THE COMMISSIONER OF INLAND REVENUE V SAND PIPER LODGE LTD HC AK CIV 2007-404-973
The Commissioner failed to discharge the burden of proving the company was insolvent because the statutory demand was stale and there was no evidence of the company’s overall financial position; non-payment alone is insufficient to establish insolvency.
Source-derived case information.
- Citation
- openlaw-778f2e2d_032c_4bbe_a6c9_43b5cdf71c9e.pdf
- Parties
- Plaintiff: Commissioner of Inland Revenue; Defendant: Sand Piper Lodge Limited
- Court
- High Court
- Jurisdiction
- New Zealand
- Judgment Date
- 7 June 2007
- Procedural Posture
- Companies Act 1993 Proceeding (statutory Demand / Insolvency Application) / First Call Hearing; Oral Judgment Delivered
- Outcome
- Proceeding dismissed for failure to prove insolvency
- Legal Topics
- Statutory Demand, Rebuttable Presumption of Insolvency, Inference of Insolvency From Non Payment, Burden of Proof, Dismissal for Failure to Prove Insolvency
Source-derived case record
Summary, issues, holding and outcome
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Parties
Commissioner of Inland Revenue
Plaintiff
Sand Piper Lodge Limited
Defendant
Procedural Posture
Companies Act 1993 Proceeding (statutory Demand / Insolvency Application) / First Call Hearing; Oral Judgment Delivered
Legal Issues
- 1 Whether the statutory demand (served 9 December 2006) could be relied upon despite being stale
- 2 Whether non-payment and size/age of debt allow an inference of insolvency absent a valid statutory demand
- 3 Whether the Commissioner discharged the burden of proving the company was insolvent
Ratio Decidendi
The Commissioner failed to discharge the burden of proving the company was insolvent because the statutory demand was stale and there was no evidence of the company’s overall financial position; non-payment alone is insufficient to establish insolvency.
Court Disposition
Proceeding dismissed for failure to prove insolvency
Orders
- Proceeding dismissed
- No order for costs
Full Case Text
Judgment text and source record
1 paragraphs
THE COMMISSIONER OF INLAND REVENUE V SAND PIPER LODGE LTD HC AK CIV 2007-404-973 7 June 2007IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY CIV 2007-404-973IN THE MATTER OF the Companies Act 1993 BETWEEN THE COMMISSIONER OF INLAND REVENUE Plaintiff AND SAND PIPER LODGE LIMITED Defendant Hearing: 7 June 2007 Appearances: Mr Macredie for Judgment Creditor No appearance for Debtor Judgment: 7 June 2007ORAL JUDGMENT OF ASSOCIATE JUDGE J P DOOGUEInland Revenue Department, P O Box 33150, Takapuna (Mr Macredie) - by facsimile: 09 984 3114 Sand Piper Lodge Limited, 841 Takatu Road, R D 6, Warkworth[1] This first calling of this proceeding was on 7 June 2007. Mr Macredie appeared for the Commissioner and there was no appearance for the defendant. [2] The Commissioner served a statutory demand 9 December 2006. The statement of claim was filed 27 February 2007. I have not myself done the calculation, but Mr Macredie tells me that the statutory demand is stale. The Commissioner is unable to rely upon the service of and non response to the statutory demand as given rise to a rebuttable presumption of an insolvency unless, Mr Macredie submitted, I conclude that the company was insolvent because of the size of the debt and the period of time for which it had been outstanding. He referred me to an English authority Re Taylors Industrial Flooring [1990] BCC 44; (1990) 8 ACLC 529 (CA). In which the Court of Appeal apparently determined that even in the absence of a statutory notice equivalent to the New Zealand section 289 type notice, the Court could infer insolvency from non-payment of the debt. [3] I agree that in some cases that may be possible. It's always a matter of fact for the Judge determining the matter to come to a conclusion on. In my judgment the Commissioner cannot persuade me that the company is insolvent. As to the size of the debt that would have great significance if I knew something about the overall state of accounts of the defendant and how much money and how much property it owns. I have no information. As to the second, the fact that the company has not paid its debt is just as consistent with an unwillingness to pay as it is with an inability to pay. That being so the Commissioner has not discharged the burden of proofing that the company is insolvent. I decline to make the orders sought. The proceeding will be dismissed and there will be no order for costs. _____________ J.P. Doogue Associate Judge