Commissioner of Inland Revenue v Needmor Firewood Limited

[2025] NZHC 1392

IN THE HIGH COURT OF NEW ZEALAND DUNEDIN REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTEPOTI ROHE

CIV-2022-412-083

[2025] NZHC 1392

UNDER

the Companies Act 1993

IN THE MATTER

of the liquidation of NEEDMOR FIREWOOD LIMITED (in liquidation)

BETWEEN

COMMISSIONER OF INLAND REVENUE

Plaintiff

AND

NEEDMOR FIREWOOD LIMITED

Defendant

Hearing:	On the papers
Judgment:	30 May 2025

JUDGMENT OF ASSOCIATE JUDGE PAULSEN

This judgment was delivered by me on 30 May 2025 at 2.30 pm pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar Date:

COMMISSIONER OF INLAND REVENUE v NEEDMOR FIREWOOD LIMITED [2025] NZHC 1392 [30 May 2025]

Introduction

[1]    On 22 September 2022 the Court made an order appointing Wendy Ann Somerville and Malcolm Grant Hollis as liquidators of the defendant company.

[2]    The liquidators have applied under s 284(1)(e) of the Companies Act 1993 for approval of the overall remuneration of $37,804.50 relating to this liquidation.

[3]    When making the order putting the defendant company into liquidation the High Court approved the liquidators’ rates of remuneration subject to s 284 of the Act. Those rates have been applied in assessing the remuneration sought.

[4]    The liquidators consider the liquidation is now complete and have provided to the Court copies of the first to fourth statutory reports, along with a draft final report prepared on the basis that remuneration has been approved.

Legal principles

[5]    The Court’s power to approve liquidators’ remuneration is provided in s 284 of the Act. The principles that apply 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.

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.

(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.

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

[6]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.

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

Discussion

[8]    I am satisfied the liquidators have pursued their duties appropriately and considered the avenues for recovery, and that the liquidation should now be concluded.

[9]    The liquidators have provided details of all the work that was undertaken. They have also provided details of the staff that undertook that work, their hourly rates of remuneration, the number of hours worked and the remuneration claimed. It appears work was performed by staff at appropriate levels to ensure costs incurred were reasonable.

[10]   The liquidators have also provided full disclosure of the amount of their fees in the six-monthly reports sent to the company’s creditors and shareholders. As part

of that disclosure the liquidators also advised creditors and shareholders of their right to have the fees reviewed under s 284 of the Companies Act. I understand no objection was received to any of the liquidators’ fees charged in the liquidation.

[11]   The liquidators have paid costs of $1,040.76 as awarded by the Court to the Commissioner of Inland Revenue in full.

[12]   A settlement amount of $32,827.00 was paid to the secured creditor following an agreement with the liquidators and the secured creditor.

[13]In addition, a distribution of 41 cents in the dollar of the total claim of

$122,456.33 was paid to the Commissioner of Inland Revenue in respect of their preferential claim, totalling $50,000.00.

[14]   I am satisfied the work undertaken by the liquidator was necessary and the remuneration claimed is appropriate and reasonable and reflects fair value for the services rendered to the creditors of the company.

Result

[15]   I grant the application for approval of the liquidators’ remuneration in the amount of $37,804.50.

O G Paulsen Associate Judge