COMMISSIONER OF INLAND REVENUE V RON WEST MOTORS (OTAHUHU) LIMITED HC AK CIV 2002-404-2881

COMMISSIONER OF INLAND REVENUE V RON WEST MOTORS (OTAHUHU) LIMITED HC AK CIV 2002-404-2881 15 May 2006IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY CIV 2002-404-2881 (M 1697/02) CIV 2004-404-5134 (M 146/89)UNDER the Companies Act 1993 BETWEEN COMMISSIONER OF INLAND REVENUE Plaintiff AND RON WEST MOTORS (OTAHUHU) LIMITED Defendant Hearing: 10 May 2006 Counsel: CK Wood for plaintiff RJ Warburton for defendant Judgment: 15 May 2006 at 13:45JUDGMENT OF ASSOCIATE JUDGE FAIRE [on application for orders reversing striking out of proceeding and reinstating the case and other orders]Solicitors: Meredith Connell, PO Box 2213, Auckland for plaintiff Warburton, PO Box 127, Auckland for defendantThe application[1] The plaintiff applies, by interlocutory application, for orders: a) Reversing the striking out of proceeding Civ 2004-404-5134 by reinstating the case; b) Amending the request for order numbered (3) in the plaintiff's application dated 18 August 2004 to read:directing that the balance held by the Court being interest on the above sum be paid to the plaintiff;c) That the proceedings Civ 2002-404-2881 and Civ 2004-404-5134 be consolidated; and d) That the interest to be allocated in Civ 2004-404-5134 be allocated before any hearing is conducted in relation to the substantive application for liquidation in Civ 2002-404-2881. [2] The application is made in respect of a winding up proceeding filed by the plaintiff on 23 December 2002.The opposition[3] Three grounds are set out in the notice of opposition. They are: a) The order of Associate Judge Sargisson dated 21 July 2005 was sealed by the plaintiff on 4 August 2005 and served on the defendant on 9 August 2005; b) No appeal has been lodged by the plaintiff; and c) The plaintiff, in its original application, sought that the balance held by the Court (after payment of the sum of $39,385.66 be paid (to theplaintiff) on account of the proceeding Civ 2002-404-2881. The judgment is not able to be altered after sealing. [4] A further ground was advanced, namely that, if the issue of entitlement to interest pursuant to a minute of Master Gambrill was not resolved by the judgment of Associate Judge Sargisson, the defendant was nevertheless the successful party and therefore entitled to that portion of the fund which is still held by the Registrar of this Court.Background[5] Two proceedings have been filed in this Court by the plaintiff, which seek orders placing the defendant into liquidation and appointing a liquidator. They are Civ 2004-404-5135 (formerly numbered M 146/89, which was issued in 1989) and Civ 2002-404-2881 (formerly numbered M 1697/02, which was issued in 2002). [6] In March 1986 the plaintiff issued assessments in respect of the defendant's taxation liability for the financial years and amounts as follows: 1982 $32,265.00 plus 10% penalty interest $3,226.50 1983 $12,548.70 plus 10% penalty interest $1,254.87 1984 $26,796.60 plus 10% penalty interest $2,679.66Total $78,734.35[7] Thereafter I adopt the history of these proceedings as recorded in a judgment of Associate Judge Sargisson delivered on 21 July 2005 in Civ 2004-404-5135.[2] The Commissioner commenced the proceeding in 1989 under M 146/89 against Ron West Motors Ltd. The proceeding was based on a notice issued under s 218 of the Companies Act 1955 which was not paid or otherwise settled to the Commissioner's satisfaction. The notice required payment of $39,385.66. That sum represents 50% of the income tax assessed by the Commissioner against Ron West Motors in 1986 for the income years 1982, 1983 and 1984, the 50% being the "non-deferrable" portion of the tax under s 34(2)(b) of the Income Tax Act 1976 plus a 10% penalty imposed unders 398(2)(a) of the Income Tax Act 1976 for failure to pay on time. The total tax assessed for the three income years including the 10% penalty on the entire sum was $78,734.35 ($71,610.30 excluding the penalty). [3] Ron West Motors applied to the Taxation Review Authority for a review of the total amount of the Commissioner's assessment. The review application was still pending at the time of the liquidation proceeding and Ron West Motors therefore made application for an order staying the liquidation proceeding and restraining advertising. Its grounds were that the debt in the s 218 notice was disputed and was an abuse of process. [4] After a defended hearing, on 9 June 1989 Master Gambrill declined Ron West Motor's application and refused to grant the stay. She accepted the Commissioner's submission that the tax debt in the notice was non-deferrable and accordingly that it was due and payable under s 