By
failing to chase up tax debts and just letting accrued penalties add up, Inland
Revenue contributes to its own lossses when a business goes belly-up, the Court
of Appeal said. The court showed little
sympathy for liquidators’ claims that slack directors should be sued for all
they are worth when Inland Revenue as a major unpaid creditor is just as slack,
doing nothing and content to sit on its statutory rights adding substantial penalties
for late payments.
The Court of Appeal told Waterstone Insolvency,
liquidators of NZNet Internet Services Ltd, that the amount of damages awarded
against company directors for any breach of directors’ duties requires an
assessment of causation, culpability and ultimately fairness. Where one of the largest debts is unpaid
taxes, liability does not fall so heavily on non-executive directors since they
do not control day-to-day company activities.
Grant
v. Johnston – Court of Appeal (29.04.16)
16.069