IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
COMMERCIAL LIST

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE	
CIV-2019-404-2049 [2020] NZHC 1112	

UNDER	Section 284 of the Companies Act 1993, section 66 of the Trustee Act 1956 and Part 19 of the High Court Rules 2016	
IN THE MATTER	of HALIFAX NEW ZEALAND LIMITED (IN LIQUIDATION)	
AND	an application by MORGAN JOHN KELLY and PHILIP ALEXANDER QUINLAN
First Applicants	
	…/2	

Hearing:	(On the papers)	
Judgment:	26 May 2020	

JUDGMENT OF VENNING J
Re: Remuneration of the liquidators and trustees (2)

This judgment was delivered by me on 26 May 2020 at 10.30 am, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

Solicitors:	Russell McVeagh, Auckland Copy to:	A Leopold SC, Sydney, Australia
E Holmes, Sydney, Australia

An application by KELLY and QUINLAN re HALIFAX NEW ZEALAND LIMITED (IN LIQUIDATION) [2020] NZHC 1112 [26 May 2020]

an application by HALIFAX NEW
ZEALAND LIMITED (IN LIQUIDATION)
Second Applicant

MORGAN JOHN KELLY and PHILIP ALEXANDER QUINLAN
Third Applicants

AND	CHOO BOON LOO
First Respondent

ELYSIUM BUSINESS SYSTEMS PTY LTD
Second Respondent

JASON PAUL HINGSTON
Third Respondent

ATLAS ASSET MANAGEMENT PTY
LTD (as trustee for the Atlas Asset Management Trust)
Fourth Respondent

FIONA McMULLIN
Fifth Respondent

ANDREW PHILLIP WHITEHEAD and
MARLENE WHITEHEAD (as trustees for the Beeline Trust)
Sixth Respondent

ANDREW PHILLIP WHITEHEAD
Seventh Respondent

[1]	In a judgment delivered on 19 December 2019 this Court held:

(a)	where liquidators are required to administer trust assets held by the company the liquidators will be allowed their costs, expenses and remuneration from those trust assets; and

(b)	where the work carried out by the liquidators during the administration and in liquidation could properly be considered to relate to the trust assets, such that it would be impractical and unnecessary to seek to apportion the costs, the costs could be properly considered to relate to the trusts generally; and

(c)	the costs of the applicants as trustees of the FMCR Trust were recoverable under ss 72 and 38(2) of the Trustee Act 1956 in the inherent jurisdiction of the Court; and

(d)	it was appropriate for the liquidators’ remuneration to be paid in Australian dollars, that being the currency the fees were rendered in and the costs were largely incurred in.

[2]	By way of a further interlocutory application dated 11 May 2020 the liquidators and trustees (the applicants) seek further directions from the Court approving further remuneration costs and expenses incurred by them.

[3]	The application is supported by a further affidavit of Mr Kelly affirmed on 9 May 2020. In that affidavit Mr Kelly:

(a)	updated the Court in respect of the work conducted by the liquidators and trustees since his previous earlier affidavits;

(b)	provided further detail of Halifax NZ’s current financial position, including:

(i)	Halifax NZ’s account balances;

(ii)	an additional Halifax NZ account (the IB NZ master account); and

(iii)	the status of the liquidators’ trading account following further investigation by the liquidators;

(c)	identified the source of funds from which this remuneration application seeks orders to access;

(d)	discussed the additional expenses incurred by the applicants since the first remuneration application for the period prior to 31 August 2019;

(e)	advised the Court of the liquidators’ remuneration for the period from 1 September 2019 to 30 November 2019;

(f)	set out the expenses incurred by the applicants from 1 September 2019 to 25 March 2020 (including professional services, fees); and

(g)	advised the Court about the report to the committee of creditors dated 4 March 2020 and the meeting of the committee of creditors held on 11 March 2020.

[4]	The liquidators have undertaken additional tracing work, additional work to calculate the date of deficiency of the trust money (being a matter raised during the course of the applications for representation), additional work relating to potential recovery actions, held further meetings of the committee of creditors, consulted with Halifax investors on various matters, and generally have progressed the directions’ applications before this Court and the Federal Court of Australia.

[5]	Presently Halifax NZ holds the following assets:

(a)	funds on deposit of NZD 956,967.88 in Halifax NZ’s accounts that were held and/or designated as NZ Trust Accounts, NZ Company

Accounts; or held in other Halifax NZ bank accounts controlled by the liquidators; and

(b)	assets valued at NZD 56,633,490.52 held by third parties on behalf of Halifax   NZ   as   deposits   or   unrealised   investments    with    NZD 25,742,709.28 of that amount being the value of stock positions held.

[6]	Halifax NZ and Halifax AU continue to have insufficient separate corporate assets to meet the remuneration costs and expenses of the liquidators. In order to meet the remuneration and expenses the liquidators seek to access funds in a further IB account, known as the IB NZ master account. The IB NZ master account is a sub- account within Halifax NZ’s IB NZ consolidated account, similar to the IB NZ property account which was previously identified as an account for payment of fees.

[7]	The IB NZ master account was the account through which client moneys in Halifax NZ’s own funds were transferred to reach the clients’ sub-accounts in Halifax NZ’s own sub-accounts. In practice it held a surplus pool of funds not allocated to any particular client of Halifax NZ. Mr Kelly considers that the funds in it cannot be said to be Halifax NZ’s own funds due to the extensive co-mingling. As at 30 April 2020 the IB NZ master account held NZD 907,645.96 in cash. There is a further minor account held by Halifax NZ, a foreign currency account which held AUD 19.87 as at 30 April 2020.

[8]	Orders are sought authorising payment of the following:

(a)	the operating and administrative expenses of the applicants as liquidators of Halifax NZ, as voluntary administrators of NZ and as trustees of the FMCR Trust incurred from 27 November 2018 to 8 December 2019 but not included in the first remuneration application. Mr Kelly has confirmed the operating expenses were NZD 252,621 and administration expenses were NZD 36,024;

(b)	additional invoices by Chapman Tripp for legal fees, including counsel’s fees of NZD 15,105 (exclusive of GST) and Chapman Tripp’s fees of NZD 11,301.68;

(c)	the liquidators further costs from 1 September 2019 to 30 November 2019 for investigation, dealing with investors, creditors, maintaining operations, dealing with assets, general administration and miscellaneous other totalling AUD 315,131.60;

(d)	remuneration of the applicants as trustees of the FMCR Trust from 1 September 2019 to 30 November 2019 of AUD 2,432.50;

(e)	miscellaneous disbursements of AUD 21,117.65; and

(f)	further external disbursements being the professional fees of the Russell McVeagh legal fees and counsels’ fees of NZD 1,019,356.88 (including GST) from 1 September 2019 to 25 March 2020.

[9]	The liquidators are not required to seek creditor approval of the remuneration as liquidators. Ultimately the approval of the liquidators’ remuneration is for the Court. However, the committee of creditors has previously been given details of the hourly rates charged and approved them. Although the committee of creditors lacked the quorum to pass the resolutions relating to the costs the subject of this application as one member left the meeting, other members confirmed they had no objection to the claimed remuneration.

[10]	In any event the Court is satisfied that the fees and expenses incurred have been properly and responsibly incurred. On the face of the material before the Court, the Court also accepts the reasonableness of the fees and expenses sought.

[11]	Accordingly there will be orders in accordance with paras 1 (a), and (b), and ancillary orders (c), and (d) of the application dated 11 May 2020.

Venning J