GRANT v COMMISSIONER OF INLAND REVENUE SC 96/2011
Leave to appeal was dismissed because the applicants had no real prospect of success on the primary issue: the Court agreed with the Court of Appeal that the chairman was not empowered to exercise a casting vote to secure approval where creditors in number formed a majority but represented less than the 75% value...
Source-derived case information.
- Citation
- SC 96/2011
- Parties
- Applicant: Damien Grant; Applicant: Steven Khov; Respondent: Commissioner of Inland Revenue
- Court
- Supreme Court
- Jurisdiction
- New Zealand
- Judgment Date
- 30 November 2011
- Procedural Posture
- Application for Leave to Appeal / Supreme Court (leave Stage)
- Outcome
- Application for leave to appeal dismissed
- Legal Topics
- Deed of Company Arrangement, Casting Vote, Creditor Voting Thresholds, Priority of Tax Debts, Section 239 ADD Termination, Companies Act 1993
Source-derived case record
Summary, issues, holding and outcome
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Parties
Damien Grant
Applicant
Steven Khov
Applicant
Commissioner of Inland Revenue
Respondent
Procedural Posture
Application for Leave to Appeal / Supreme Court (leave Stage)
Legal Issues
- 1 Whether the chairman of the watershed meeting could exercise a casting vote in favour of the proposed DOCA where a majority of creditors in number voted for it but those creditors represented less than 75% of the company's indebtedness by value
- 2 Whether the High Court should have terminated the DOCA under s 239ADD as oppressive or unfairly prejudicial to or discriminatory against the Commissioner because the DOCA did not give the Commissioner the preferential priority he would have in liquidation
Ratio Decidendi
Leave to appeal was dismissed because the applicants had no real prospect of success on the primary issue: the Court agreed with the Court of Appeal that the chairman was not empowered to exercise a casting vote to secure approval where creditors in number formed a majority but represented less than the 75% value threshold required by Part 15A of the Companies Act 1993, and the appeal could not succeed unless both issues were won.
Court Disposition
Application for leave to appeal dismissed
Orders
- Leave to appeal dismissed
- Costs of $2,500 to respondent
Full Case Text
Judgment text and source record
1 paragraphs
GRANT v COMMISSIONER OF INLAND REVENUE SC 96/2011 30 November 2011IN THE SUPREME COURT OF NEW ZEALANDSC 96/2011[2011] NZSC 145BETWEEN DAMIEN GRANT AND STEVEN KHOVApplicantsAND COMMISSIONER OF INLANDREVENUERespondentCourt: Elias CJ, Blanchard and Tipping JJCounsel: R M Dillon for ApplicantsP W O'Regan and R A Hearn for RespondentJudgment: 30 November 2011JUDGMENT OF THE COURTThe application for leave to appeal is dismissed with costs of $2,500 to the respondent.REASONS[1] The proposed appeal seeks to raise two issues concerning the validity of a deed of company arrangement (DOCA) under Part 15A of the Companies Act 1993. The first is whether the chairman of the watershed meeting was entitled to exercise a casting vote in favour of the proposed scheme in circumstances where a majority of creditors in number had voted in favour but those creditors represented less than 75% of the company's indebtedness by value. The second issue is whether, if the casting vote was valid so that the scheme embodied in the DOCA was adopted by the meeting of creditors, nevertheless the High Court should have terminated the DOCA under the power given in s 239ADD because it was oppressive or unfairly prejudicial to, or unfairly discriminatory against, the Commissioner of Inland Revenue because it did not give him the preferential priority which he would havehad if the company were put into liquidation (another possible outcome of the watershed meeting).[2] The appeal cannot succeed unless the applicant can prevail on both issues. While the second issue may be arguable, we are not persuaded that the applicant has any prospect of succeeding on the casting vote issue. We are in full agreement withthe Court of Appeal's reasoning that the chairman was not empowered to exercise a casting vote in the circumstances.1[3] It is therefore not in the interests of justice that leave be given.Solicitors:Queen City Law, Auckland for ApplicantsCrown Law Office, Wellington1 Grant and Khov v Commissioner of Inland Revenue [2011] NZCA 390 at [45]–[53].