THE COMMISSIONER OF INLAND REVENUE V PIKITIA LTD HC AK CIV 2006-404-1309

THE COMMISSIONER OF INLAND REVENUE V PIKITIA LTD HC AK CIV 2006-404-1309 31 July 2006IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY CIV 2006-404-1309UNDER The Companies Act 1993 BETWEEN THE COMMISSIONER OF INLAND REVENUE Plaintiff AND PIKITIA LIMITED Defendant Hearing: 28 July 2006 Counsel: C Wood for plaintiff G Clews for defendant Judgment: 31 July 2006 at 16:00JUDGMENT OF ASSOCIATE JUDGE FAIRE [on application to adjourn appointment of liquidator]Solicitors: Meredith Connell, PO Box 2213, Auckland for plaintiff Graeme Skeates Law, PO Box 56 179, Ponsonby for defendant[1] The defendant seeks an adjournment of the plaintiff's application to appoint a liquidator to my next list on 31 August 2006. [2] The application is made so that the defendant can complete: a) Its application to the Taxation Review Authority for leave to challenge, out of time, assessments, together with a supporting affidavit; and b) An application to this Court, pursuant to r 700K, for a stay of the proceeding pending of the determination of the application to the Taxation Review Authority. [3] The application is opposed. In broad terms, Mr Wood relied on the following: a) There has been ample time to complete an application for stay; b) There is doubt a to whether there is a jurisdictional basis for the application to the Taxation Review Authority in any event; and c) If I adjourned this application, it would provide a precedent for other taxpayers, who have defaulted in their obligations to pay tax, to seek adjournments of similar applications. [4] I adjourned this matter so that Mr Wood could produce, for me, two authorities which he said made it plain that stay applications should not be granted in these circumstances and that there was a real risk of prejudice by delay in determining an application to appoint a liquidator. They are, respectively, the judgments of Master Lang, as he then was, in Re Ilich; ex parte CIR (2004) 21 NZTC 18,577 and KJ Cummings Ltd v The Commissioner of Inland Revenue CA 178-03 28 June 2004. [5] As I suspected, the cases are of general assistance to the Court in determining stay applications, but do not really assist in the determination that I must make inthis case, as to whether a further short adjournment of this proceeding should be granted. [6] I cannot, on the material before me, make any determination as to whether there is a proper jurisdictional foundation for the proposed application to the Taxation Review Authority. Technically, there would appear to be a possible jurisdiction provided the defendant company can make out a case for extraordinary circumstances in accordance with s 138D of the Tax Administration Act 1994. [7] There is no doubt that there have been delays on the part of the defendant in this case. As Mr Wood pointed out, the opportunity to set aside the statutory demand on which the proceeding is based was not taken up. Further, there have been, effectively, four previous calls of this proceeding and the defendant has still not formulated, in final form, an application for stay. [8] I do take into account, however, that the defendant has instructed a counsel experienced in taxation matters. Mr Clews advises me that the reason the stay application has been held up is because the defendant's tax agent has been diagnosed with terminal cancer and it has been difficult therefore for him to obtain instructions. However, he now considers that the application, both to the Taxation Review Authority and for stay, which is an application to this Court, can be completed within fourteen days. In addition, he points to the fact that there are no other creditors. The company is not trading. There does not, on the face of it, appear to be any risk of loss of an asset by delaying the appointment of a liquidator to the next call of this proceeding. [9] When I weigh these matters up, I reach the view that it is safest, in all the circumstances of the case, to allow the application for stay to be completed provided that occurs within the time I set. If, of course, it is not completed and filed within that time, the defendant will, no doubt, readily appreciate that the likelihood is that an order will be made appointing a liquidator at the next call of this proceeding.Orders[10] I order that the application to appoint a liquidator be adjourned to the Miscellaneous Companies List at 11.45am on 31 August 2006. Any application for stay of this proceeding shall be filed and served no later than 14 August 2006 and it shall have as its date of hearing 11.45am no 31 August 2006. In the event that such application is not so filed, it is unlikely that the Court will consider any further adjournment of this proceeding. [11] I reserve costs. _____________________ JA Faire Associate Judge