34(2) and that it was not to be "suspended by any objection, appeal or case stated" made or requested under the Act. She rejected the argument that the liquidation proceeding was an abuse of process and being used improperly for debt collection purposes. She said:The same arguments as were advanced in the case of Royston Newman Developments Limited were advanced by counsel for the defendant herein. That is, the matter was not finally determined. The defendant, despite the statutory provision, should not be made to pay. The defendant urged upon me that there was a possible abuse of process as it was not envisaged or intended that the winding up should be used for the purposes of debt collection. The defendant companies were taking all positive steps to justify the companies' belief that no tax was owing, and for this reason, the defendant said that this Court should not permit the Commissioner to proceed on its winding up proceedings. I am satisfied in both cases that the statute law is clear and must be upheld. Whatever steps the defendant is electing to take the concrete obligation to pay the tax has arisen through the wording of the statute and there is no submission that can persuade me that the debt is not now due and owing pursuant to the Income Tax Act 1976. It is the Court's obligation to uphold the wording of the statute which is clear and unequivocal and for these reasons I would refuse a stay of the proceedings and order that the liquidation proceedings be advertised. The winding up proceedings are to be heard on 12 July 1989.[5] The result was that the Commissioner was entitled to proceed to seek an order for liquidation and the application was set down for hearing. The application was advertised on 28 June 1989. [6] However, in subsequent developments, Ron West Motors filed an appeal to the Court of Appeal against the refusal to grant the stay. On 12 July 1989 it filed a statement of defence, claiming that the Commissioner was not entitled to an order because it was solvent and had paid $39,385.66 into a solicitor's trust account whiledenying liability; that the Commissioner was not a creditor; that the assessments had been appealed; that it could offset tax losses against the assessments; and that it was just and equitable that the claim be dismissed. On 13 September 1989 Master Gambrill made orders by consent governing the future conduct of the proceeding. She recorded the order as follows:"Adjourned by consent $39,385.66 paid to Registrar High Court by 1.00 pm Friday 15/9/1989 invested interest bearing account and released only on following condition: i) On final determination Tribunals decision appeal to taxation appeal Authority the sum together with interest paid to successful party or upon delivery judgment Court of Appeal on the application for stay or subsequent final determination of this winding up proceeding the fund will be released to the successful party. By consent the winding up proceedings are stayed on the above conditions".[7] Ron West Motors made payment to the Registrar in terms of the order, which clearly contemplated that the Registrar would have authority to hold the $39,385.66 and any interest earned on that sum for release in accordance with the terms attaching to the stay. Since the time payment was made to the Registrar, the monies have been held in an interest bearing deposit. It appears they now amount to approximately $97,000.00. [8] Ron West Motors did not pursue the appeal to the Court of Appeal against the stay decision. It is common ground that the appeal was deemed to have lapsed. [9] However, Ron West Motors did pursue its objection to the Taxation Review Authority. The Authority issued its decision on 4 September 1990 disallowing the objection and confirming the assessment. The decision is reported as Case M109 (1990) 12 NZTC 2,690. Subsequently, the High Court dismissed Ron West Motor's appeal against the decision. The High Court's decision is reported as KJ Cummings Limited v CIR; Ron West Motors (Otahuhu) Ltd v CIR(1998) 18 NZTC 13,537. Baragwanath J rejected the various grounds raised by way of challenge to the assessments. Ron West Motors filed a notice of appeal to the Court of Appeal but took no further steps and the appeal was deemed abandoned on 18 September 1998 under r 10 of the Court of Appeal (Civil) Rules 1997. [10] The result was that: a) The Master's finding that the non-deferrable portion of the tax debt was owing and due under the Income Tax Act 1976 remained unchallenged and subject only to the Master'ssubsequent order. In terms of s 218, Ron West Motors continued to "be deemed to be unable to pay its debts". b) There was a final determination on the decision of the Taxation Review