IN THE HIGH COURT OF NEW ZEALAND INVERCARGILL REGISTRY

I TE KŌTI MATUA O AOTEAROA WAIHŌPAI ROHE	
CIV-2021-425-15
[2024] NZHC 2586	

UNDER	the Companies Act 1993	
IN THE MATTER	of the liquidation of Sam and a Van Limited (in liquidation)	
BETWEEN	KIWIRAIL LIMITED
Plaintiff	
AND	SAM AND A VAN LIMITED (IN LIQUIDATION)
Defendant	

Hearing:	On the papers	
Judgment:	10 September 2024	

JUDGMENT OF ASSOCIATE JUDGE PAULSEN

This judgment was delivered by me on 10 September 2024 at 4.15 pm pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar Date:

KIWIRAIL LIMITED v SAM AND A VAN LIMITED (IN LIQUIDATION) [2024] NZHC 2586 [10 September 2024]

[1]	The liquidators of Sam and a Van Ltd (in liquidation), Elizabeth Keene and Luke Norman, have applied for approval of the liquidators’ overall remuneration of
$94,482.00. Ms Keene and Ms Vivian Fatupaito were appointed as liquidators by the High Court on 3 June 2021 but Ms Fatupaito resigned and was replaced by Mr Norman on 8 March 2022.

[2]	The liquidators have attached their draft final report to their memorandum prepared on the basis that their fees have been approved together with copies of their first to seventh reports.

[3]	Upon receipt of the liquidators’ application I sought further information from them in the form of a schedule of all non-preferential unsecured creditors and confirmation that no concerns have been raised by creditors in relation to the liquidators’ remuneration. That information was supplied.

[4]	The liquidators have provided a summary of the work undertaken in the liquidation which I have considered as well as perusing the liquidators’ reports filed with the Companies Office. I accept that that work had complex elements involving identifying and pursuing claims against company officers, the sale of the business and assets of the company, and securities issues. It appears that matters were further complicated by defaults and renegotiation of settlement arrangements that had been entered into.

[5]	The liquidators anticipate:

(a)	the plaintiff’s costs in obtaining the order for liquidation of $7,806 will be paid in full;

(b)	there shall be a first and final distribution of $2,796 to the company’s employees, representing 100 per cent of their preferential claims;

(c)	there shall be a first and final distribution of $232,499 to the Commissioner of Inland Revenue, representing 100 per cent of its preferential claim; and

(d)	there shall be no distribution to the unsecured non-preferential creditors who have made claims totalling $184,661.40. I note that of this sum,
$98,453.78 is owed to the Commissioner of Inland Revenue.

Legal principles

[6]	The Court’s power to approve liquidators’ remuneration is provided in s 284 of the Companies Act 1993. The principles that apply in considering applications for approval are set out in the full High Court decision, Re Roslea Path Ltd (in liq).1 The Court of Appeal in Madsen-Ries v Salus Safety Equipment Ltd (in liq) recently confirmed the approach adopted in Re Roslea Path Ltd.2 The Court approved counsel assisting’s summary of the principles that apply to the determination of retrospective applications as follows:3
(a)	Liquidators are fiduciaries and their fundamental obligation is a duty to account. There is a conflict between the interests of the liquidator (fiduciary) in receiving remuneration and the interest of the creditors (those to whom the fiduciary duties are owed) who bear the cost of that remuneration.
(b)	Liquidators are officers of the Court and are subject to its general supervisory function. They must attend diligently to their tasks and make all proper reports and inquiries. They have the same responsibilities as barristers and solicitors.
(c)	Liquidators must justify their claims for remuneration. They bear the onus in this regard and the benefit of any doubt due to inadequate information must be resolved in favour of the creditors.
(d)	Fixing liquidators’ remuneration requires judicial judgment. It is more akin to an administrative task. It is implicit that the judicial officer can draw on his/her own experience in performing this role.
(e)	In fixing liquidators’ remuneration the Court is making a determination of the fairness and reasonableness of the proposed fees compared to the work undertaken and results achieved. The focus is on the value of services rendered to the creditors of the company.
(f)	The Court will consider whether there has been unnecessary work or over servicing as this would not represent time reasonably expended at a reasonable rate.
(g)	A broad brush approach is acceptable provided that there is an exercise of judicial judgment as opposed to an arbitrary choice of amount.

1	Re Roslea Path Ltd (in liq) [2013] 1 NZLR 207 (HC) at [102].
2	Madsen-Ries v Salus Safety Equipment Ltd (in liq) [2022] NZCA 101.
3	At [15].

(h)	The process of fixing remuneration needs to be proportionate. It should not be unduly prescriptive; nor should it unnecessarily add costs to creditors.

[7]	The Court of Appeal held:4

… even where there is no challenge to the liquidator’s remuneration, this does not absolve the Court from the obligation to be satisfied that the remuneration approved reflects the value of the services rendered to the creditors of the company.

[8]	I am, therefore, required to be satisfied that the remuneration reflects the value of the services rendered to the creditors of the company.

Discussion

[9]	I am satisfied that the liquidators have now concluded that all avenues for recovery have been pursued and the liquidation can be concluded.

[10]	As I have noted, the liquidators have provided copies of each of their reports in the liquidation. Each of these reports sets out the fees charged during the relevant period and invites creditors’ feedback in respect of the fees charged at any time during the liquidation.

[11]	The liquidators have included a breakdown of the time records and remuneration claimed, confirming the hourly rates applied were the rates approved by the Court. It appears that the work has been undertaken by staff at an appropriate level of seniority to ensure costs were maintained at a reasonable level. On this occasion a greater amount of the work was undertaken by the liquidators than might otherwise have been the case, reflecting the difficult nature of the work undertaken.

[12]	The total hours worked were 278 for an average hourly recovery rate of $340 (excluding GST). I am very aware that both the number of hours worked and the liquidators’ fees are higher than for many liquidations, but I have no reason to believe that either are excessive in the context of this particular liquidation given the nature of the work performed.

4	At [54].

[13]	The liquidators also sought approval from the company’s largest creditor, the Commissioner of Inland Revenue, to the level of the liquidators’ remuneration and expenses. The Commissioner has confirmed that there is no objection to them. I also note that the liquidators have advised that no unsecured creditors have raised concerns as to the level of their remuneration of which they had notice during the course of the liquidation.

Result

[14]	I am satisfied, having regard to the memorandum filed and its attachments, including the Commissioner of Inland Revenue’s approval, that the liquidators’ remuneration reflects the value of the services rendered to the creditors of the company. I grant the application for approval of the liquidators’ fees totalling $94,482 (excl GST).

O G Paulsen Associate Judge

Solicitors:
The Liquidators