Commissioner of Inland Revenue v Seafood and More Hospitality Limited [2013] NZHC 339 (27 February 2013)

Last Updated: 7 March 2013

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2012-404-004452 [2013] NZHC 339

UNDER the Companies Act 1993

BETWEEN COMMISSIONER OF INLAND REVENUE

Plaintiff

AND SEAFOOD AND MORE HOSPITALITY LIMITED

Defendant

Hearing: 27 February 2013

Appearances: C Van Der Merwe for plaintiff

R Hucker for defendant

Judgment: 27 February 2013

_{INTERIM (ORAL) JUDGMENT OF ASSOCIATE JUDGE ABBOTT}

Solicitors:

C Van Der Merwe, Inland Revenue, PO Box 76-198, Manukau 2241, Auckland

R Hucker, Hucker & Associates, PO Box 3843, Auckland

COMMISSIONER OF INLAND REVENUE V SEAFOOD AND MORE HOSPITALITY LIMITED HC AK CIV 2012-404-004452 [27 February 2013]

[1] The plaintiff’s application to liquidate the defendant has come before the Court today to receive a decision on an oral application for extension of time for serving the substituted proceedings and, if that is successful, to consider the substantive application. If it is not successful, there is an issue of costs.

[2] The oral application was made at the call on 12 December 2012. It was made in response to a submission by counsel for the defendant that there was no longer an extant proceeding. The basis for that submission was that although an order had been made on 7 November 2012 substituting the Commissioner of Inland Revenue as plaintiff, the Commissioner had not served the substituted proceedings (there was no dispute that they had been filed within time). The oral application was made seeking exercise of the Court’s discretion, and on the grounds that there were acceptable reasons for the delay in service and no undue prejudice to the defendant.

[3] The oral application was opposed on the basis that the very explicit terms of r

31.24(5) for filing and service within five working days meant that the Commissioner was in default of that condition, and that the proceeding had come to an end when the Commissioner did not comply with it (relying on the finding of this Court in Spicers Paper (NZ) Ltd v Buckley Ltd[1]). Counsel for the defendant also argued that there was no power to resurrect the proceeding and apply r 1.19 to extend time.

[4] I have ruled this morning that I accept the submission of counsel for the defendant that the proceeding came to an end with the failure to comply with the condition in r 31.24(5),[2] but I have not accepted the submission that there is no jurisdiction to resurrect. I prefer the approach in Regal Haulage Ltd v Palmford Investments Ltd,[3] noting that the point was not part of the ratio in Spicers.

[5] However, I have also ruled that I am not satisfied that this is an appropriate case to exercise the power under r 1.19. I accept the submission that failure to

_{comply with r 31.24(5) is a breach of the High Court Rules, and in light of the very}

strongly worded provision, there must be some material before the Court to justify non-compliance. In this case there is no formal application, nor supporting affidavit. I do not rule out the possibility advanced by counsel for the Commissioner that the delay was caused by delay in release of document from the Court, but that does not explain why no steps were taken to follow up with the Court, or indeed to seek to apply for extension before the matter came back before the Court, giving evidence on which the Court could exercise its discretion.

[6] I adopt the finding in Spicers that the Court must have some material on which to inform its discretion (and noting that that is based on a decision in this Court in Day v Ost (No.2,)[4] applying the decision of the Privy Council in Ratnam v

Cumarasamy and Another[5]. The exercise of the discretion requires a balancing of

interests. On the one hand I have to take into account the need to ensure compliance with the High Court Rules, and in liquidation proceedings to ensure that matters are brought forward and determined as promptly as possible, together with possible continuing prejudice to creditors due to the relation back period. As against that, I can see no insurmountable prejudice to the Commissioner who can bring the application again.

[7] I have found, accordingly, that the application for liquidation has come to an end, and that there is no good reason to exercise the discretion to extend time.

[8] That leaves me with the question of costs. Counsel for the defendant seeks costs in resisting the oral application, and in respect of the two mention hearings (including this hearing) in respect of it. Those costs are sought on a 2B basis. Counsel for the Commissioner accepts that an order for costs on a 2B basis is appropriate, but questions whether the Commissioner should be visited the costs of the last two hearings, given that the Commissioner was not responsible for them.

[9] I accept that there is no reason to visit the intermediate hearing (on 25

January 2013) on the Commissioner. Regrettably the matter was not determined then because there had been no time to give it sufficient consideration with the

intervention of the Christmas and New Year Period. However, I see no reason to

deny the defendant costs on today’s hearing.

[10] The defendant is entitled to costs on a 2B basis in relation to the preparation for and appearance at the hearing on 12 December 2012, and for the mention hearing today. Counsel for the plaintiff accepts, and I therefore order, that the costs of preparation for and appearance at the hearing on 12 December 2012 should be combined in an allocation of half a day.

[11] In summary, this proceeding is dismissed. The plaintiff is to pay the defendant costs as I have indicated.

[12] In the course of the list hearing today it is not possible to give any further background or reasons, but I have endeavoured to set out the basis for my reasoning in this decision. I will treat it as an interim decision. Counsel for the plaintiff has leave to request more detailed reasons for this decision, by memorandum to be filed within five working days. Otherwise, this interim judgment will stand as the reasons

_{for the decision.}

Associate Judge Abbott

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[1] _{Spicers Paper (NZ) Ltd v Buckley Ltd (1993) 6 PRNZ 16.}
[2] _{Accepting the authority of Spicers.}

[3] Regal Haulage Ltd v Palmford Investments Ltd HC Hamilton M48/93, 1 November 1993.
[4] _{Day v Ost (No.2) (1974) 1 NZLR 714 (SC).}
[5] Ratnam v Cumarasamy and Another [1964] 3 All ER 933, 935.