Commissioner of Inland Revenue v Victory Builders & Developers Limited [2018] NZHC 140 (14 February 2018)

Last Updated: 21 February 2018

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2017-404-002853 [2018] NZHC 140

BETWEEN	THE COMMISSIONER OF INLAND REVENUE Plaintiff
AND	VICTORY BUILDERS & DEVELOPERS LIMITED Defendant

Hearing:	14 February 2018
Appearances:	J V Angelson for Plaintiff B Cunningham for Defendant
Judgment:	14 February 2018

_{JUDGMENT OF VENNING J}

Solicitors: Meredith Connell, Auckland

Peter Broad Lawyer, Auckland

Copy to: B Cunningham, Auckland

THE COMMISSIONER OF INLAND REVENUE v VICTORY BUILDERS & DEVELOPERS LIMITED [2018] NZHC 140 [14 February 2018]

[1] This is an application for orders restraining the advertising of the liquidation proceeding and otherwise staying the proceeding. When the matter was last before the Court on 17 January 2018 Edwards J directed that the substantive application for liquidation was to be adjourned to 2 March 2018 with the application for stay adjourned to today’s date.

[2] I have heard from both counsel and have had the assistance of counsels’ memoranda on the file as well. Basically the defendant company seeks time to put a proposal for payment of the debt owing to the Commissioner to the Commissioner. The suggestion is that a lump sum will be made available to clear the indebtedness. That is to be sourced from two construction contracts the company is going to enter, which will lead to 10 per cent deposits being paid, (to a total of $125,500 within a week or so of the contracts being entered); and further, the company is going to apply for a loan from Avanti Finance Limited (on the figures of approximately) $80,000. It is anticipated that that loan will be approved by this Friday, 16 February 2018.

[3] Mur Cunningham made the point that earlier correspondence from the Inland Revenue was not received by the company. However, it is quite clear that the company has been aware of these proceedings for some time and has engaged with the Commissioner. It has made a number of proposals for payment by instalment or over time, all of which have been rejected by the Commissioner.

[4] On the information before the Court, the Court is not satisfied that it is appropriate to grant the application for stay or to grant the application order restraining advertising. As discussed with counsel the Court is concerned at the suggestion that the debt to the Commissioner will be satisfied by application of deposits under fresh building contracts and/or by borrowing from a finance company, other than from the usual source of funding such as working capital of a company of this nature. There must be a risk to creditors and people dealing with the company in the circumstances.

[5] Mr Angelson also makes a valid point that the explanation given for part of the reason for the defendant’s financial position, namely that a supplier failed to pay, or that a trade debtor failed to pay in 2017 is answered by the fact that these debts go back to originally 2015.

[6] As discussed with counsel I consider that this is a matter where the public interest requires the proceeding to continue and for advertising to be permitted. The substantive application is to be called on 2 March 2018. If on that date there are no appearances in support of the application to liquidate then that will be a relevant factor to determining whether the Court should at that stage adjourn the matter further.

[7] By that date also the proposals set out in support of the current application regarding alternative funding will have been resolved. Either they will have been brought to fruition or not. Again, those matters will be particularly relevant as to whether any further adjournment past 2 March 2018 is to be considered by the Court.

[8] The application for interim stay and restraining advertising is dismissed with costs to the Commissioner on a 2B basis.

[9] The substantive application to liquidate will be called on 2 March 2018 at

_{10.45 am.}

Venning J