Lamacraft and Meltzer v CIR [2026] NZHC 979

Messrs Lamacraft and Meltzer were appointed administrators of a company called Sanctuary Developments Limited. They sought a binding ruling from Inland Revenue that they were not “specified agents” under section 58 of the Goods and Services Tax Act 1984. That section provides that the “specified agent” for an “incapacitated person” is treated as carrying on that person’s taxable activity and so is personally liable to file GST returns and account for GST arising in respect of that activity.

 

When IR declined to give the requested ruling, the applicant administrators sought a declaration as their GST status. Specifically the administrators disputed that a company in voluntary administration is an incapacitated person and therefore that they were specified agents in terms of section 58 as it stood at the time.

 

Sanctuary was only in voluntary administration for some four months before it was placed into liquidation in March 2021, but in that time it had entered into and completed several sales of apartments in the building the company was developing. For the administration period two GST returns were file for a total liability of some $5.32 million. IR made a disputable decision that the administrators were liable for this as specified agents of the company. That decision was subject to the statutory disputes procedures that culminated in the IR Disputes Review Unit confirming the initial decision as to liability.

 

While the report says that the administrators sought a declaration, that appears to have been the remedy sought as part of a tax challenge under the Tax Administration Act, which would be the normal response to an adverse decision by the DRU. It does not appear that an alternative procedure such as under the Declaratory Judgments Act was used.

 

The contest was fairly narrowly focused and the main issue has been overtaken by a 2023 amendment that expressly includes voluntary administration in the definition of “incapacitated person.” That was not the case for the periods in question. The administrators could not be specified agents unless their administration meant Sanctuary was an incapacitated person under the earlier version of that defined term. They argued that section 58 did not refer to administration. And supported a narrow notion of corporate incapacity based on the instances where full capacity of a company is curtailed by statute.

 

The Commissioner argued that the phrase in section 58, “becomes … incapacitated” encompassed any circumstance where a registered person becomes deprived of their capacity to carry on their taxable activity. He argued that this included administration because the company’s directors lose their agency and control over the business, property, and affairs of the company.

 

The Court examined the statutory framework of companies and administration. It noted three key elements of the voluntary administration regime. The company directors remain in office, though with curtailed powers. It is a short term protective process and creditors decide the company’s future. In general terms the administrator is an agent for the company but for the purposes of section 58 at the time, that was not enough. The company had to be incapacitated.

 

The administrators argued that, in construing that word, close attention should be paid to the structure of the section. By referring to the specific insolvency states of liquidation and receivership, and to “incapacitated” separately, on a plain reading, a company in either of those states of insolvency is not necessarily also incapacitated. The company is an incapacitated person, only because of the specific mention of those insolvency states in the definition. That is the position that now pertains to administration because of its 2023 addition to the definition.

 

But at the time in question, the Judge concluded there had to have been some legally recognisable deprivation of the company’s capacity to undertake any business or activity, do any act or enter into any transaction before incapacity would be established outside the express states of insolvency. The Court concluded that the company in administration retained its capacity to operate through the administrator, including by carrying on taxable activities.

 

While the same might be argued of a company in liquidation, that instance was caught by the specific insolvency language of section 58. No doubt that is a reason why voluntary administration was added to the specific instances of incapacity in 2023.

 

The outcome of the case was a win for the administrator – Messrs Lamacraft and Meltzer did not face a personal liability for more than $5m. But it is of limited impact given the amendment to section 58 of the GST Act that placed voluntary administration on the same footing as insolvency, as an express state of incapacity and specified agency.

 

© G D Clews, 2026