Authority to uphold the Commissioner's entire assessment. Under s 27 of the Income Tax Act 1976 (now s 109 of the Tax Administration Act 1994) the assessments in their entirety were deemed correct and determinative of Ron West Motors' tax liability for the years 1982 - 1984. The assessments are not therefore open to dispute in "a Court or in any proceedings on any grounds whatsoever". c) There was no remaining reason for Ron West Motors not to pay the debt on which the s 218 notice was based or for the fund held by the Registrar not to be released to the Commissioner. On any sensible reading of the consent order, he could claim have become "the successful party". There was also no reason for the liquidation proceeding not to be relisted so that it could be disposed of. [11] However, no steps were taken to list the liquidation proceeding for call in the High Court in Auckland, possibly because of an oversight. The re-listing of the proceeding did not occur until the Commissioner filed the current application. [12] In the meantime, in 2002 the Commissioner commenced a new winding up proceeding in 2002 under M 1697/02 (CIV2002-404- 2881) based on an unsatisfied statutory demand in respect of the full amount of the assessment together with the 10% penalty. On 29 August 2003, the application was stayed by Master Faire under r 700K until the application under M 146/89 has been dealt with.The second proceeding[13] In the second proceeding, Ron West Motors accepted that the appeal to the Court of Appeal from the High Court decision had effectively lapsed, and that the assessments could not be challenged through the objection procedure. However, Mr Warburton sought a stay of the proceeding and an order prohibiting advertising, based on two grounds. [14] The principal ground raised was that s 99(4) of the Income Tax Act 1976 (being the relevant provision at the time) applied to bar automatically the collection of the assessed tax. In his judgment of 29 August 2003, Master Faire decided he did not need to decide the point of law involved because:[24] Even if Mr Warburton's submission on the point of law is correct, there is no proper foundation or factual premise which would support it in this case . Having reached that conclusion I conclude that a stay is not justified on the principal ground advanced.[15] As to the second ground, namely whether the proceeding was vexatious and an abuse of process, Master Faire held:[29] There are two extant proceedings against this defendant filed by the plaintiff seeking orders placing the defendant into liquidation and appointing a liquidator. [30] On the first proceeding, the Registrar holds a substantial payment into Court. The extent of that fund would have to be taken into consideration before the Court appointed a liquidator assuming that the jurisdictional requirements are otherwise met. [31] The current proceeding is vexatious and therefore there is an abuse of process whilst the first proceeding remains in existence. Because of the implication of r426A of the High Court Rules it would not be appropriate to dismiss the current proceeding. What should occur is that it should be stayed until either the first proceeding is dealt with or discontinued or otherwise disposed of. [32] Accordingly, I order that this proceeding be stayed pending further order of the Court until either the first proceeding is dealt with or discontinued or otherwise disposed of.[8] The matter dealt with by Associate Judge Sargisson was an application by the plaintiff which is described in [16] of the judgment as follows:[16] This brings me to the Commissioner's application. The Commissioner now seeks the following orders for the purpose of disposing of this proceeding: a) An order striking out the conditional stay of this proceeding; b) An order directing that the sum of $39,385.66 paid into Court on 15 September 1989 be paid forthwith to him in discharge of his claim for non-deferrable tax under s 34(2)(b) of the Income Tax Act 1976; c) A further order directing that the balance held by the Court, being interest on the above sum, be paid to him on account of the sum claimed in proceeding M 1697/02 (CIV 2002- 404-2881); d) Granting leave for the Commissioner to withdraw his application on the payment of the monies referred to in (b) and (c); and e) Costs in his favour.