Commissioner of Inland Revenue v ACL Linehaul Limited (in liquidation)

[2022] NZHC 2971

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2020-409-000032

[2022] NZHC 2971

BETWEEN

THE COMMISSIONER OF INLAND REVENUE

Plaintiff

AND

ACL LINEHAUL LIMITED (IN LIQUIDATION)

Defendant

Hearing:	On the papers
Counsel:	Liquidators in person
Judgment:	14 November 2022

JUDGMENT OF ASSOCIATE JUDGE PAULSEN

This judgment was delivered by me on 14 November 2022 at 3.00 pm pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

COMMISSIONER OF INLAND REVENUE v ACL LINEHAUL LTD [2022] NZHC 2971 [14 November 2022]

[1]                 This is an application by the liquidators of ACL Linehaul Ltd (In Liquidation) for approval of their remuneration under s 284(1)(e) of the Companies Act 1993.

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

[3]                 ACL Linehaul Ltd was incorporated on 17 June 2010. It carried on business as a haulage company. The company was put into liquidation on the application of the Commissioner of Inland Revenue by order of this Court on 19 March 2020. The company had been failing to meet its tax obligations. In making the liquidation order, the Court approved the liquidators’ rates of remuneration, subject to s 284 of the Companies Act 1993.

[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 Vivian Judith Fatupaito.

[5]                 The liquidators’ application is accompanied by copies of their statutory reports and a draft final report to be lodged with the Registrar of Companies. The draft final report has been submitted on the basis that all distributions have been made and the liquidators’ remuneration approved.

[6]                 The liquidators’ first report to creditors sets out the basis upon which the liquidators would charge fees and the hourly rates that have been approved by the Court.

[7]                 The liquidators have provided a detailed summary of the work undertaken in the liquidation. I do not need to set it out here. It is sufficient to note that a considerable amount of time has been required to gain an understanding of the company’s affairs and to pursue claims on behalf of the company that have been

1      Re Roselea Path Ltd (in liq) [2013] 1 NZLR 207 (HC) and Madsen-Ries v Salus Safety Equipment Ltd (in liq) [2022] NZCA 101.

successful in recovering assets and payments in settlement. I am satisfied that the liquidators have concluded all avenues for recovery.

[8]                 I am advised that the only unsecured creditors in the liquidation were the Inland Revenue Department for a total amount of $217,007.20 (of which $198,864.03 was a preferential claim) and UDC Finance Ltd for $206,324.96.

[9]                 With the liquidators’ draft final report is a statement of realisations and distributions. It shows total realisations in the liquidation of $131,967. From this the liquidators have paid legal fees and expenses, a small amount of taxation, the petitioning creditors’ costs and a payment to the Inland Revenue as the preferential unsecured creditor of $58,621.34. The balance shall go to paying the liquidators’ remuneration and expenses. There shall be no further distributions in the liquidation.

[10]              The liquidators have provided a breakdown of time records and charges which shows 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 file was 212.2 hours of which 23.6% of time was of the liquidators, 4% was time of managers, but 72.4% was of insolvency or administration support staff. The average hourly recovery rate is $310.68 which appears reasonable given the nature of the work undertaken and the usual hourly charges that apply in the market.

[11]              Whilst the only creditor to receive payment in the liquidation is the Commissioner of Inland Revenue, I am satisfied that the work undertaken by the liquidators was necessary to wind up the affairs of the company. The Commissioner of Inland Revenue has confirmed its approval of the fees of the liquidators. The Commissioner is satisfied with the outcome of the liquidation and that the fees claimed are reasonable.

[12]              In those circumstances I grant the application for approval of the liquidators’ remuneration.

Result

[13]              The liquidators’ remuneration is approved in an amount of $65,926.50 (excluding GST).

O G Paulsen Associate Judge

Solicitors:
Inland Revenue, Legal and Technical Services, Christchurch