THE COMPTROLLER OF CUSTOMS IN RESPECT OF THE CUSTOMS SERVICE v SHAKY BRIDGE WINES LIMITED [2017] NZHC 986

THE COMPTROLLER OF CUSTOMS IN RESPECT OF THE CUSTOMS SERVICE v SHAKY BRIDGE WINES LIMITED [2017] NZHC 986 [15 May 2017]IN THE HIGH COURT OF NEW ZEALANDDUNEDIN REGISTRYCIV-2016-412-000122[2017] NZHC 986UNDER the Companies Act 1993IN THE MATTER of SHAKY BRIDGE WINES LIMITEDBETWEEN THE COMPTROLLER OF CUSTOMSIN RESPECT OF THE CUSTOMSSERVICEPlaintiffAND SHAKY BRIDGE WINES LIMITEDDefendantHearing: 15 May 2017 (Determined on the papers)Counsel: R P Bates for PlaintiffD J More for DefendantJudgment: 15 May 2017COSTS JUDGMENT OF ASSOCIATE JUDGE MATTHEWS[1] In this proceeding the Comptroller of Customs sought an order placing Shaky Bridge Wines Limited into liquidation. The basis of the application was that the company had not complied with a demand issued under s 289 of the Companies Act 1993.[2] The debt relied on by the Comptroller was $349,464.86. This comprised unpaid excise duty of $154,515.02, together with a modest unpaid levy and additional duty imposed under s 87 of the Customs and Excise Act 1996 of $192,348.56.[3] The company filed a statement of defence in which it said that it had paid $80,000 towards the unpaid excise duty, and that the additional duty imposed by the Comptroller was disputed.[4] The company applied for an order restraining advertising of the application. After hearing from counsel the Court made an interim order restraining advertising on 31 October 2016. The Court recorded that there was to be a fixture in Queenstown on 8 December 2016 before the Customs Appeal Authority in relation to the additional duties. That hearing duly took place. The effect of the decisions of the Authority, issued on an interim basis on 18 January 2017 and a final basis on 23 March 2017, was that the majority of the additional duty of which payment was sought in the statutory notice was remitted. In the meantime the company had paid the core debt. Counsel for the Comptroller advised the Court of this on 15 December 2016. The Court noted this that day and adjourned the case to 29 March 2017. On that day the case was discontinued, as in its final decision the Authority had set out a 24 month instalment payment programme for the penalty which it found should be paid.[5] Costs were reserved by the Court. I have received and considered memoranda from the Comptroller and the company. The defendant company seeks costs, and the plaintiff opposes.[6] At the time the proceeding was issued the core debt was owing. The company made a payment of just over half, promptly, and has since paid the balance. Proceedings were on foot in relation to review by the Customs Appeal Authority of the balance of the debt claimed. Under s 92(1) of the Customs and Excise Act 1996 the entire sum was, however, owing.[7] I am therefore satisfied that the Comptroller was justified in issuing the proceeding. It had the effect of ensuring that the entire amount of the core debt was paid. There was a substantial dispute going back over a period of years in relation to remission of penalties. Had the notice been issued only in relation to additional duty there may have been room for an argument about whether, notwithstanding the provisions of s 92, there was still a substantial dispute to a claim for appointment of liquidators. There would have been a sound basis for a submission that the Court should not appoint liquidators, despite s 92, until the remission application was decided. I need not decide that point on this application. The response of the Court to the position it faced was in line with the response the Court normally makes whereliability for payment of the sum owing is being reconsidered in another court or authority, as here – to adjourn the case until the decision on that proceeding has been released.[8] However, it is clear that the Comptroller was justified in bringing theapplication in relation to the core debt. I do not accept Mr More's submission thatthe decision by the Comptroller to withdraw the application was an admission that it would fail if the application went to a hearing. It simply recognised that the differences between the parties had been resolved and there was a payment order in place in relation to the balance of the additional duty, the core debt having been paid. Nor do I accept that the Comptroller was in error in issuing the proceeding. There was a significant core debt owing in respect of which there does not appear to have been any defence. Leaving aside any question about whether the additional duty should have been the subject of the proceeding, as it is not necessary to decide the point, the Comptroller was justified in bringing the application.[9] For these reasons costs will lie where they fall._______________________J G MatthewsAssociate JudgeSolicitors:RPB Law, DunedinScholefield Cockroft Lloyd, Alexandra