Make Painters Limited (in liquidation)

[2025] NZHC 2407

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

I TE KŌTI MATUA O AOTEAROA KIRIKIRIROA ROHE

CIV-2023-419-132

[2025] NZHC 2407

UNDER

AND

the Companies Act 1993

IN THE MATTER

of the liquidation of MAKE PAINTERS LIMITED (in liquidation)

BETWEEN

THE COMMISSIONER OF INLAND REVENUE

Plaintiff

AND

MAKE PAINTERS LIMITED (in

liquidation) Defendant

Hearing:	On the papers
Attendances:	Memorandum filed by W Somerville for the liquidators of the Defendant
Judgment:	22 August 2025

JUDGMENT OF ASSOCIATE JUDGE SUSSOCK

[Approval of Liquidators’ Remuneration]

This judgment was delivered by me on 22 February 2025 at 3 pm pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Solicitors:

PriceWaterHouseCoopers, Hamilton

RE MAKE PAINTERS LIMITED (IN LIQ) [2025] NZHC 2407 [22 August 2025]

Introduction

[1]    The liquidators of Make Painters Limited (in liquidation)  (Company),  Wendy Ann Somerville and Malcolm Grant Hollis of PriceWaterHouseCoopers, have completed the liquidation and now apply for approval of their overall remuneration of

$62,522.28.

[2]    The memorandum filed by the liquidators attaches a breakdown by hours worked at each staffing level together with a detailed narration of the work carried out by those staff.

[3]    In addition, the memorandum attaches copies of the six monthly reports provided to creditors and shareholders required by s 255 of the Companies Act 1993 and a draft of the liquidators’ final report pursuant to s 257, prepared on the basis that all distributions have been made and the liquidators’ remuneration has been approved.

[4]    The issue I have to consider is whether the Court is satisfied that the remuneration for which approval is sought reflects the fair value of services rendered by the liquidator to the creditors of the Company.1

[5]    In Madsen-Ries v Salus Safety Equipment Ltd (in liq) the Court of Appeal held:2

… 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.

[6]    I set out the background below before considering whether the remuneration ought to be approved.

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

2      Madsen-Ries v Salus Safety Equipment Ltd (in liq), above n 1, at [54].

Background

[7]    The Company was incorporated in November 2018. The liquidators record their understanding that the Company’s insolvency followed cashflow pressures together with COVID-19 and poor weather hindering trading conditions.

[8]    The Commissioner of Inland Revenue applied to liquidate the company following the Company’s failure to meet tax obligations. The liquidation application was granted on 4 September 2023 with Wendy Somerville and Malcolm Hollis appointed jointly and severally as liquidators. The Commissioner was awarded petitioning creditor costs of $344.58 and disbursements of $1,009.40 for a total of

$1,353.98.

[9]    The liquidators’ draft final report records that at the date of liquidation, the Company possessed three 2021 Hyundai iLoad vehicles, one Holden Acadia and a Scorpion 610 boat, all of which were subject to security interests. The liquidators contacted the secured creditor to arrange for the repossession and sale of the assets. The assets were sold by the secured parties, with a surplus of $6,436 remitted back to the liquidation.

[10]   In addition, the liquidators became aware the Company owned a 2022 Ford Raptor at the date of liquidation, also subject to a security interest. The secured creditor advised the security agreement was novated to a related party following the liquidators’ appointment. Given the low level of equity in the vehicle, the liquidators concluded that it was uneconomic to pursue further.

[11]   The liquidators advised the Company also owned a small number of painting tools and equipment such as painting sprayers. However, the liquidators did not consider it was economic to pursue these assets given their low value.

[12]   In addition to the above assets, the liquidators identified accounts receivable owed to the Company at the date of liquidation, comprising finished jobs and work in progress. The liquidators issued a demand letter for the completed work and received a payment in full and successfully negotiated a settlement in respect of the work in

progress. A total of $89,578 was received in the liquidation relating to outstanding accounts receivable.

[13]   The liquidators conducted an investigation into the shareholders current account position owing and concluded the total amount owed to the Company was

$306,094. Following a negotiation, the liquidators entered into a Deed of Admission and Arrangement with the shareholders in respect if the overdrawn current account. As part of this agreement, the shareholders were to sell two residential properties owned personally. The liquidators registered caveats to protect the interests of creditors until the properties were sold. The sale process was prolonged because of a downturn in the market. One property was eventually sold. The directors agreed with their bank that the total debt owing to the liquidators could be paid from the proceeds. The liquidators arranged for the discharge of the caveat for the second property.

[14]    The liquidators are satisfied that there are no further avenues of recovery and so are finalising the liquidation.

Creditor outcomes

[15]   The liquidators recovered $6,436 from the secured parties following the realisation of the secured assets.

[16]   The petitioning creditor, the Commissioner of Inland Revenue, was paid the costs and disbursements awarded by the Court of $1,353.98 in full.

[17]   The liquidators received a preferential claim of $400,219.35 from Inland Revenue in relation to unpaid GST and PAYE and have made a distribution of

$224,122.84, equating to 56 cents in the dollar in relation to this claim.

[18]   Three unsecured claims totalling $205,733.04 were received. However, no distribution was made to unsecured creditors due to insufficient recoveries in the liquidation.

Should the liquidators’ remuneration be approved?

[19]   The breakdown of the liquidators’ time records and charges provided confirms that the hourly rates that have been applied are in accordance with those approved by the Court.

[20]   The breakdown attached to the memorandum of the liquidators’ fees by staffing category shows that of the hours completed, about 27 per cent were at Liquidator/Director level, less than 1 per cent at Senior Associate level, 71 per cent at analyst level and 2 per cent at support staff level. In total, 218 hours were spent for fees incurred of $69,925. However, the liquidators are only seeking approval of fees of $62,522.58. The average hourly rate is therefore $286.80 exclusive of GST, which is in the mid-range for average hourly rates charged by liquidators.

[21]   Each of the six-monthly reports to creditors and shareholders record the liquidators’ activities up to the date of that report and provide a detailed fee and disbursement analysis. The reports include reference to s 284 of the Companies Act which provides a right to creditors to seek review of the liquidators’ remuneration with leave. The liquidators’ memorandum confirms that no objections to the fees charged have been received.

[22]   In the circumstances, I am satisfied that the categories of work undertaken by the liquidators were necessary to wind up the affairs of the company and that the remuneration for which approval is sought reflects the fair value of services rendered by the liquidators to the creditors.

Result

[23]   For the reasons set out above, the liquidators’ remuneration of $62,522.28 (excluding GST and disbursements) is approved.

Associate Judge Sussock