COMMISSIONER OF INLAND REVENUE v ROBERTSON [2018] NZHC 696

COMMISSIONER OF INLAND REVENUE v ROBERTSON [2018] NZHC 696 [17 April 2018]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV-2015-406-000015[2018] NZHC 696BETWEEN COMMISSIONER OF INLANDREVENUEPlaintiffAND STUART DOUGLAS ROBERTSONDefendantHearing: 21-23 March 2018Appearances: N H Malarao and H M McKee for PlaintiffA A H Low and T M Kelly for DefendantJudgment: 17 April 2018Reissued: 26 April 2018JUDGMENT OF JAGOSE JThis judgment is delivered by me on 17 April 2018 at 3.30 pmpursuant to r 11.5 of the High Court Rules......................................................Registrar / Deputy RegistrarSolicitors:Meredith Connell, AucklandAlexandra Low and Associates, AucklandContentsIntroduction ........................................................................................................... [1]Factual background ............................................................................................... [6]Commissioner's objections to documents ........................................................... [30]Recovery under s 301 of the Act ......................................................................... [34]Affirmative defence of estoppel .......................................................................... [46]Commissioner's other causes of action ............................................................... [51]—recovery under the rule in Re Condon [52]—recovery as mistaken payment [54]Interest ................................................................................................................. [55]Result................................................................................................................... [61]Costs .................................................................................................................... [62]Introduction[1] In this proceeding, the plaintiff (the "Commissioner") seeks to recover some$160,000 plus interest from the defendant, Mr Robertson. Mr Robertson was theliquidator of Hukatere Coastal Trustees Limited ("Hukatere").[2] The $160,000 comprised GST refunds paid to Hukatere (in liquidation). TheCommissioner had earlier assessed Hukatere was liable to pay GST arrears andpenalties in the amount of some $214,000, and her investigations were continuing.[3] Section 46(6) of the Goods and Services Tax Act 1985 (the "GST Act") entitlesthe Commissioner to apply the amount of a refund in payment of tax payable by theGST-registered person. Also relevant is s 310(1) of the Companies Act 1993 (the"Act"):310 Mutual credit and set-off(1) Where there have been mutual credits, mutual debts, or other mutualdealings between a company and a person who seeks or, but for theoperation of this section, would seek to have a claim admitted in theliquidation of the company,—(a) an account must be taken of what is due from the one party to theother in respect of those credits, debts, or dealings; and(b) an amount due from one party must be set off against an amountdue from the other party; and(c) only the balance of the account may be claimed in the liquidation,or is payable to the company, as the case may be.[4] Mr Robertson took the view the GST refunds were properly payable to thetrustee of the WBR Trust, which he belatedly understood Hukatere had ceased to beprior to his appointment as liquidator, and paid them across.[5] The Commissioner contends her payment of the GST refunds to Hukatere isrecoverable from Mr Robertson in damages under s 301 of Act; under the principlesarticulated in Re Condon;1 and as a mistaken payment.Factual background[6] Hukatere was incorporated on 12 November 2004. Roy Victor Brown wasHukatere's sole director and shareholder, and settlor of the WBR Trust on Hukatere astrustee by deed dated the same day. The deed provided the office of trustee is vacatedif the trustee is put into liquidation.[7] In May 2009, the Commissioner issued the trustees of the WBR Trust with aNotice of Proposed Adjustment, identifying proposed adjustments of net tax shortfallsof approximately $456,000, plus shortfall penalties of approximately $20,000. The taxshortfalls were contended to relate to input credits claimed by the WBR Trust forpurchases of two residential properties in the GST period ending 30 April 2007, andof three cars in the GST period ending 30 April 2008. Mr Brown disagreed with theproposed adjustments, contending the returns made were correct.[8] The Commissioner served Hukatere, as trustee of the WBR Trust, with astatutory demand dated 15 March 2010 for some $211,000 of unpaid GST paymentsand penalties.1 Ex parte James; In re Condon (1874) LR 9 Ch App 609.