COMMISSIONER OF INLAND REVENUE v THE POP-UP GLOBE FOUNDATION LIMITED [2021] NZHC 515

COMMISSIONER OF INLAND REVENUE v THE POP-UP GLOBE FOUNDATION LIMITED [2021] NZHC515 [12 March 2021]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV-2021-404-91[2021] NZHC 515UNDER the Companies Act 1993, section 241IN THE MATTER OF an application for the liquidation of The Pop-Up Globe Foundation LimitedBETWEEN COMMISSIONER OF INLANDREVENUEPlaintiffAND THE POP-UP GLOBE FOUNDATIONLIMITEDDefendantHearing: 12 March 2021Appearances: Cloete Van Der Merwe for the CommissionerJanko Marcetic for the shareholder, The Pop-Up GlobeInterntional LimitedJudgment: 12 March 2021ORAL JUDGMENT OF ASSOCIATE JUDGE R M BELLSolicitors:Inland Revenue Department, Manukau, for the PlaintiffChapman Tripp (J Marcetic/M D Arthur/N Whittle), Auckland, for the shareholder[1] The Commissioner has applied for the Pop-Up Globe Foundation Ltd to be putinto liquidation.[2] A statement of defence has been filed. The shareholder raises the defenceunder s 241AA of the Companies Act 1993 that the shareholder had already passed aresolution appointing liquidators. A decision is required how s 241AA applies in thecircumstances of this case.[3] The Commissioner served the company on 19 February 2021. On 3 March2021, the shareholder resolved under s 241(2)(a) of the Act to put the company intoliquidation. That was within 10 working days of service.[4] Section 241AA deals with the validity of the appointment of liquidators byshareholders or a board, after the company has been served with an application to putthe company into liquidation. Subsection (2) says:(2) A liquidator may be appointed under s 241(2)(a) or (b) only if—(a) the liquidator is appointed within 10 working days after theapplication is served on the company; or(b) if the application is made under s 241(2)(c)(iv) the creditor whofiled the application consents to the appointment afters 241(2)(a) or (b).[5] Sub-clause (b) is new. It was introduced under s 31 of the InsolvencyPractitioners Regulations (Amendments) Act 2019. Under the earlier law, theshareholder and the board still had 10 working days after service of the proceeding inwhich to put the company into liquidation and that would be effective. A problemsometimes arose where the company passed a resolution after the 10 working days,but the creditor seeking the liquidation order was happy with the shareholders' choiceof liquidator. Notwithstanding the creditor's satisfaction with the company going intoliquidation and the choice of liquidator, the voidness of the appointment after 10working days could not be undone. The purpose of the new sub-clause (b) is to allowthe situation I have just described, to be legally effective. That is, even if theshareholders resolved after the 10 working days, the appointment of the liquidatorswill be effective if the petitioning creditor consents.[6] Subsection (2) offers alternatives. That is shown by the word "or".Appointment by the shareholders will be effective if done within the 10 working daysor, if done outside the 10 working days, it is done with the consent of the creditorapplying for liquidation. In this case, the facts come clearly within 2(a), and 2(b) doesnot apply. The appointment of the liquidators was effective notwithstanding that theCommissioner's consent was not given or sought.[7] Accordingly, because the liquidators have already been appointed, I dismissthis application. Notwithstanding the dismissal of the application, the Commissionerhas been vindicated in bringing the proceeding and I award the Commissioner costsas sought.[8] While I have awarded costs to the Commissioner, the shareholder also seekscosts on their successful defence of the proceeding. I give Mr Marcetic the opportunityto file a written submission as to why costs to the shareholder should also be awarded....Associate Judge R M Bell