[9] The judgment, however, records what Mr Wood said was a different contention being advanced orally by the plaintiff in respect of entitlement to interest.For completeness' sake I set out the four contentions that are recorded in [17] of Associate Judge Sargisson's judgment:[17] The Commissioner contends: a) The assessments against Ron West Motors for the income years ended 31 March 1982, 1983 and 1984 are deemed to be correct and determinative of liability of Ron West Motors Motor's liability by virtue of s 109 of the Tax Administration Act 1994 (previously s 27 of the Income Tax Act 1976); b) There is no justifiable reason for the stay imposed by Master Gambrill to continue. When the appeal to the Court of Appeal was deemed abandoned, no further grounds of dispute could be raised by Ron West Motors; c) The Commissioner is "the successful party" in terms of the consent order and is entitled to the principal sum of $39,385.66 together with interest which has accumulated on the money paid into Court. The Commissioner has been denied the use of that money since 1989; and d) When the money held by the Court has been paid to the Commissioner, there is no further reason for this proceeding (M 146/89) to continue and it is appropriate for leave to be granted for it to be withdrawn or struck out.[10] It will be observed that the application required the interest to be paid on account of the sum claimed in the 2002 proceeding. By contrast the plaintiff's contentions could be construed as a claim that the entire fund was to be paid on completion of the matters referred to in Master Gambrill's order and to the extent that that included interest, that was because the plaintiff had been kept out of his entitlement to the capital, that is the non-deferrable tax. [11] I conclude, however, that Associate Judge Sargisson proceeded on the basis that the application and the oral contentions were not inconsistent. At [27] of her judgment, the following is recorded:[27] That brings me to the question of how the proceedings should be disposed of. The parties have very different views on this. The Commissioner says there should be two orders (set out at [17] c) and d) above] which in effect require the Registrar to release the $39,385.66 (representing the non-deferrable portion of the assessments together with the 10% penalty) to him, and for the balance to be paid to him on account of the amount owing in thesecond proceeding (representing the balance of the assessments together with a 10% penalty).[12] At [56] of the judgment Associate Judge Sargisson made the following orders:[56] For the above reasons, I make the following orders: a) The conditional stay is set aside; b) The Registrar is directed to release the $39,385.66 to the Commissioner, and to transfer the balance to the second liquidation proceeding M 1697/02 (CIV 2002-404-2881), to be released on such basis as the Court may order in that proceeding; c) The Commissioner has leave to withdraw the winding up proceeding. d) Proceeding M 1697/02 (CIV 2002-404-2881) is to be listedfor mention in the Liquidation List on 28 August 2005 at 10.45 am before Associate Judge Faire.[13] The order which was sealed varied the formal orders recorded in the judgment by changing the date for the listing of M 1697/02 (Civ 2002-404-2881) to 1 September 2005. [14] The defendant's counsel filed a memorandum seeking an order recalling Associate Judge Sargisson's judgment. Counsel attended on Her Honour on 30 August 2005. In her minute she recorded that defendant's counsel withdrew the application for recall. She then added:[5] That leaves the matter of the final disposition of this liquidation proceeding (Civ 2004-404-5134). As noted above, on 21 July 2006 I made an order giving the Commissioner leave to withdraw the proceeding. I have discussed with counsel today the means by which this should be done. Both are agreed this proceeding is to be listed in Judge Faire's liquidation list on Thursday 1 September 2005 at 10.45am and I direct accordingly. They are also agreed that at that time, an oral application will be made for leave to withdraw the liquidation proceeding and an order can be made accordingly. [6] I note that the related liquidation proceeding Civ 2002-404-2881 is already listed on 1 September 2005 at 10.45am. Both counsel confirm that they are aware of the hearing and require no further notification.