[9] The common bundle of documents contains documents dated 29 March 2010,which purport to record Mr Brown's appointment of RVB Corporate Trustees Limited("RVB") in substitution for Hukatere, and Mr Brown's advice to Hukatere of thatremoval. RVB was a company also associated with Mr Brown. (The Commissionerobjected to the 29 March 2010 documents (and others), submitting they should not "beconsidered to be what [they appear] to be" pursuant to High Court Rule 9.5(1)(c).I agree with her objection, and give my reasons at [30] below.)[10] As Hukatere's director, Mr Brown resolved Hukatere was unable to pay itsdebts as they fell due, and as its shareholder, appointed Mr Robertson as liquidator,who consented to that appointment. Resolution, appointment, and consent all occurredat noon on 14 April 2010.[11] On that same day, Mr Robertson issued Mr Brown his standard questionnaireon appointment as liquidator, and required delivery of all Hukatere's documentation.Mr Brown's cursory response to the questionnaire identified Hukatere's business as"bare trustee", and identified Sharlene Phillimore of Isolve Accounting and Taxationas Hukatere's accountant. (Ms Phillimore, formerly employed by Mr Robertson as anaccountant, acquired Isolve Accounting and Taxation Limited from Mr Robertson on30 July 2002, from which she took over Mr Robertson's accounting and tax agencyclients on 1 April 2004.) Mr Brown explained Hukatere "has no liabilities", but "[t]heTrust was unable to meet obligations", leading to the resolution to wind up Hukatere.[12] Mr Robertson's first report as Hukatere's liquidator, dated 22 April 2010,explained the company acted as a bare trustee of an unnamed trust. A shortfallremained after realisation of the trust's assets, meaning the trust could not indemnifythe trustee, and Mr Brown decided to put Hukatere in liquidation. From MrRobertson's inspection of Hukatere's records, it appeared "the only remaining assetdue to the trustee could be a GST refund being withheld by the Inland RevenueDepartment". He proposed to dispense with any creditors' meeting, as any fundsrecovered would not exceed those owed to the secured creditor, identified as $44,000to Instant Funding Limited. He also identified Isolve Accounting as a creditor for lessthan $800.[13] A letter dated 29 April 2010 purports to provide Mr Brown's further responseto Mr Robertson's 14 April 2010 letter. Now enclosing the sought documentation, theletter advises Hukatere "acted as Trustee of the WBR Trust until 29 March 2010 whenit was replaced". (The Commissioner objects to this letter: see [30] below.)[14] On 7 May 2010, the Commissioner lodged proof of debt with Mr Robertsonfor some $214,000 in unpaid GST, advising "this is not our final claim as the companyis subject to an investigation and upon completion an amended claim will be filed".At the same time, the Commissioner sought to replace Mr Robertson as liquidator. On11 May 2010, Mr Robertson rejected the Commissioner's proof of debt, pending issueof assessments for the period under review, and incorporating refunds payable,observing his expectation of an ultimate reimbursement due "to the trust".[15] Mr Robertson replied on 11 May 2010 – on Isolve Limited letterhead,identifying his "Isolve.co.nz" email address domain – to reject the Commissioner'sproof of debt "[u]ntil such time as the assessments are issued for the periods underreview and the refunds are determined and applied to the periods showingindebtedness". He expressed his view "the Inland Revenue Department is in fact aDebtor to the trust which will give rise to a reimbursement entitlement".[16] The Commissioner responded by letter of 24 May 2010, insisting its proof ofdebt was an admissible claim, being certain notwithstanding refunds may be offsetagainst it. She characterised s 46(6) of the GST Act as stating "the Commissioner willonly refund an amount when he is satisfied as to the correctness of the refund". Shereinforced she was "under no obligation, subject to relevant notices being issued, torelease that refund until such time as he becomes satisfied that it is payable".[17] After considering Mr Brown's explanations of WBR Trust's treatment of itsGST inputs and outputs, on 25 June 2010 the Commissioner issued her statement ofposition to "Trustees in the WBR Trust". Her revised net tax shortfall wasapproximately $195,000, plus penalties of some $23,500.[18] There was then further correspondence:(a) dated 21 June 2010, purporting to be from Mr Robertson to Mr Brown,which requested the WBR Trust deed and financial statements; and(b) dated 30 June 2010, purporting to be from Mr Brown to Mr Robertson,which enclosed the deed and "Notice of Discharge of TrusteeObligation", and noted "[t]he company has no copies of financialstatements as they remain the property of the Trust".