THE COMMISSIONER OF INLAND REVENUE V ROSENEATH PROPERTIES LIMITED HC AK CIV 2006-404-5878

THE COMMISSIONER OF INLAND REVENUE V ROSENEATH PROPERTIES LIMITED HC AK CIV 2006-404-5878 25 January 2007IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY CIV 2006-404-5878UNDER the Companies Act 1993 BETWEEN THE COMMISSIONER OF INLAND REVENUE Plaintiff AND ROSENEATH PROPERTIES LIMITED Defendant Hearing: 25 January 2007 Counsel: T Molloy for plaintiff and for creditor in support, Adrian Ironside M Locke for defendant Judgment: 25 January 2007(ORAL) JUDGMENT OF ASSOCIATE JUDGE FAIRE [on application for putting company into liquidation, appointing liquidators and stay]Solicitors: Meredith Connell, PO Box 2213, Auckland for plaintiff Lovegroves, PO Box 25 006, Auckland for defendant[1] The plaintiff applies for an order putting the defendant company into liquidation and appointing Richard Dale Agnew, chartered accountant, and Vivian Judith Fatupaito, insolvency practitioner, as liquidators. [2] The application is supported by the creditor, Adrian Ironside, who claims to be owed $27,498.50. The grounds set forth in the statement of claim for the orders are non-compliance with a statutory demand. [3] The requirements of s 241 of the Companies Act 1993, on the face of it, have been met in this case. [4] The defendant company has filed, this morning, an application for stay. The application seeks a stay for a period of six weeks. It is said, in the supporting affidavit, that it is expected that the outstanding debt to the plaintiff of $27,217.44 could be paid within that period. No precise information is given as to how that would occur and, indeed, how the position of the supporting creditor could also be met. [5] The affidavit is filed by the defendant's accountant who, apparently, is also the in-house accountant for a group of companies associated with the Kelly family. The defendant, along with a number of those companies, is presently in receivership. The affidavit advises that the receiver was appointed in the middle of 2006 by Contributory Mortgage Nominee Limited. That company is presumed to be the mortgagee of one of the defendant company's disclosed assets, being a property at 2 Brighton Road. The company has been involved in developments. It claims to have fallen into a liquidity problem with those developments. [6] The group accountant has annexed a balance sheet which he claims shows a net equity of $545,389.99. On close examination of that document, however, it is apparent that it does not take into account a debt owed to the Kelly Trust in the sum of $1,500,000.00. No specific explanation for excluding that debt is given in the affidavit in support of the stay application. Counsel, however, advised from the Bar, that he considered it likely that the Kelly Trust would not advance its claim inpreference to other creditors. That, apparently, is the only known basis for the position advanced. [7] There are disturbing features with this case. There is, apparently, an exchange involved in relation to the company's assets by which it will sell its property at 2 Brighton Road and provide that as an exchange for the acquisition of a property at 28 Market Road. The Brighton Road property is subject to a mortgage which, on the statement of assets, disclose an indebtedness of $1,637,000.00. No explanation is given as to whether the mortgagee would consent to a transfer of that mortgage, or how the transaction would otherwise be funded. That is surprising in view of the fact that the receivers are apparently involved on behalf of Contributory Mortgage Nominee Limited. [8] An explanation is given for the lack of action in this case by the group accountant. He said that he did not understand that there was any need to act on these sorts of matters whilst the receivership was in place. He says that for that reason he did not bring the relevant papers to the attention of the defendant's directors. [9] I am not satisfied, given the material that has been placed before the Court, that it is appropriate to delay the appointment of the liquidator of this company, given the information that has been placed before me. The balance sheet disclosed shows an excess of liabilities over assets. There is no clear path identified which would show me how the position could be corrected and the overall position salvaged. I bear in mind that, in addition to the debt owed to the Commissioner about which there is no opposition, there is also a claim by another creditor. [10] Taking these matters into account, I refuse the application for stay. [11] I order that the company be put into liquidation and that Richard Dale Agnew and Vivian Judith Fatupaito be appointed liquidators. [12] The plaintiff and the supporting creditor are entitled to costs based on Category 2 Band B together with disbursements as fixed by the Registrar.[13] These orders are made at 10.45am. _____________________ JA Faire Associate Judge