[15] The hearing on 30 August 2005 confirmed that at that time there had been no formal determination of M 146/89 (Civ 2004-404-5134). Although leave to withdraw the proceeding had been granted there had, in fact, apparently, been no formal withdrawal or discontinuance of the proceeding. [16] On 1 September 2005 both proceedings were called before me. At that time Mr Wood appeared for the plaintiff and Mr Warburton for the defendant. Mr Wood produced a memorandum. It summarised the orders made by Associate Judge Sargisson in the judgment of 21 July 2005. It recorded that the $39,385.66 figure should have been paid to the plaintiff in 1989 in compliance with s 34 of the Income Tax Act 1976. It recorded that the money, however, was not paid to the Commissioner but was paid instead to the Court. It submitted that the interest was not money that could otherwise be applied in satisfaction of the outstanding tax because it belonged to the Commissioner as he was the person entitled to the non- deferrable tax pursuant to s 34. The memorandum added that there would still be an unsatisfied balance due to the Commissioner for the outstanding tax (by implication, the deferred portion of the tax) in respect of which the Commissioner now sought orders in terms of the substantive application filed in respect of M 1697/02 (Civ 2002-404-2881). It then noted that the 1989 proceeding appears to have been fully dealt with. As a consequence, it contained a submission that there was now no reason why the stay, which I imposed in respect of the 2002 proceeding, could not be lifted. [17] I recorded that leave to withdraw the 1989 proceeding was granted. That order was made on the express understanding that it brought that proceeding to an end. In respect of the 2002 proceeding, I minuted the file:The stay ordered on 29 August 2003 shall remain pending further order. The issue of entitlement to interest on the non-deferrable tax paid to the Registrar requires a ruling.I then set a timetable for the exchange of submissions in relation to that issue and adjourned the matter to 29 September 2005, which was a list day. [18] Unfortunately, the matter could not be determined on that day and had to be adjourned to 7 October 2005. However, a problem, which Mr Wood said took himcompletely by surprise, was first raised in submissions which were filed in writing on behalf of the defendant and which are dated 27 September 2005. Paragraph 24 of that submissions records:The balance of the money after payment of the non-deferrable tax is for the benefit of the defendant. Associate Judge Sargisson has ordered that it be transferred to the present proceeding. The question of interest on the non- deferrable tax was a question to be determined in the now defunct proceeding. It is not a question that falls to be determined in this proceeding. It is no part of the statement of claim. The interest has been transferred to this proceeding to be dealt with in this proceeding. The Commissioner sought in M No 146/89 that the interest on the non-deferrable tax be paid to him on account of the sum claimed in this proceeding. The Court saw fit to transfer the amount claimed to this proceeding. The amount thus transferred to this proceeding is for the benefit of the defendant company.I have underlined the critical part. [19] Mr Wood said that it was not until the application was argued before me on 7 October 2005 that the significance of what Mr Warburton contended for was appreciated. Mr Wood contended that Associate Judge Sargisson's judgment of 21 July 2005 had simply left unresolved who was entitled to the interest and the basis upon which the entitlement was to flow and that, by consent, that was to be determined in the 2002 proceeding. He submitted that for the first time in the submissions of 27 September 2005, and at the hearing on 7 October 2005, the defendant contended that the interest held by the Registrar was to be held for the benefit of the defendant company and as a credit for any sum due in the 2002 proceeding. He further submitted that, because of an understanding he had at the time of the hearing before Associate Judge Sargisson, he had not been given the opportunity to advance argument as to why the plaintiff was entitled to the interest. [20] Because there was a clear difference between counsel as to the basis upon which the issue of entitlement to interest was to be determined and at Mr Wood's request, I adjourned the hearing on 7 October 2005 to enable Mr Wood to give further consideration to the matter. The matter was then called next in the Miscellaneous Companies List at 11.45am on 27 October 2005.[21] On 27 October 2005 Mr Wood sought leave to file an interlocutory application in the winding up proceeding. That application, in fact, is the application which has been listed for determination in this judgment. The application was then formally filed and given a mention date for 1 December 2005. [22] On 1 December 2005 directions for the filing and service of a notice of opposition were made together with provision for affidavits in opposition and affidavits in reply and for an exchange of synopses of submissions. The fixture allocated for this proceeding was then made.The questions requiring determination[23] There are two fundamental questions which require determination in this application. They are: a) Is the plaintiff entitled to an order directing the Registrar to