(The Commissioner objects to this correspondence: see [30] below.)[19] On 7 July 2010, the Commissioner asked Mr Robertson as liquidator forinformation in relation to Hokianga Farm Management Limited, RVB Limited andHukatere. In relation to the last, Mr Robertson responded:I need to take legal advice as regards my position as Liquidator of HukatereCoastal Trustees Limited (In Liquidation). If the Company is no longer theTrustee and I believe it not to be, then it is simply a creditor of an insolventtrust with no power over any of the assets, if there were any. I need to clarifywhat are my powers in relation to recovering any monies on behalf of theTrustees [sic] Creditors. That after all is the purpose of any Liquidation.[20] The Commissioner then sought certain of Hukatere's financial and otherrecords from Mr Robertson. Mr Robertson responded on 15 July 2010 with referenceto Hokianga Farm Management Limited, RVB Limited and Hukatere – now on 'StuartD Robertson, Insolvency Practitioner' letterhead, but still with an email addressdomain of "Isolve.co.nz". He denied having any records or other information for theWBR Trust, explaining "[o]n my appointment as Liquidator the Deed of trustterminated the Companies appointment as trustee". The Commissioner replied on 18August 2010, seeking confirmation of the new trustee's appointment, and identifyingthe company's liability for periods while corporate trustee.[21] By letter of 10 September 2010, the Commissioner's solicitors indicated theCommissioner's intention to have Mr Robertson declared disqualified from acting asliquidator for any of Hokianga Farm Management Limited, RVB Limited andHukatere, on which it sought Mr Robertson's contrary explanation or resignation.[22] On 13 September 2010, the Commissioner advised Mr Robertson the WBRTrust was deemed to have accepted the Commissioner's position set out at [17] above.She explained "[t]he Trust will receive Notices of Assessment shortly confirming thesechanges". On 16 September 2010, the Commissioner advised Mr Robertson "the auditof the WBR Trust has now been completed". On 24 September 2010 and 19 October2010, the Commissioner then disbursed cheques respectively for $157,662.04 and$2,248.54 to Mr Robertson.[23] In her evidence, Rosalie Eagleton explained how the disbursements occurred.Ms Eagleton is Inland Revenue's employee in charge of collecting Hukatere's taxdebts. The Commissioner's investigation and audit of Hukatere's GST returns meant"a halt had been placed on the Company's account within Inland Revenue's system.The halt meant no refunds would be released". But, once the Commissioner'sassessment was deemed accepted, "the audit was complete, and as a result the halt onthe Company's account was removed". Ms Eagleton did not discover the refunds hadbeen paid to Mr Robertson until 29 November 2010, but Mr Robertson had depositedthe cheques into his account on the same days as their disbursements.[24] On 12 November 2010, Mr Robertson issued his second report as Hukatere'sliquidator. He recorded, for the period to 14 October 2010, "[t]here have been norealisations, no distributions and no Liquidator remuneration during the period", andnoted:The Liquidator has primarily been involved in the identification andqualification of creditors, attempting to obtain the Trust records andunderstanding the events that took place prior to the appointment of theLiquidator.An ongoing dispute between the Trust and the Inland Revenue Departmentwherein certain transactions of the Trust have been disallowed will have amaterial outcome on the trusts final liabilities. The Trustee now in Liquidationis totally dependent on the obligation of the Trust to indemnify the Trustee forclaims made in the Liquidation.A letter dated 20 December 2010, purporting to be from Mr Brown to Ms Phillimore,states she is holding funds in trust for WBR Trust, identifies WBR Trust's appointmentof a new trustee, encloses the deed of appointment of RVB Corporate TrusteesLimited, and directs the funds be released to Napier Investment Trust. A letter dated21 December 2010, purporting to be from Ms Phillimore to Mr Robertson, states he isholding funds for WBR Trust, explains the current trustee has requested the funds bereleased to her, and provides her account details for their deposit. (Again, theCommissioner objects to these two letters: see [30] below.)