Published 10 June 2006
Auckland Labour Services Ltd, a company related to troubled city property developer Colin Godfrey, has been allowed to continue its attempt to find the finance to pay Inland Revenue, although the IRD believes some of the arrangements, in Australia, may be shams.
In the Auckland High Court on Friday, Associate Judge John Faire couldn’t accept that Inland Revenue’s interests would be prejudiced by allowing Auckland Labour Services the 7 weeks it wanted for funding to be put together in Australia, through a gst refund to another company there.
The judge had adjourned the application from 1 to 9 June for the company’s lawyer, Geoff Clews, to give the court an undertaking to advise the court & Inland Revenue of any material change in the company’s circumstances within 48 hours of that occurring.
Back in court on Friday, Mr Clews produced an affidavit from Mr Godfrey, Auckland Labour Services director Douglas Williams and a director of the Australian development company seeking the Australian gst refund, then found himself fighting an Inland Revenue attempt to wind the company up rather than just getting the expected further adjournment.
But after 45 minutes of submission, clarification & discussion, Associate Judge Faire granted the adjournment to the High Court’s liquidations list on Thursday 29 June at 10am.
Auckland Labour Services director Mr Williams is also a shareholder with former director Stephen Catsicas, who’s a former director of a number of companies in Mr Godfrey’s First City Developments Ltd group.
When Inland Revenue’s application to wind Auckland Labour Services up was before the Auckland High Court in April, Leo Farmer, for Inland Revenue, said the debt had reached $306,000.
Mr Farmer said the company contended a refund was owed to a related company but Inland Revenue said the High Court rules prevented the setoff. Tracy Spencer, appearing for Auckland Labour Services on that occasion, said the funds would go to Gosford Investments Ltd, whose sole director & shareholder is Mr Godfrey. It wasn’t a request to the commissioner to make the offset. She said it was also possible to call on other companies in the group to satisfy the debt.
In court on Friday, Mr Clews said a conditional loan offer had been made for the first of 3 proposed subdivision transactions by the Australian development company, but Associate Judge Faire said it triggered some alarm bells because the loan was conditional on presales and he had no information on what presale level was required.
While Mr Farmer said Mr Williams had written an affidavit saying Auckland Labour Services had no assets, the judge found a statement from Mr Williams that it did have assets â€“ the debts of Mr Godfrey’s First City Group. One company in that group, Gosford Investments Ltd, was relying on a gst refund but hadn’t got it yet.
Mr Farmer said the claimed credits were “nowhere near completed and are subject to investigation.”
Mr Clews said investigation alone wasn’t reason to liquidate the company and, he added: “It does seem the Commissioner is intent to pursue these companies into liquidation, come what may. He has statutory powers and to my understanding he has not used those powersâ€¦..
“The Commissioner is able to obtain information about the First City group. There seems no need to overlay that with a liquidation.”
At the end of all this, Associate Judge Faire wanted answers to a handful of questions:
Have any of the contracts in Australia settled?
When was the gst application to the Australian Tax Office made?
He wanted evidence from a properly qualified person on the Australian law on when a gst refund is made
Assuming the Australian gst refund has been applied for, whether any direction or decision on it has been given which might affect the time when the refund can be made
And he wanted confirmation that a refund was expected.
Attribution: Court hearing, story written by Bob Dey for this website.