pay him the accumulated interest on the non-deferrable tax, and which arises from the order made by Master Gambrill on 13 September 1989? b) Alternatively, is the interest to be held by the Registrar of this Court as a security for whatever sum is found to be due to the plaintiff in respect of the issues raised in the proceeding Civ 2002-404-2881 (M 1697/02)?Consideration of the issues and the orders sought[24] Undoubtedly the problem for the plaintiff lies in the fact that the formal application before Associate Judge Sargisson sought an order that the interest on the funds held by the Registrar be paid to the plaintiff on account of the sum claimed in the 2002 proceeding. [25] Mr Wood submitted that counsel's oral submissions sought the interest because the plaintiff was the successful party. By implication the interest was due because the Commissioner was entitled to the non-deferred tax of $39,385.66. Theinterest was not sought as a payment that could be accepted on account of the deferred tax. [26] Associate Judge Sargisson did not view the submissions in the way I have referred to them in the previous paragraph. That is clear from what she said in [27] of her judgment. After referring to the oral submissions, she interpreted them as meaning that the Commissioner sought the balance, that is the interest:to be paid to him on account of the amount owing in the second proceeding representing the balance of the assessments together with a 10% penalty.[27] It is understandable having regard to the way the application was framed that Associate Judge Sargisson formed that view. Both winding-up proceedings related to the same tax assessments. [28] However, that view overlooks an important matter which affects the timing of the obligation to pay the tax. The 1989 proceedings related to a liability to pay half the assessed tax, which obligation was not suspended by the filing of an objection. The plaintiff was at the time Master Gambrill made her order in 1989 entitled to be paid $39,385.66. The defendant was obliged to pay it. No basis has been advanced to justify the propositions that the $39,385.66 was not then due and payable to the plaintiff. [29] Indeed the defendant, by counsel, recognised that position. In his submissions dated 27 September 2005 he submits:4. Ordinarily the Commissioner would receive and recover the non- deferrable tax. He could have recovered the non-deferrable tax from the defendant company. The non-deferrable tax was due. It was payable. 6. It is correct that if the Commissioner had recovered the non- deferrable tax, he would have been entitled to the use of that money. 7. At any particular point in time, the Commissioner would be entitled to the use of non-deferrable tax, when he chooses to recover it.[30] The position which I have outlined and which is reflected in counsel for the defendant's submissions to which I have made reference, applies by virtue of s 34(2)(b) of the Income Tax Act 1976 as amended by s 8 of the Income Tax Amendment Act (No. 2) Act 1985. Section 34(2)(b) provides:(2) The obligation to pay and the right of the Commissioner to receive and recover - (b) Any tax, not being deferrable tax, shall not be suspended by any objection, appeal, or case stated, made or requested under this Part of this Act.The same Act defines deferrable tax as meaning an amount equal to one-half of so much of the tax assessed in the assessment. It is common ground that the non- deferrable tax in this case was $39,385.66. [31] Mr Wood advised from the Bar that the only ground available to the plaintiff to claim entitlement to interest in respect of the non-deferrable tax was the order of Master Gambrill. There was at the time the order was made no statutory basis for imposing interest on this portion of the unpaid tax. That said, it is readily understandable that Master Gambrill intended that the person who was entitled to the fund which was to be paid into Court should also be entitled to the interest on what was later established as that party's entitlement. The interest here has been generated from the fund which was paid into Court and which has been found to be due to the Commissioner at the time, it was paid to the Registrar. [32] The only argument on the merits advanced for the defendant is that with the release of the fund to the Commissioner, no basis existed for the appointment of a liquidator. Mr Warburton submitted that the plaintiff could not obtain an order appointing a liquidator. Therefore he submitted that the defendant was the successful party in the proceeding. I reject that submission. By failing to pay the statutory demand, the plaintiff had produced the required proof of inability to pay debts. In short, the plaintiff established the grounds which would justify the order sought in the proceeding. It was only the late payment by the defendant which prevented an order from being made.