[25] Under cross-examination, Ms Phillimore:(a) acknowledged receiving the Commissioner's 24 September 2010 and19 October 2010 cheques as addressed to Mr Robertson at her office,and possibly depositing them at the bank on his behalf;(b) agreed Mr Robertson had transferred $8,000 into Isolve Accountingand Taxation Limited's bank account on 19 October 2010, which sheknew had come from the WBR Trust, and was in payment or settlementof fees owed by WBR Trust to Isolve Accounting and Taxation Limited;(c) said Mr Robertson came into Isolve Accounting and Taxation Limited'soffice, she handed him the 21 December 2010 letter, and showed himthe 20 December letter and the enclosed deed;(d) identified a transfer on 21 December 2010 of $152,387.89 from MrRobertson's account to her client funds account on behalf of the WBRTrust as meeting her 21 December 2010 request of Mr Robertson;(e) identified her transfer also on 21 December 2010 of $150,000 withinher client funds account as being "from WBR to Napier InvestmentTrust as a deposit for the purchase of a carpark" – "[s]o Napier now hasthe money in their bank account under my name"; and(f) explained, in her client funds account, the $150,000 was separated into$30,000 and $120,000 batch payments:(i) the former split evenly in $15,000 payments to each her practiceaccount on account of fees owing by other entities, "[p]ossiblyincluding Napier Investments", and to Pinevale Trust, withwhich Mr Robertson was involved; and(ii) $100,000 of the latter paid to an "E Krasniqi", a formeremployee of Mr Robertson and for whose companies MrRobertson may have acted as liquidator; and the balance paidequally between Mr Brown, and then one "S Cannon", who MsPhilimore identified as Mr Brown's personal assistant and MrRobertson's former employee.[26] On 17 February 2011, Mr Robertson was also appointed liquidator of RVBCorporate Trustees Limited, and of Shakespeare Trustees Limited, another companyof which Mr Brown was the sole director and shareholder. Shakespeare TrusteesLimited acts as trustee for Napier Investment Trust.[27] In January 2012 – after some interlocutory skirmishing on the Commissioner'sapplication to disqualify Mr Robertson from acting as liquidator for Hokianga FarmManagement Limited, RVB Corporate Trustees Limited and Hukatere – Mr Robertsonproposed resigning from those positions. To consider that proposal, the Commissionerrequested a full account of all funds received "(including GST refunds)", and ofpayments made, in the liquidations. Mr Robertson's counsel advised "Mr Robertsonreceived no funds in relation to the three liquidations and he made no payments". TheCommissioner's solicitors identified the GST refunds paid to Mr Robertson, andsought confirmation he retained them. Mr Robertson counsel forwarded MrRobertson's explanation:After my appointment a cheque arrived in the post a[d]dressed to the Trust.It was banked into my Trust Account awaiting clarification of what I neededto do with it as I planned to return it to the IRD.The Trust (by way of the replacement Trustee) advised their Accountant whothen advised me that a new Trustee had been appointed prior to myappointment and I had no right to withhold the proceeds and insisted that Irelease the monies without deduction, I did so.That is the total explanation.[28] There were continued interlocutory skirmishes on the Commissioner'sapplication for disqualification. Ultimately, Associate Judge Abbot gave orders byconsent striking out Mr Robertson's defence; and orders were also made on theCommissioner's application, declaring his appointment as liquidator invalid, andappointing new liquidators. Mr Robertson unsuccessfully attempted to recallAssociate Judge Abbott's decision on grounds he misunderstood the effect of hisconsent as preparatory to his resignation as liquidator.2[29] Mr Robertson initially responded constructively to the new liquidators' requestfor information about Hukatere. He explained:I received one GST refund. I banked it believing it belonged to the Trustee andwould be available to make payment to the IRD, it was after all a refund thatI understood was due, however I was advised [differently], so I released it tothe replacement Trustee.But follow up requests were met only by Mr Robertson's provision of informationpredating the liquidation, but refusing information arising thereafter on grounds "theLiquidation has been '[j]udged not to have taken place'".Commissioner's objections to documents[30] The index to the common bundle of documents in this proceeding records theCommissioner's generic objection to certain of the documents tendered in evidenceby Mr Robertson. Pursuant to r 9.5(2), the objections "must be determined by the courtat the hearing or at any prior time that the court directs".