Issued
2018
Decision
26 Sep 2018
Appeal Status
Not appealed

An application for orders appointing a replacement liquidator

The Commissioner of Inland Revenue applied for orders appointing a replacement liquidator for Mercantile Developments Limited by way of originating application without notice.

Case
Commissioner of Inland Revenue v Mercantile Developments Limited [2018] CIV-2018-404-1920
Legal terms
Liquidation, replacement liquidator, prospective creditor, originating application

Summary

The Commissioner of Inland Revenue (“the Commissioner”) applied for orders appointing a replacement liquidator for Mercantile Developments Limited (“the Respondent”) by way of originating application without notice. The Court agreed that the Commissioner had standing as a prospective creditor to bring the application and that it was in the public interest that an experienced liquidator be appointed.

Impact

The Commissioner is a prospective creditor by virtue of amounts proposed in a Notice of Proposed Adjustment. As a prospective creditor, the Commissioner has standing to apply for the appointment of a liquidator.

Facts

The Respondent was placed in liquidation in June 1981 and the Court appointed a liquidator. The liquidator resigned on 9 April 1997, did not appoint a replacement liquidator and the office of the liquidator has been vacant since then.

The Commissioner is in dispute with the Respondent in relation to losses claimed in relation to the 1982 to 2010 income years. The Commissioner had issued a Notice of Proposed Adjustment proposing to disallow the losses. The Commissioner asserted that it was essential to have a liquidator appointed to enable progression of the tax dispute process.

The Commissioner sought orders to commence the application by way of originating application without notice; leave to proceed with the application as a prospective creditor; and orders appointing an experienced liquidator.

Decision

The Court granted the Commissioner leave to bring the application by way of originating application without notice. The Court found that the Commissioner is a prospective creditor by virtue of the disputed amounts set out in the Notice of Proposed Adjustment because there was a real prospect of the Commissioner being a creditor in the future. Accordingly, the Court found that as a prospective creditor the Commissioner has standing to bring the application.

The Court also agreed that it was in the public interest that the affairs of the Respondent be put in order by an experienced liquidator. The Court noted that there were several provisions of the Companies Act 1993 currently being breached and appointment of a liquidator would enable the Commissioner to progress the dispute by issuing the disclosure notice and statement of position.

Companies Act 1993 ss 241, 248, 260, 283 and 318; High Court Rules 2016 r 7.23, Part 19