[33] The argument advanced for the defendant was in fact rejected by Associate Judge Sargisson, as is clear from page 48 of her judgment where she said:Further, Ron West Motors has not advanced any meritorious argument for its contention that the funds should not be released to the Commissioner as the "successful" party in terms of the first condition of the consent order. I repeat that on any sensible reading of the order, the Commissioner is the successful party if the terms of the order are to be complied with. The assessments have been upheld by a final determination of the High Court, and the tax debt is due and owing.[34] The difficult issue raised by this application is what affect does the judgment of Associate Judge Sargisson have on the outcome now contended for by the plaintiff. [35] Mr Wood submitted that the order transferring the funds to the 2002 proceeding was made on a consent basis. The consent basis was that all issues relating to entitlement to the interest which flowed from Master Gambrill's 1989 order were open to be pursued in determining the application. By contrast, Mr Warburton submitted, and I quote from paragraph 24 of his submission dated 27 September 2005, as follows:The balance of the money after payment of the non-deferrable tax is for the benefit of the defendant. Associate Judge Sargisson has ordered that it be transferred to the present proceeding. The question of interest on the non- deferrable tax was a question to be determined in the now defunct proceeding. It is not a question that falls to be determined in this proceeding. It is no part of the statement of claim. The interest has been transferred to this proceeding to be dealt with in this proceeding. The Commissioner sought in M No. 146/89 that the interest on the non- deferrable tax be paid to him on account of the sum claimed in this proceeding. The Court saw fit to transfer the amount claimed to this proceeding. The amount thus transferred to this proceeding is for the benefit of the defendant company.[36] To overcome the difficulty, Mr Wood seeks the reinstatement of the 1989 proceeding. To reinstate that proceeding requires a recall of the order I made on 1 September 2005. It does not involve a recall of Associate Judge Sargisson's judgment. That judgment did not bring the 1989 proceeding to an end. [37] No specific opposition to the recall and vacation of the order I made on 1 September 2005 is contained in the notice of opposition. My order has not beendrawn up or sealed. The Court therefore has jurisdiction to recall that order. Re. Harrison's Settlement [1955] Ch 260; [1955] 1All ER 185 cited with approval inHorowhenua County v Nash (No. 2) [1968] NZLR 632 at 633. The order I made was made without the benefit of any argument. It was sought based on a clear misunderstanding of the effect contended for by the defendant. Associate Judge Sargisson, in her judgment, clearly left open the existence of the 1989 proceedings for determination at a hearing later than that which she was determining in her judgment. By reinstating the 1989 proceeding, it then cannot be contended that there is an impediment to giving effect to Master Gambrill's order. Further, until there is a final determination of entitlement to the moneys held pursuant to Master Gambrill's order, I do not consider that there has been a completion of the matters requiring resolution in the 1989 proceeding. [38] There is, however, a further question. By ordering the transfer of the interest portion of the fund to the 2002 proceeding, the issue arises as to whether Associate Judge Sargisson was closing the door to a consideration of entitlement to that fund pursuant to Master Gambrill's order. I conclude she was not. My conclusion arises from the fact that she did not strike out the 1989 proceeding in her judgment. It is common ground that that position advanced no further than the granting of leave to the plaintiff to withdraw it and that that step was not formally taken until the matter came before me on 1 September 2005. I conclude Associate Judge Sargisson's judgment does not bar me from looking at the order which dictates the terms as to entitlement to the entire fund that was held by the Registrar in determining entitlement. [39] The next matter that requires consideration is the second order sought. Mr Warburton submitted that the power to amend could not be exercised following a final judgment. Mr Wood's response is to point to [52] of Associate Judge Sargisson's judgment. There she said:Because of the orders I propose to make there is no need for me to deal with the question of the interest payable on $39,385.66.