[31] Mr Robertson relies on those impugned documents to establish Hukatere wasreplaced by RVB Corporate Trustees Limited as trustee for the WBR Trust on 29March 2010, before Hukatere was put into liquidation on 14 April 2010. They includeMr Brown's specific advice of that contention to Mr Robertson dated 29 April 2010.[32] I find the content of those documents to be inconsistent with Mr Robertson'srepeated assertions after 29 April 2010 expressly or impliedly stating Hukatere wastrustee of the WBR Trust. They are also inconsistent with Mr Brown's initial responseto Mr Robertson, and to Mr Robertson's first liquidator's report, both before 29 April2010. Mr Brown's 29 April 2010 letter does not address the latter inconsistencies.[33] I uphold the Commissioner's objections. The Commissioner was right todispute incorporation of those documents in the common bundle should have theconsequence they were "to be considered to be what [they appear] to be" under2 Commissioner of Inland Revenue v Robertson [2012] NZHC 1215 at [3], [21]-[22] and [46].r 9.5(1)(c). The Commissioner's objection begged evidence to be called from at leastMr Brown. Mr Robertson did not call Mr Brown to give evidence. I infer Mr Brown'sevidence would not have assisted Mr Robertson.3Recovery under s 301 of the Act[34] Section 301 of the Act provides:301 Power of court to require persons to repay money or returnproperty(1) If, in the course of the liquidation of a company, it appears to the courtthat a person who has taken part in the formation or promotion of thecompany, or a past or present director, manager, administrator,liquidator, or receiver of the company, has misapplied, or retained, orbecome liable or accountable for, money or property of the company,or been guilty of negligence, default, or breach of duty or trust inrelation to the company, the court may, on the application of theliquidator or a creditor or shareholder,—(a) inquire into the conduct of the promoter, director, manager,administrator, liquidator, or receiver; and(b) order that person—1. to repay or restore the money or property or any part of itwith interest at a rate the court thinks just; or2. to contribute such sum to the assets of the company byway of compensation as the court thinks just; or(c) where the application is made by a creditor, order that person topay or transfer the money or property or any part of it with interestat a rate the court thinks just to the creditor.[35] Mr Robertson's counsel, Alexandra Low, provided a helpful memorandum ofissues for trial, in which Mr Robertson accepts:(a) Hukatere was liable for WBR Trust's GST obligations, and MrRobertson received the GST refunds as Hukatere's agent;(b) s 310 had application in Hukatere's liquidation to require the amountdue from the Commissioner to Hukatere to be set off against the amountdue from Hukatere to the Commissioner;3 Ithaca v Perry [2004] 1 NZLR 731, (2003) 9 NZCLC 263,386 at [151]-[154].(c) Mr Robertson was wrong to comply with directions to disburse the GSTrefunds without taking advice on those instructions; and(d) "he has failed in his duties of care and skill as a liquidator in respect ofthe GST refunds", giving rise to liability to pay compensation unders 301(1)(b)(ii).Given those concessions, I need not to rely on expert evidence given by Andrew JohnMcKay for the Commissioner, as to how a reasonable liquidator in Mr Robertson'sposition would have dealt with the GST refunds.[36] But Mr Robertson resists any suggestion he has misapplied, or retained, orbecome liable or accountable for the GST refunds, so as to be required to repay themoney under s 301(1)(b)(i). His argument is more than mere negligence is required,and therefore the order in s 301(1)(c) for payment of the money to the creditor has noapplication.[37] I can dispense with that ground of resistance immediately.[38] The "more than mere negligence" test was adopted by Casey J in Re AvonChambers Ltd.4 The Judge was addressing the meaning of "misfeasance or breach oftrust in relation to the company" appearing in the predecessor to s 301(1), s 315(1) ofthe Companies Act 1955. In s 301(1), the phrase is "negligence, default, or breach ofduty or trust in relation to the company" – ie, the second limb for liability. Casey J wassaying nothing about the first limb: "misapplied, or retained, or become liable oraccountable for, money or property of the company". In any case, even on that secondlimb, the 'something more' was met by showing "what occurred amounted to a breachof duty",5 which Mr Robertson concedes.