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

COMMISSIONER OF INLAND REVENUE v ACL LINEHAUL LTD [2022] NZHC 2971 [14 November 2022]IN THE HIGH COURT OF NEW ZEALANDCHRISTCHURCH REGISTRYI TE KŌTI MATUA O AOTEAROAŌTAUTAHI ROHECIV-2020-409-000032[2022] NZHC 2971BETWEEN THE COMMISSIONER OF INLANDREVENUEPlaintiffAND ACL LINEHAUL LIMITED(IN LIQUIDATION)DefendantHearing: On the papersCounsel: Liquidators in personJudgment: 14 November 2022JUDGMENT OF ASSOCIATE JUDGE PAULSENThis judgment was delivered by me on 14 November 2022 at 3.00 pmpursuant to Rule 11.5 of the High Court RulesRegistrar/Deputy RegistrarDate:[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 theremuneration claimed by the liquidators reflects the fair value of the services renderedby them for the benefit of the creditors of the company.1[3] ACL Linehaul Ltd was incorporated on 17 June 2010. It carried on businessas a haulage company. The company was put into liquidation on the application of theCommissioner of Inland Revenue by order of this Court on 19 March 2020. Thecompany 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 theCompanies Act 1993.[4] Initially the liquidators were Elizabeth Helen Keene and Vivian JudithFatupaito, but on 8 March 2022 Luke Norman was appointed a joint and severalliquidator upon the resignation of Vivian Judith Fatupaito.[5] The liquidators' application is accompanied by copies of their statutory reportsand a draft final report to be lodged with the Registrar of Companies. The draft finalreport has been submitted on the basis that all distributions have been made and theliquidators' remuneration approved.[6] The liquidators' first report to creditors sets out the basis upon which theliquidators would charge fees and the hourly rates that have been approved by theCourt.[7] The liquidators have provided a detailed summary of the work undertaken inthe liquidation. I do not need to set it out here. It is sufficient to note that aconsiderable amount of time has been required to gain an understanding of thecompany's affairs and to pursue claims on behalf of the company that have been1 Re Roselea Path Ltd (in liq) [2013] 1 NZLR 207 (HC) and Madsen-Ries v Salus Safety EquipmentLtd (in liq) [2022] NZCA 101.successful in recovering assets and payments in settlement. I am satisfied that theliquidators have concluded all avenues for recovery.[8] I am advised that the only unsecured creditors in the liquidation were the InlandRevenue Department for a total amount of $217,007.20 (of which $198,864.03 was apreferential claim) and UDC Finance Ltd for $206,324.96.[9] With the liquidators' draft final report is a statement of realisations anddistributions. It shows total realisations in the liquidation of $131,967. From this theliquidators have paid legal fees and expenses, a small amount of taxation, thepetitioning creditors' costs and a payment to the Inland Revenue as the preferentialunsecured 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 whichshows the hourly rates have been applied in accordance with those approved by theCourt. I am satisfied that the work has been performed by staff at an appropriate levelof seniority to ensure costs incurred were reasonable. The total amount of time spenton the file was 212.2 hours of which 23.6% of time was of the liquidators, 4% wastime of managers, but 72.4% was of insolvency or administration support staff. Theaverage hourly recovery rate is $310.68 which appears reasonable given the nature ofthe work undertaken and the usual hourly charges that apply in the market.[11] Whilst the only creditor to receive payment in the liquidation is theCommissioner of Inland Revenue, I am satisfied that the work undertaken by theliquidators was necessary to wind up the affairs of the company. The Commissionerof Inland Revenue has confirmed its approval of the fees of the liquidators. TheCommissioner is satisfied with the outcome of the liquidation and that the fees claimedare 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 PaulsenAssociate JudgeSolicitors:Inland Revenue, Legal and Technical Services, Christchurch