[40] Paragraph [52] of her Honour's decision discloses that she was not dealing with entitlement to the interest and had expressly left that matter as a live issue.There is therefore no question of there being an amendment sought after determination of the issue by the Court. [41] Generally, there are three hurdles which an applicant for an amendment must meet before the amendment is granted, namely: a) That the amendment is in the interests of justice; b) That it will not significantly prejudice the defendant; c) That it will not cause significant delay.Elders Pastoral Ltd v Maher (1987) 2 PRNZ 383 at 385. [42] The amendment here is required. Without it there is the distinct possibility of there being no power to give effect to Master Gambrill's order. The whole purpose of Master Gambrill's order was to see that the person who was entitled to the fund to be paid to the Registrar got the benefits attaching to that fund. No specific prejudice has been identified as far as the defendant is concerned. There is no issue as to delay. Accordingly, I conclude that the amendment is both proper and is justified. [43] The application to consolidate the proceedings is really a necessary consequence of the findings that I have made and is necessary to ensure that a ruling can be given on the merits of entitlement to the interest. Having regard to the finding I have already made that until that issue is resolved, the 1989 proceeding necessarily has not been concluded the order is justified. [44] The final order sought is that I now rule on entitlement to the interest. For practical reasons that is important because it gives the parties a clear indication as to whether additional money is due and owing to the Commissioner by the defendant or not. [45] I have already set out in this judgment why there can be only one party entitled to the entire fund that was held by the Registrar, that is the plaintiff. That is because the plaintiff was the successful party. The non-deferrable tax was due andpayable a the time it was paid to the Registrar. Nothing has changed that position. No future event will change the position. [46] Mr Wood sought at this stage the orders that I have analysed only. Both he and Mr Warburton were in agreement that the stay in respect of the 2002 proceeding should remain. That position was agreed to by counsel because of a new matter which I am not required otherwise to take into account. It arises from a judgment of Simon France J given on 14 December 2005 and which counsel advise is the subject of an appeal. Until that appeal is resolved or there is an order of the Court, both counsel agree it would be inappropriate to further deal with the 2002 proceeding in this Court. I will therefore proceed on that basis. [47] I invited counsel to indicate whether there was any need for separate submissions in relation to costs on this application. Both agree that I should deal with the question of costs on the premise that the successful party is entitled to an order based on Category 2, Band B of the High Court Rules. That then is the reason why the order in relation to costs is made in this judgment. [48] Mr Warburton sought leave to file an affidavit by Mr Russell. Its contents have not been shown to either myself or Mr Wood. I am not therefore in a position to rule as to whether the contents would assist the determination of this application. Mr Warburton did not press the application and, in those circumstances, I refuse it.Orders[49] I order as follows: a) The order striking out Civ 2004-404-5134 is recalled and is vacated. b) The plaintiff's interlocutory application dated 18 August 2004, Order No. 3, is amended to read:"Directing that the balance held by the Court being interest on the above sum be paid to the plaintiff".c) Civ 2002-404-2881 and Civ 2004-404-5134 are consolidated.d) The Registrar shall pay to the plaintiff the balance of the fund held originally pursuant to the order of Master Gambrill on 13 September 1989 and now held by the Registrar pursuant to the judgment of Associate Judge Sargisson of 21 July 2005. e) Both proceedings, that is, Civ 20002-404-2881 and Civ 2004-404-534 are stayed pending the determination of an appeal from a judgment of Simon France J given on 14 December 2005, or further order of the Court. On dismissal of the stay, the Registrar shall list the proceedings in an appropriate companies list. f) The defendant shall pay the plaintiff's costs for a defended interlocutory application based on Category 2, Band B, together with disbursements as fixed by the Registrar. _____________________ JA Faire Associate Judge