[39] I do not see any material difference between the positions of Mr Robertsonhere, and of the defendant, Mrs Flay, in Sanders v Flay.6 Both misapplied companyfunds by paying them away. As Heath J describes the facts of that case:4 Re Avon Chambers Ltd [1978] 2 NZLR 638, (1977) 1 BCR 149 at 641.5 At 641 citing Walker v Wimborne (1976) 50 ALJR 446, 449-450.6 Sanders v Flay (2005) 9 NZCLC 263,906 at [5]-[6].The sum of $85,000 was paid to Mrs Flay on or about 28 November 2000.The sum was tendered to Mrs Flay as agent for her company. It appears fromthe evidence that that sum was not paid over to the company but, rather, washeld initially in the trust account of Mrs Flay's solicitors and then applied tomeet personal indebtedness of Mrs Flay.Following that application of funds, one of two consequences resulted. EitherMrs Flay would have been required to repay that sum to the company ondemand or the sum should be regarded as a misapplication of companyproperty. There is no evidence that that sum was repaid.On application for formal proof, the Judge held "[f]rom a legal point of view, thenature of the claim falls squarely within s 301 relating as it does to misapplication ofcompany funds".7 The same could be said on the facts of this case.[40] If I am wrong in that, I cannot see any factor giving rise to a lesser award ofcompensation. While the Court has discretion in fixing the amount of compensation,the discretion is to be exercised in accordance with principle.8 Three factors –causation of the loss, culpability of the defendant, and duration of the breach – areespecially relevant to that discretion.9 Here, the loss was caused directly by MrRobertson paying away the GST refunds, in circumstances in which he wasresponsible to retain them for set-off under s 310, and the breach continues.[41] Ms Low relied heavily on the Commissioner's contribution to thecircumstances leading to disbursement of the GST refunds to Mr Robertson. Sheemphasised Mr Robertson had told the Commissioner Hukatere was not WBR Trust'strustee. But before and after that advice, Mr Robertson's formal reports as liquidatorof Hukatere addressed the WBR Trust's position. And the Commissioner had not beenadvised of any other trustee.[42] Ms Low also asserted Mr Robertson properly rejected the Commissioner'sproof of debt, and the Commissioner had not provided Mr Robertson with anyamended proof of debt. But Mr Robertson disregarded the mandatory set-off providedby s 310. Mr Robertson had no basis to believe nothing was due from Hukatere to theCommissioner. By the time he received the cheques, he had received the7 At [16].8 FXHT Fund Managers Ltd (in liq) v Oberholster [2010] NZCA 197 at [33].9 Mason v Lewis [2006] 3 NZLR 225, (2006) 9 NZCLC 264,024 (CA) at [110].Commissioner's advice WBR Trust was deemed to have accepted the Commissioner'sstatement of position (stating WBR Trust's tax liability was larger than the GSTrefunds). Mr Robertson's statement in evidence he believed the GST refunds torepresent the Commissioner's final position is not credible. It is belied by themultiplicity of indications in the evidence he apprehended the GST refunds wouldhave to be repaid to the Commissioner.[43] In Sanders v Flay, Heath J also explained:10Ordinarily, the claim under s 301 for misapplication of company funds wouldresult in restoration of those funds to company assets for distribution amongall creditors. But the section itself gives standing to a creditor to bring theproceeding. It has been acknowledged that the Court has a discretion to awardany moneys for which judgment is entered to be paid to the creditor ratherthan the liquidator, particularly when the liquidator takes no steps: see s301(1)(c) and Marshall Futures Ltd v Marshall [1992] 1 NZLR 316, at 332-333 per Tipping J.At 332, of Marshall, Tipping J, referred to Re Cyona Distributors Ltd [1967]Ch 889 (CA), in which Lord Denning MR, at 902, made the point that whenan application is made by a creditor who has been defrauded, the Court haspower to order payment to the creditor. Similarly, Danckwerts LJ took theview at 908, that where a creditor begins proceedings at his or her ownexpense, the creditor ought prima facie to be entitled to the reward ofjudgment. Although Russell LJ took a different view, at 908, I am satisfiedthat the circumstances of this case justify an approach along the linessuggested by the majority in Cyona.[44] That Mrs Flay also obtained a benefit from the misapplication, in reduction ofdebt, was immaterial. There may be a foundation here on which to inquire whetherpayment to people and entities closely connected with Mr Robertson was alsoultimately to Mr Robertson's benefit. But, as I say, that is immaterial.