Commissioner of Inland Revenue v Accommodating Concrete Cutting Limited (in liquidation)

[2024] NZHC 2174

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2019-409-578

[2024] NZHC 2174

UNDER

the Companies Act 1993

IN THE MATTER

of the liquidation of Accommodating Concrete Cutting Ltd (in liquidation)

BETWEEN

COMMISSIONER OF INLAND REVENUE

Plaintiff

AND

ACCOMMODATING CONCRETE

CUTTING LIMITED (in liquidation) Defendant

Hearing:	On the papers
Judgment:	5 August 2024

JUDGMENT OF ASSOCIATE JUDGE PAULSEN

This judgment was delivered by me on 5 August 2024 at 4.30 pm pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar Date:

COMMISSIONER OF INLAND REVENUE v ACCOMMODATING CONCRETE CUTTING LIMITED (in

liquidation) [2024] NZHC 2174 [5 August 2024]

[1]    The liquidators of Accommodating Concrete Cutting Ltd (in liq) (the company) have applied for approval of their remuneration under s 284(1)(e) of the Companies Act 1993. They have provided a full memorandum in support of the application, along with copies of each of the ten liquidators’ reports issued in the liquidation and a draft final report that will be lodged with the Registrar of Companies if and when approval of the liquidators’ fees is obtained.

[2]    The issue is whether the Court is satisfied that the remuneration claimed by the liquidators reflects the fair value of services rendered by them for the benefit of the creditors of the company.1

[3]    The company was incorporated on 7 July 2011 and its business was concrete cutting. It was put into liquidation by order of the Court on the application of the Commissioner of Inland Revenue on 5 December 2019. Upon the making of the liquidation order, the Court approved the liquidators’ rates of remuneration subject to s 284 of the Companies Act.

[4]    Initially the liquidators were Elizabeth Helen Keene and Vivian Judith Fatupaito, but on 8 March 2022 Luke Norman was appointed a joint and several liquidator upon the resignation of Ms Fatupaito.

[5]    In the liquidators’ first report to creditors they set out the basis upon which they would charge fees and the hourly rates that had been approved by the Court.

[6]    The liquidators have provided a summary of the work undertaken in the liquidation. In summary, the liquidators made enquiries of the director and shareholders to gain an understanding of the business and requested and received information to determine whether there were available assets belonging to the company, as well as potential avenues for recovery and/or claims. The liquidators identified an outstanding debt and after various attendances payment was received in full. The shareholders advised they wanted to continue to trade the company and additionally the liquidators identified potential claims for a breach of director’s duties

1      Re Roslea Path Ltd (in liq) [2013] 1 NZLR 207 (HC) at [102]; and Madsen-Ries v Salus Safety Equipment Ltd (in liq) [2022] NZCA 101, [2022] NZCCLR 12 at [13].

and overdrawn shareholders’ current account. The liquidators entered into an agreement to sell the company’s business to the director and settle the claims against the director and shareholders. Whilst the director subsequently went bankrupt, settlement of the sale was completed with a related party and payment in full was made. The liquidators also attended to administrative tasks, including corresponding with creditors and attending to statutory reporting requirements.

[7]    The liquidators’ reports identify that the only preferential creditor in the liquidation was the Commissioner of Inland Revenue, which was owed $48,478. The unsecured creditors were the Inland Revenue Department and one other party, which were owed a total of $37,327. The preferential creditor has been paid in full and non- preferential unsecured creditors have received 78 cents in the dollar.

[8]    The liquidators have provided a breakdown of the time records and charges which show the hourly rates have been applied in accordance with those approved by the Court. I am satisfied that the work has been performed by staff at an appropriate level of seniority to ensure costs incurred were reasonable. The total amount of time spent on the liquidation was 114.05 hours. Most of the attendances were at analyst level, and the average hourly recovery rate was $318.86 which appears reasonable given the nature of the work undertaken and the usual hourly charges that apply in the market.

[9]    I am satisfied that the work undertaken by the liquidators was necessary to wind up the affairs of the company and the Commissioner of Inland Revenue has confirmed its approval of the fees of the liquidators.

[10]   In the circumstances I am satisfied that the remuneration claimed reflects the fair value of services rendered for the benefit of the creditors of the company and I grant the application for approval of the liquidators’ remuneration.

Result

[11]   I grant the application for approval of the liquidators’ remuneration in the amount of $36,367.

O G Paulsen Associate Judge

Copy to:

KPMG, Christchurch