the Commissioner is a creditor.2 Aside from those matters, it is alsojust and equitable to restore the company to enable the Commissioner's concerns tobe investigated.3[8] The Commissioner has served the shareholders and directors of the company,the Registrar of Companies, the Secretary of the Treasury and the liquidator,Mr Young, who agreed to accept service by email.[9] Mr Young has indicated that on the company being restored, he will resign asliquidator to allow another liquidator to be appointed. Under s 283(2) of theCompanies Act, a liquidator may resign by appointing another person to be his or hersuccessor. I take it, therefore, that a change in liquidator can be carried out smoothly.But if there are difficulties there may be resort to the court under s 283(4).[10] Accordingly, I make these orders:(a) NSTK Investments Ltd is restored to the Register.(b) Leave is granted to the Commissioner to apply under s 284.(c) The liquidator's final report under s 257 of the Companies Act is setaside..Associate Judge R M Bell2 Companies Act 1993, ss 329(1)(a)(iii) and (iv).3 Companies Act 1993, s 329(1)(b).