[45] Again, I do not see any material difference in the circumstances of the twocases. The Commissioner was entitled to have the statutory set-off applied in herfavour, and Mr Robertson was bound so to exercise it. The Commissioner hasprosecuted the proceeding, and is entitled to the fruit of my judgment in her favour.10 Sanders v Flay, above n 11, at [18]-[19].Affirmative defence of estoppel[46] Mr Robertson pleads he reasonably relied on the Commissioner'srepresentations "no claim for the repayment of the GST [refunds] was being soughtby the Commissioner".[47] Ms Low contended the Commissioner represented she would not pay a refundunless satisfied it was owing, would issue notices of assessment in wake of the audit,and would file an amended proof of debt. She said the Commissioner then paid therefunds, and issued notices of assessment "reflecting" the refunds,11 did not file anyamended proof of debt, and remained silent both in respect of her mistaken paymentand on her intent to seek recovery from Mr Robertson personally.[48] Except for the last point, I do not understand how any of that constitutes thepleaded representation. As to that last, to constitute estoppel by silence, theCommissioner's silence must be in the face of Mr Robertson's known mistake as to"their respective rights and obligations".12 But she had no obligation to prosecute MrRobertson, and he had no right to know she intended to do so.[49] Ms Low's argument was rather the balance of the Commissioner'srepresentations overall represented the GST refunds were the Commissioner's finalposition on WBR Trust's tax liability. That argument is not sustainable either: the GSTrefunds were owing; it was just s 310 had application in the liquidation to require theirset off against WBR Trust's tax liability. And, because that set-off is "mandatory" and"self-executing",13 no estoppel is effective to countermand it.14[50] In any event, there is no evidence Mr Robertson relied on the Commissioner'sclaimed representations. The evidence was he was instructed to disburse the GSTrefunds, and complied without more introspection.11 The Commissioner produced assessments identifying a credit in an amount 'reflecting' the GSTrefunds, but showing larger debits by way of unpaid GST and penalties. They predated the GSTrefunds.12 The Lutetian [1982] 2 Lloyd's Rep 140 at 157.13 Finnigan v He [2010] 2 NZLR 668, (2010) 10 NZCLC 264,648 at [22].14 Re Paddington Town Hall Centre Ltd (1979) 41 FLR 239, 4 ACLR 673 at 241.Commissioner's other causes of action[51] Given my decision the Commissioner is entitled to recover the GST refundsfrom Mr Robertson under s 301, it is unnecessary to consider the Commissioner'sother causes of action to the same end. However, had I been required to determinethem, I would have held Mr Robertson liable under both causes of action.—recovery under the rule in Re Condon[52] Re Condon establishes that liquidators are not permitted to take advantage ofstrict legal rights available to them if to do so would mean they were acting unjustly,inequitably, or unfairly. This rule applies to liquidators because – whether they areCourt appointed or not15 – they are "obliged to act in a manner consistent with thehighest principles".16 The rule was applied in Strategic Finance v Bridgman to hold"the liquidators are obliged to pay the mistaken GST refund to theCommissioner".17[53] Mr Robertson's disbursement of the GST refunds is not a sufficient basis toescape application of the rule. Only if Mr Robertson's disbursement of the GSTrefunds was consistent with those "highest principles" could such disbursement offerescape. But Mr Robertson concedes his conduct in disbursing the GST refunds withouttaking advice was not consistent with those principles, that conduct being a breach ofhis common law duty of care and skill owed as liquidator to creditors.—recovery as mistaken payment[54] That same concession establishes the 'unconscionability' ground on whichcourts have been prepared to consider restitutionary relief from a mistaken payment,18and disentitles Mr Robertson from succeeding in any claim to a defence of change ofposition.19 The Court in Strategic Finance v Bridgman noted the "chief objection"'unconscionability' is "too loose" a foundation for restitutionary relief (although that15 Commissioner of Inland Revenue v Robertson [2017] NZHC 31, (2017) 4 NZTR 27-002 at [84]citing ANZ National Bank Ltd v Sheahan [2012] NZHC 3037, [2013] 1 NZLR 674 at [137]-[138].16 Strategic Finance Ltd (in rec & in liq) v Bridgman [2013] NZCA 357, [2013] 3 NZLR 650 at[108].17 At [120].18 Thomas v Houston Corbett [1961] NZLR 151 at 161.19 National Bank v Waitaki International [1999] 2 NZLR 211, (1999) 6 NZBLC 102,646 at 219.criticism was in relation to proprietary, not personal, remedies).20 If the objection wasupheld here, then the United Kingdom Supreme Court's restatement of restitution'sobjective – "to correct normatively defective transfers of value, usually by restoringthe parties to their pre-transfer positions" – would have application to ensure therequirement in s 310(1) was met.21Interest[55] The Commissioner claims interest on the judgment sum.