The Commissioner of Inland Revenue (Commissioner) appealed a decision of Associate Judge Christiansen to approve a payment proposal by Mr Wilson to discharge a debt he owed the Commissioner and thereby avoid a declaration of bankruptcy.
The Court of Appeal considered whether the High Court had jurisdiction, either inherent or under section 29 of the Insolvency Act 2006, to approve a debtor's payment proposal when that proposal had not been accepted by the creditor. Associate Judge Christiansen had cited the Court's inherent jurisdiction in approving the payment proposal, despite opposition from the Commissioner.
Applying a purposive approach to interpretation of section 29, the Court of Appeal held that this provision did not grant the High Court the power to approve a compromise proposed by a debtor unless the creditor had accepted the proposal. The Court held that while a creditor and a debtor could compromise a debt outside the comprehensive statutory regime, the Court had no inherent jurisdiction to do so. Furthermore, when the creditor is the Commissioner, the debtor may only seek to compromise a debt by applying for financial relief under sections 177 to 177B of the Tax Administration Act 1994.
See the full judgment here.