[56] Schedule 1, cl 1 of the Interest on Money Claims Act 2016 – which came intoforce on 1 January 2018 – provides s 87 of the Judicature Act 1908, although repealedby s 182(1) of the Senior Courts Act 2016, "continues to apply to every civilproceeding commenced before this clause comes into force".[57] This proceeding commenced in 2015. Section 87 continues to apply. I thushave discretion to order: interest at such rate, not exceeding the prescribed rate, as [the Court] thinksfit on the whole or any part of the debt or damages for the whole or any partof the period between the date when the cause of action arose and the date ofthe judgment.Since 1 July 2011, clause 4 of the Judicature (Prescribed Rate of Interest) Order 2011prescribes that rate as "5.0% per year".[58] While not here applicable in its terms, also relevant to the exercise of mydiscretion is s 10(1) of the Interest on Money Claims Act 2016, which provides "Inevery money judgment, a court must award interest under this section as compensationfor a delay in the payment of money". While I have discretion to award interest at all,the 2016 Act illustrates a general expectation delays in payment of money will becompensated. But my discretion to award interest under the Judicature Act 1908 doesnot extend to a rate exceeding 5 per cent per annum.20 Strategic Finance, above n 16, at [124].21 Investment Trust Companies v Revenue and Customs Commissioners [2017] UKSC 29, [2017] 2WLR 1200 at [42].[59] Section 13 of the 2016 Act mandates establishment of an "Internet sitecalculator", which calculates interest rates for the purposes of the Act. The site's FAQexplains:22The interest rate is calculated for a specific day by:(a) Taking the six most recent observations for the retail 6-month termdeposit rate that have been published by the Reserve Bank of NewZealand (RBNZ), and taking an average of these six rates. Theaverage is the base rate.(b) Adding the base rate to the premium (0.15%). The result becomes theper annum simple interest rate.(c) Converting the per annum simple interest rate into a daily effectiverate. The formula for this conversion is as follows:Daily effective rate = ((1 + "per annum simple interest rate as %" / 100) ^(1 / "Days in the year" - 1) x 100The result is the interest rate expressed as a daily effective rate for the specificday.[60] I also take judicial notice of the Reserve Bank of New Zealand's retail 6-monthterm deposit rate, which has been below 4 per cent per annum since mid-2015.23 I willaward interest at rates calculated in accordance with the Interest on Money Claims Act2016, but not exceeding 5 per cent per annum.Result[61] I order Mr Robertson pay to the Commissioner:(a) the sum of $159,910.58 (the "judgment sum"); and(b) under the Judicature Act 1908, interest:(i) on $157,662.04 of the judgment sum from 24 September 2010;and(ii) on $2,248.54 of the judgment sum from 19 October 2010—22 "Civil Debt Interest Calculator" Ministry of Justice <www.justice.govt.nz>.23 "Interest Rates on Lending and Deposits" Reserve Bank of New Zealand <www.rbnz.govt.nz/-/media/ReserveBank/Files/Statistics/tables/b3/hb3.xlsx>.at rates calculated in accordance with the Interest on Money Claims Act2016, but not exceeding 5 per cent per annum.Costs[62] In my preliminary view, Mr Robertson should also be liable to pay theCommissioner costs calculated on 2B scale, including for second counsel, and actualand reasonable disbursements as certified by the Registrar.[63] If my preliminary view is not accepted by either party, and costs cannototherwise be agreed between them, costs are reserved for determination on shortmemoranda of no more than five pages – annexing a single-page table setting out anycontended allowable steps, time allocation, and daily recovery rate – to be filed andserved by:(a) the Commissioner within ten working days of the date of this judgment;(b) Mr Robertson within five working days of service of theCommissioner's memorandum; and(c) the Commissioner strictly in reply within five working days of serviceof Mr Robertson's memorandum.—Jagose J